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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:569,892 / 5,734
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Selling Options on Futures?

Old May 15th, 2014, 05:38 PM   #3261 (permalink)
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haeloong View Post
Hi All,

I am beginner to future options world.
Appreciate to all of your great posts to extend my limited knowledge in commodities future options trading.

Recently I came cross to this tastytrade video - Rising Star - Craig. You may google and watch it.
It is sharing the story of the rising star - Craig, who also using karen's strategy to trade /CL only with no single losing trade.

His result:
a. Initial capital about USD34,000
b. In year 2012, 100% capital return, i.e. USD68,000
c. In year 2013, 100% capital return, i.e. USD136,000
d. In year 2014 March, about 10-20% capital return.

His strategies only selling /CL with following conditions:
a. 60 DTE
b. IV 20%
c. Close the position at 30 DTE, he claimed that the premium drops 80% from its origin value.

I just funded the trading account and would like to trade /CL using his simple strategies.
Any advice?

This is my first post in the forum. Thanks for reading and comment.


The video about that specific rising star was quite interesting. Do note that he incurred a 40% drawdown in September 2013 on the Syria debacle. If one can stomach this, the system might be palatable for you....


Tom Sosnoff, Tony Battista and our Math wiz, Jacob Perlman, discuss the math behind risk and probability of profit in options trading. Jacob walks the guys through theoretical costs and how they relate to defined risk trading. In other words, the video below includes a mathematician explaining why it works to sell far OTM options.



Last edited by Cogito ergo sum; May 16th, 2014 at 06:32 AM.
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Old May 15th, 2014, 07:36 PM   #3262 (permalink)
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kevinkdog View Post
100% return selling options is pretty aggressive, based on my personal experience. Obviously, it can be done.


My one piece of advice: take a look at CLs history over past 2 years. Compare it to the period of 2006-2010, with regards to volatility. I wonder how well an aggressive option selling approach would have worked then?

You're right about volatility. I was selling equity and indices puts during the fall of 2008 and a boatload of cash would have been needed if selling naked especially on /CL.

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Old May 15th, 2014, 07:40 PM   #3263 (permalink)
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haeloong View Post
Hi All,

I am beginner to future options world.
Appreciate to all of your great posts to extend my limited knowledge in commodities future options trading.

Recently I came cross to this tastytrade video - Rising Star - Craig. You may google and watch it.
It is sharing the story of the rising star - Craig, who also using karen's strategy to trade /CL only with no single losing trade.

His result:
a. Initial capital about USD34,000
b. In year 2012, 100% capital return, i.e. USD68,000
c. In year 2013, 100% capital return, i.e. USD136,000
d. In year 2014 March, about 10-20% capital return.

His strategies only selling /CL with following conditions:
a. 60 DTE
b. IV 20%
c. Close the position at 30 DTE, he claimed that the premium drops 80% from its origin value.

I just funded the trading account and would like to trade /CL using his simple strategies.
Any advice?

This is my first post in the forum. Thanks for reading and comment.


Have a boatload of cash in reserves and be prepared for substantial drawdowns.

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Old May 15th, 2014, 07:41 PM   #3264 (permalink)
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Recent OTM CLM4 90P Time Decay Chart

Regarding the recent posts I have been looking at this more closely and here is a chart demonstrating the rate of change over the 90DTE to expiry for an OTM CLM4 90P. I agree with a comment made by Kevin. CL has for a few years been in a controlled range. Go back in history and look. Taking a result does not mean it will apply into the future. Trade and market awareness is required.


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Old May 16th, 2014, 04:00 AM   #3265 (permalink)
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effective View Post
I have started doing similar thing recently. Have not seen Craig's video before though. The main question for me what are the deltas of his shorts. It looks like he using 10 delta. I am much more conservative and staying between 2-3 delta. There is still nice profit at that level and I sleep better

I have small capital with OptionsXpress Inc (OX).
I just started my first live crude oil future options trade by selling 5 contracts of CLN488P at premium 0.11 on May-12 (about 40 DTE) with initial margin requirement USD2716.15 and PITM about 5%.

But my friend sold 2 weeks earlier than me at premium 0.15. It looks like it is rich in premium around 60 DTE.
By looking at the IV 20%, I do not favor with the PITM of about 10%. I prefer PITM about 5%.

My friend also advise me to:
a. You only can trade 1/3 of your total capital. But I prefer 1/5 as my principal money management.
b. Leg in for collecting much higher premium (using Bollinger Band) between 45-60 DTE, until you form the strangle.
c. If the PITM is about 15%, then roll the position to the next strike price equivalent to PITM 8% and double the contract size (to breakeven excluded the commission charge)

But I have no idea about delta on this video.

Thanks for those on giving me the idea of leg in too.

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Old May 16th, 2014, 04:04 AM   #3266 (permalink)
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OX's commission charge is too high

I tried to negotiate lower commission charge with OX live help but they refused and maintained at USD6.99 per contract.
They want to me to fund more capital up to USD30K. It is also ridiculous with their crazy requirement of trading at least average 50-100 contracts weekly.

The real fact is that I cannot afford to trade large number of contracts due to my small capital account.
But high commission charge really does not encourage the trader to be with them in long term relationship.

I am using the thinkorswim platform to monitor and see all the necessary parameters for my live trading in OX.
The platform is really comprehensive and they offer the commission as low as USD3.50 per contract.
Is thinkorswim is a better choice at all?

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Old May 16th, 2014, 04:51 AM   #3267 (permalink)
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mixpol View Post
my thoughts about jun exp within 93/106

that is good expire jun CL= 101.5

so, will be watching jul exp within 94/105


Last edited by mixpol; May 16th, 2014 at 05:19 AM.
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Old May 16th, 2014, 04:58 AM   #3268 (permalink)
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BlueRoo View Post
Regarding the recent posts I have been looking at this more closely and here is a chart demonstrating the rate of change over the 90DTE to expiry for an OTM CLM4 90P. I agree with a comment made by Kevin. CL has for a few years been in a controlled range. Go back in history and look. Taking a result does not mean it will apply into the future. Trade and market awareness is required.


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good looking program ! could u share it with us) thx forward

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Old May 16th, 2014, 04:59 AM   #3269 (permalink)
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Hi Chris,

I tried but not sure which file that you are looking for.
You may click on the "Thread Tools", choose the "Show Attachment" to find the file.
Anyway may you share the file out?
I think it is a good way to set up our plan for a trade.

Thanks.

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Old May 16th, 2014, 05:08 AM   #3270 (permalink)
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mixpol View Post
that is good expire jun CL= 101.5

so, will be watching jul exp within 94/105


Referring to TOS platform, the /CL 94P JUL PTIM=7.5% and 105C JUL PITM=25%
The premiums are extremely rich at call options but risky.
May I know how do judge the trade position and what is your strategy for recovery/rolling if required?
Mind to share?

Thanks.

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