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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:568,200 / 5,727
Last Reply:December 2nd, 2016 (12:40 PM) Attachments:642

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Selling Options on Futures?

Old April 5th, 2014, 07:29 PM   #3161 (permalink)
World'sWorstTrader
Knoxville Tennessee USA
 
Futures Experience: Intermediate
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Well I haven't made a real money trade yet but after reading this whole thread I feel like I've been in the trenches with you guys for a while. Thanks to all who have contributed! I found options through tasty trade and then found this thread and I've been consuming everything I can find on options and paper trading ever since. I'll be opening an account with DeCarley soon and plan on keeping things very small and manageable until I have some experience under my belt. As I progress I hope to have some substance to add to the conversation here. I noticed that DeCarley has several levels of service/commissions , from full service at $35 to self directed Pro at $7, as a new trader would a higher service level be worth it?

These are excessively high commissions.

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Old April 5th, 2014, 08:38 PM   #3162 (permalink)
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Well I haven't made a real money trade yet but after reading this whole thread I feel like I've been in the trenches with you guys for a while. Thanks to all who have contributed! I found options through tasty trade and then found this thread and I've been consuming everything I can find on options and paper trading ever since. I'll be opening an account with DeCarley soon and plan on keeping things very small and manageable until I have some experience under my belt. As I progress I hope to have some substance to add to the conversation here. I noticed that DeCarley has several levels of service/commissions , from full service at $35 to self directed Pro at $7, as a new trader would a higher service level be worth it?

I suggest you talk to Carley directly to get commission rates.There are a lot of options with different FCMs and different platforms, many of which will impact your cost.

Something else to consider is how they charge commissions. Some brokers charge all at the beginning, and some charge both for entry and exit. That may be an important consideration if you exit before expiration.

Another issue to investigate is how "option selling friendly" the broker is. Some deep discount brokers I found were dirt cheap, but did not want option sellers (they felt it was too much risk). Not many brokers are accomodating to option selling.

I can tell you from my personal experience that DeCarley overall prices are very reasonable. Service has been world class. That alone is worth it, in my opinion.

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
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Old April 5th, 2014, 09:00 PM   #3163 (permalink)
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Well I haven't made a real money trade yet but after reading this whole thread I feel like I've been in the trenches with you guys for a while. Thanks to all who have contributed! I found options through tasty trade and then found this thread and I've been consuming everything I can find on options and paper trading ever since. I'll be opening an account with DeCarley soon and plan on keeping things very small and manageable until I have some experience under my belt. As I progress I hope to have some substance to add to the conversation here. I noticed that DeCarley has several levels of service/commissions , from full service at $35 to self directed Pro at $7, as a new trader would a higher service level be worth it?

If you intend to execute a specific trading system in a live environment (such as selling OTM options) with predetermined rules I personally don't see any real value added to go full service. In addition, a $35 RT commission for a "small account" can destroy your theoretical edge and can negatively skew your returns depending on your strategy and trade size. I recommend that you model your paper trades with both commission structures to see where you stand from a pure financial point of view.

Broker selection is a different discussion altogether.

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Old April 5th, 2014, 09:05 PM   #3164 (permalink)
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Cogito ergo sum View Post
If you intend to execute a specific trading system in a live environment (such as selling OTM options) with predetermined rules I personally don't see any real value added to go full service. In addition, a $35 RT commission for a "small account" can destroy your theoretical edge and can negatively skew your returns depending on your strategy and trade size. I recommend that you model your paper trades with both commission structures to see where you stand from a monetary point of view. As for selecting a broker is a completely different discussion alltogether.

Good points. Make sure you don't pay for more than what you need.

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
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Old April 6th, 2014, 02:15 PM   #3165 (permalink)
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Hmm, so things got interesting after Friday's market moving jobs data report. Gold shot up quite a bit, the S&P Index took it a sharp dive, and unrelated to the market, coffee futures skyrockets over $10.00 in a day. Nasdaq was rocked too.

Looks like volatility is back in action, creating some good option selling premium. How are you guys going to play it?

I'm thinking of selling some S&P puts, and perhaps a couple of coffee calls at the very high range, (over 300). Time to make hay fellas!

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Old April 6th, 2014, 02:42 PM   #3166 (permalink)
World'sWorstTrader
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Hmm, so things got interesting after Friday's market moving jobs data report. Gold shot up quite a bit, the S&P Index took it a sharp dive, and unrelated to the market, coffee futures skyrockets over $10.00 in a day. Nasdaq was rocked too.

Looks like volatility is back in action, creating some good option selling premium. How are you guys going to play it?

I'm thinking of selling some S&P puts, and perhaps a couple of coffee calls at the very high range, (over 300). Time to make hay fellas!

I sold some NQ NQM4 2810 puts @ $76.00. 76 DTE. Delta=0.022 , IM= 417 (Per TOS).

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Old April 6th, 2014, 02:47 PM   #3167 (permalink)
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I sold some NQ NQM4 2810 puts @ $76.00. 76 DTE. Delta=0.022 , IM= 417 (Per TOS).

And what is your stop loss? Level on the script or how do you define your stop loss when shorting any options?

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Old April 6th, 2014, 05:14 PM   #3168 (permalink)
World'sWorstTrader
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And what is your stop loss? Level on the script or how do you define your stop loss when shorting any options?

My drop dead stop loss is that given by RON99. But I may make adjustment before that.

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Old April 6th, 2014, 08:50 PM   #3169 (permalink)
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I suggest you talk to Carley directly to get commission rates.There are a lot of options with different FCMs and different platforms, many of which will impact your cost.

Something else to consider is how they charge commissions. Some brokers charge all at the beginning, and some charge both for entry and exit. That may be an important consideration if you exit before expiration.

Another issue to investigate is how "option selling friendly" the broker is. Some deep discount brokers I found were dirt cheap, but did not want option sellers (they felt it was too much risk). Not many brokers are accomodating to option selling.

I can tell you from my personal experience that DeCarley overall prices are very reasonable. Service has been world class. That alone is worth it, in my opinion.

Any option selling friendly broker suggestion ?

Sent from my GT-N7105 using Tapatalk

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Old April 6th, 2014, 08:54 PM   #3170 (permalink)
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energetic View Post
Any option selling friendly broker suggestion ?

Sent from my GT-N7105 using Tapatalk

I use DeCarley (through Gain) and OptionsExpress. I'm happy with both.

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
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