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Selling Options on Futures?
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Selling Options on Futures?

  #3321 (permalink)
Market Wizard
Cleveland Ohio/United States
 
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So, ECB rate decision came out, and the Euro bounced a bit before dropping about 25 pips. It already looks like OTM options are quickly dropping off (1.34 puts and 1.385 calls have both decreased 3 pips today).

The tricky part about EC options is that they look good from an ROI perspective when they are close to expiration. That means there is a lot of risk inherent in these, even if it is for a short time.

That being said, I've been a seller most months as it gets close to expiration. I just haven't gotten burned - yet...



And at 8:30 AM, it started going down more, down 70 pips now. Not time to relax yet for Put sellers...

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

Last edited by kevinkdog; June 5th, 2014 at 08:33 AM. Reason: 8:30 AM update
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  #3322 (permalink)
Elite Member
Dallas, TX
 
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kevinkdog View Post
So, ECB rate decision came out, and the Euro bounced a bit before dropping about 25 pips. It already looks like OTM options are quickly dropping off (1.34 puts and 1.385 calls have both decreased 3 pips today).

The tricky part about EC options is that they look good from an ROI perspective when they are close to expiration. That means there is a lot of risk inherent in these, even if it is for a short time.

That being said, I've been a seller most months as it gets close to expiration. I just haven't gotten burned - yet...



And at 8:30 AM, it started going down more, down 70 pips now. Not time to relax yet for Put sellers...

I was short 42 1.32 Puts and 20 1.33 Puts. I went ahead and bought them back in last night, at a small profit. This approach is, for me at least, not a "swing for the fences" approach, but rather one where you hit single after single and build profits consistently and minimize risk as much as possible. It has worked very well this year, with the exception of some NG calls a few months back.

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  #3323 (permalink)
Market Wizard
Cleveland Ohio/United States
 
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mu2pilot View Post
I was short 42 1.32 Puts and 20 1.33 Puts. I went ahead and bought them back in last night, at a small profit. This approach is, for me at least, not a "swing for the fences" approach, but rather one where you hit single after single and build profits consistently and minimize risk as much as possible. It has worked very well this year, with the exception of some NG calls a few months back.

Probably a safe way to play it. That is a lot of options, depending of course on your account size. Better safe than sorry.

Do you allocate a certain percent of you account to currency options? I try to keep my risk (initial margin) to 5-8% of my account for currencies.

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
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  #3324 (permalink)
World'sWorstTrader
Knoxville Tennessee USA
 
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Favorite Futures: ES, NQ, CL, /6E futures options.
 
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/6E


kevinkdog View Post
So, ECB rate decision came out, and the Euro bounced a bit before dropping about 25 pips. It already looks like OTM options are quickly dropping off (1.34 puts and 1.385 calls have both decreased 3 pips today).

The tricky part about EC options is that they look good from an ROI perspective when they are close to expiration. That means there is a lot of risk inherent in these, even if it is for a short time.

That being said, I've been a seller most months as it gets close to expiration. I just haven't gotten burned - yet...



And at 8:30 AM, it started going down more, down 70 pips now. Not time to relax yet for Put sellers...

*************************************************************************************

Being ignorant of the world conditions affecting /6E, but noticing that EVZ was well above the 100 unit moving average, I sold some August 6EU4/6EQ4 1.27 PUTS with a delta of 0.02 . No problems so far especially with the
drop in IV.

***************************************************************************************

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  #3325 (permalink)
Market Wizard
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datahogg View Post
*************************************************************************************

Being ignorant of the world conditions affecting /6E, but noticing that EVZ was well above the 100 unit moving average, I sold some August 6EU4/6EQ4 1.27 PUTS with a delta of 0.02 . No problems so far especially with the
drop in IV.

***************************************************************************************


EVZ? 100 unit - is that 100 days?

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
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  #3326 (permalink)
World'sWorstTrader
Knoxville Tennessee USA
 
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Favorite Futures: ES, NQ, CL, /6E futures options.
 
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kevinkdog View Post
EVZ? 100 unit - is that 100 days?

I was using 2 charts. One was a range chart with a ATR of 0.02. The other was a simple 15 minute chart using a 100 unit moving average. Well actually an exponential ribbon average. But I do look at a daily chart to see the larger picture.

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  #3327 (permalink)
Elite Member
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kevinkdog View Post
Probably a safe way to play it. That is a lot of options, depending of course on your account size. Better safe than sorry.

Do you allocate a certain percent of you account to currency options? I try to keep my risk (initial margin) to 5-8% of my account for currencies.

I have yet to include a strict diversification component to my trading. I am trading a mid six figure account and it has taken me several months to ramp up to where I have 33% of the capital deployed. To accomplish this [at least at the current time], I've had to go heavy in energy futures, CL, NG, RB, HO, etc. I do keep diversification in mind and when I get heavy in one type of option, I will not add any more until something comes off.

I've been short various 6E Futures Options the past 4 months, but it has been a small part of my overall portfolio, although being short 62 options is more than I've ever had on, which added to my concern about what might happen this morning. I slept better last night knowing that I had bought back in 42 of the 62 options and had an order in overnight to buy back the other 20, which I did.

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  #3328 (permalink)
Market Wizard
Cleveland Ohio/United States
 
Futures Experience: Advanced
Platform: Tradestation
Broker/Data: various
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Posts: 2,256 since Jul 2012
Thanks: 1,059 given, 4,101 received


mu2pilot View Post
I have yet to include a strict diversification component to my trading. I am trading a mid six figure account and it has taken me several months to ramp up to where I have 33% of the capital deployed. To accomplish this [at least at the current time], I've had to go heavy in energy futures, CL, NG, RB, HO, etc. I do keep diversification in mind and when I get heavy in one type of option, I will not add any more until something comes off.

I've been short various 6E Futures Options the past 4 months, but it has been a small part of my overall portfolio, although being short 62 options is more than I've ever had on, which added to my concern about what might happen this morning. I slept better last night knowing that I had bought back in 42 of the 62 options and had an order in overnight to buy back the other 20, which I did.

Thanks for sharing!

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
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  #3329 (permalink)
Trading Apprentice
Kazan russia
 
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just wanna see jul exp WTI between 101.5/103.5 let's look at my humble prediction

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  #3330 (permalink)
Trading Apprentice
NYC +NY/ United States
 
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Woahhh baby! Anybody sell put options on the S&P Index?

We've been raking it in over the last two weeks, I'm loving it!!

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