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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:567,971 / 5,727
Last Reply:22 Hours Ago (12:40 PM) Attachments:642

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Selling Options on Futures?

Old June 7th, 2014, 09:55 PM   #3341 (permalink)
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mu2pilot View Post
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.


For what it is worth, here is a list of my current open positions, and the ROI. I try to be evenly balanced in each major area (although I am not always able to do that):

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Old June 7th, 2014, 10:58 PM   #3342 (permalink)
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Big Mike View Post
Who are "we" ?

Mike

"We" being in reference to myself and anyone else on the forum who sold put option selling on the S&P Index.

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Old June 7th, 2014, 11:01 PM   #3343 (permalink)
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kevinkdog View Post
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!

Yes, in the past it has. Overexuberance and Overpositioning. I have been doing a staggered layering between Jun current contract (Over 10 contracts) July (4 contracts) August (1 so far). All between 1500 and under.
Life is good baby!!

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Old June 7th, 2014, 11:07 PM   #3344 (permalink)
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rmejia View Post
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?

Options with .01 Delta, I've been selling daily, but usually I do once a week on a Friday for maximum time decay. DTE is dependent on the volatility. I made a mini fortune in Feb selling Nat Gas calls with 2 days until expiration. Too many scared sheep selling, while I bought at the 9.5 to 10 level. (It was only trading at max 7 I believe, before collapsing hahaha) EASY MONEY!!!!! When the market shows up looking stupid, slaughter it!

I normally shoot for 40-50 days until expiration.

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Old June 7th, 2014, 11:10 PM   #3345 (permalink)
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Futures Edge on FIO

Are you a NinjaTrader user?

 

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

Perhaps datahogg, but let's put it this way. Many so called experts have been calling a market crash for the last 2 years, and not only were they were wrong... They were incredibily wrong!
One can sit on the sideline and play chicken little, or one can invest smart. Stagger in with a couple contracts at a time, layer them by each month. Don't overposition, have self control.

I've learned this over time, through pain, and it has led furure success.

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Old June 7th, 2014, 11:15 PM   #3346 (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.

ROI isn't everything. I like making money, pure and simple. In my opinion, the S&P is the most stable out there right now. Coffee, grains, metals. Hell no!!!! Those are widow makers my friend. Maximum ROI comes with a price my friend, and the price is you feeling extreme anxiety as they are currently too volatile.

I enter the market with one goal, make money consistently. I don't care if it's $50 dollars a day or $500, make money, and risk management to protect that cash collateral is key. If you chase ROI as the paramount metric, I can ensure you, you will be taken down hard one day.

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Old June 7th, 2014, 11:17 PM   #3347 (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.


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


Bingo! You hit it brother.

The key is risk management. For option sellers, that is DON'T OVERPOSITION, no matter how good it looks. Be smart.

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Old June 7th, 2014, 11:26 PM   #3348 (permalink)
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Futures Experience: Advanced
Platform: OptionsXpress
Favorite Futures: Future Option Selling
 
Posts: 26 since Mar 2014
Thanks: 13 given, 7 received


mu2pilot View Post
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.


Ugh, you're way to involved in this ROI metric.
Here's what you need to understand to improve your trading:
THE TREND IS YOUR FRIEND

You're way too technical. Keep things simple, because it is. Here's my number one rule:

PROTECT CASH COLLATERAL, MAKE MONEY CONSISTENTLY.

That's it, don't care how I get there, as long as I get there and sleep soundly at night.

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Old June 7th, 2014, 11:30 PM   #3349 (permalink)
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Platform: OptionsXpress
Favorite Futures: Future Option Selling
 
Posts: 26 since Mar 2014
Thanks: 13 given, 7 received

This is good, very good! Can you give us a heads up if your sold puts or calls on those commodities/indexes?
Just curious how you positioned, because I couple of your key spots are my targets as well going into next week.



kevinkdog View Post
For what it is worth, here is a list of my current open positions, and the ROI. I try to be evenly balanced in each major area (although I am not always able to do that):

Attachment 148635


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Old June 7th, 2014, 11:42 PM   #3350 (permalink)
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Zero85 View Post
ROI isn't everything. I like making money, pure and simple. In my opinion, the S&P is the most stable out there right now. Coffee, grains, metals. Hell no!!!! Those are widow makers my friend.


Zero85 View Post
I made a mini fortune in Feb selling Nat Gas calls with 2 days until expiration.


Cognitive dissonance

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