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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:568,944 / 5,728
Last Reply:16 Hours Ago (05:26 PM) Attachments:642

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Selling Options on Futures?

Old June 7th, 2014, 12:29 PM   #3331 (permalink)
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Zero85 View Post
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!!

I've got some on.

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Old June 7th, 2014, 12:38 PM   #3332 (permalink)
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Old June 7th, 2014, 01:47 PM   #3333 (permalink)
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Zero85 View Post
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!!


Awesome you and your group! Hopefully that will continue.

Personally speaking, everytime I've gotten super excited about making money, shortly thereafter I've been paid back with a big drawdown (often a nasty one at that). Hope that doesn't happen to you!

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Old June 7th, 2014, 02:26 PM   #3334 (permalink)
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Zero85 View Post
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!!

I sell S&P puts on VIX spikes. At VIX 11... way too much risk for a VIX spike and little premium. Would not be a lot fun to watch the price of the puts go up 10x+ from a silly VIX spike at these levels.

What are you selling, monthlys, weeklys? How many DTE and what Delta?

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Old June 7th, 2014, 04:41 PM   #3335 (permalink)
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True

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Zero85 View Post
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!!

This is true, but I wonder when the hammer will fall?? Will there be sell off not too far away????

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Old June 7th, 2014, 04:59 PM   #3336 (permalink)
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datahogg View Post
This is true, but I wonder when the hammer will fall?? Will there be sell off not too far away????

I agree. The sell off may not come for months though. What is keeping me from selling ES puts is the ROI, compared to other futures options, sucks.

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Old June 7th, 2014, 05:03 PM   #3337 (permalink)
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mu2pilot View Post
I agree. The sell off may not come for months though. What is keeping me from selling ES puts is the ROI, compared to other futures options, sucks.

Even with the low initial ROI, the way ES has been going up, you can sell a 2% ROI and then a few weeks later buy it back at a price that yields a 5+% ROI.


But still, I think a lot of people will be wiped out if and when volatility suddenly spikes...

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Old June 7th, 2014, 05:25 PM   #3338 (permalink)
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kevinkdog View Post
Even with the low initial ROI, the way ES has been going up, you can sell a 2% ROI and then a few weeks later buy it back at a price that yields a 5+% ROI.

That is true, although you can do the same thing with other futures options, but starting with a much better ROI/Delta ratio. I just ran the ES thru Dudetooth's spreadsheet and you have to go up to a 4 delta to sniff a 2% ROI.

I did some ZM puts this week with a 1 delta and a 3.88 ROI.

Until I run out of other "options" (or until their ROIs improve), I'm avoiding ES for now.

CORRECTION: Based on Friday's ES closing numbers, the lowest delta offering a 2% ROI is 6.96. That is too close to the fire for me.


Last edited by mu2pilot; June 7th, 2014 at 05:34 PM.
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Old June 7th, 2014, 07:05 PM   #3339 (permalink)
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mu2pilot View Post
That is true, although you can do the same thing with other futures options, but starting with a much better ROI/Delta ratio. I just ran the ES thru Dudetooth's spreadsheet and you have to go up to a 4 delta to sniff a 2% ROI.

I did some ZM puts this week with a 1 delta and a 3.88 ROI.

Until I run out of other "options" (or until their ROIs improve), I'm avoiding ES for now.

CORRECTION: Based on Friday's ES closing numbers, the lowest delta offering a 2% ROI is 6.96. That is too close to the fire for me.

Yep, you are right. One thing I have noticed is that I can "flip" ES otpions (when the ROI doubles) much quicker than most others. I suspect that will end when the market starts heading down.

I agree, 2% ROI for a 7 delta is not the best option to sell, unless you need big volume and can't get better ROI elsewhere.

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Old June 7th, 2014, 07:24 PM   #3340 (permalink)
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kevinkdog View Post
Yep, you are right. One thing I have noticed is that I can "flip" ES otpions (when the ROI doubles) much quicker than most others. I suspect that will end when the market starts heading down.

I agree, 2% ROI for a 7 delta is not the best option to sell, unless you need big volume and can't get better ROI elsewhere.

I agree with all this and I'm not arguing with you.

But, the reason why you can flip ES options quicker is because the market is moving in your direction. All I'm saying is that if you trade any other option and it moves in your direction like the ES has, you'll have a very nice ROI in short order. I don't think there is anything special about the ES. It is a result of its recent market movement.

The challenge I remain to have is finding enough, different options to sell. I don't want to be heavy in any one option. I want diversification and I have it to some degree. But my challenge happens when an option moves in my favor and I lock in 5-10% ROI over a couple weeks' time. I can't always replace it with something else that meets my minimum criteria.

For example, right now, I have RB options that, when I sold them, offered a 3.66% ROI and a 33 DTE. Now, 15 days later, I've made 7.53% on capital risked and can expect only .43% over the next 18 days. As soon as I can find something to replace it, I'm going to buy it back in.

I can see the potential for lowering my minimum ROI standards and replacing something like this with even a 1.5% ROI option. But I am having difficulty getting excited about that ROI.

I'm still learning and am still developing my trading plan. I'll get better.

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