Yep. It wiped out a couple of months of profit on my account.
I am a CL options trader, and I am looking to diversify. I tried a few other commodities with limited success but I am still looking around. It seems that NG is a popular choice here, but aren't the movements quite extreme (as with some other commodities) from time to time?
Just a view that might spark a "I ain't going to loose any money any more attitude!"
As sellers we want volatility to be balanced. (slow moving price with average vol.) If you have been wiped out because of CL in the last few months I suggest re-looking at what you have been doing. Honestly CL vol has been tame for a good few years now. Selling options can be very boring to some and it appears that this is the false sense some option sellers adopt and how they approach it. But honestly, you have to be very active as a option selling because your are managing unlimited risk. You have to act. You can not just hope. (Goes for all trading.) Look at your decision making structure and the decision options you could have made and play out each scenario. You will teach yourself more than you will every learn from a book, course, thread, or even the most experienced trader...we trade ourselves not against the market...!
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Thanks for the input. My thoughts exactly. I was wondering what your opinions are regarding new-related risk. When the news of the current Iraq struggle hit, the oil price shot up quickly as we all saw. I happen to have a spread (both OTM puts and calls sold) at that time, and the call leg quickly lost money.
I have been asking myself how I could have done better. I myself do not have a way to predict news events like the current Iraq situation. Aggressive cut-loss could be an answer to limit loss, but it itself has costs and downsides.
Anyhow, I am still looking for more products to trade. Any suggestions?
If there is new related risk, and you have some proven directional skills, and you are watching a developing v smile, as well as good DTE management then these combined give you better odds. increase your arsnell. a good trader has good technique...a better trader has two...it is exponential and about ma never ending experience curve...we all know this...like me we let it slip some times...the recent news was well know before a call threat to premium became an issue...then there a decisions to be made ... is 35 or 60 better... then you might look back at old post i have made here about how i hedge and trade the underlying as a more complete approach to dealing with such recent events...but really it is about what options you have on the table as potential tools to use...
but you are doing great just asking the questions...now make up some answers and you will find your are teaching yourself stuff you did realise you already new because it is applied cognitively...
i personally credit this thread with opening my eyes to diversification...with a special thanks to Kevindog who pointed this out to me over 2 yeas ago...there are more than enough liquid commodities and selling strategies to equip you
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I just spent the past week or so reading everything in this thread, really awesome ideas here. Thanks Ron for sharing your method and thanks others for contributing as well.
I've been an equity options trader for a while now (with TOS) and futures have looked more and more attractive to me because of how far you can go OTM and still collect a reasonable premium. ROI is a powerful way to look at these positions.
As has been noted by others, TOS has a limited number of futures options available to trade. Comparing to the XLS-SPAN spreadsheet, it sort of seems like the margins are marked up as well which hurts ROI a lot. I'm wondering if anyone here has any experience with trademonster as your brokerage and if so what do you think? I reached out to them today and here's what they told me:
Commissions are $1.50 a side. There is no overnight fee for holding a Futures Option position.
Our trading platform has real time SPAN margining on all Futures contacts and Futures options in each account. The initial margin requirement we use is that set by both the CME and ICE exchanges.
We are not a Full Service brokerage firm, therefore, we do not mark up the premium of Futures Option contracts like other firms on the street might. There is not a list of Futures Options that we offer. However, what we offer is as follows. A majority of all Globex traded Futures and those that offer Futures Option Contracts. In addition to recently adding many of the ICE futures option contracts mainly, the "soft's."
They ranked well with Barron's recently which may not mean much but at least gave me the idea to check them out. Thoughts on trademonster anyone? If not maybe I'll be the guinea pig..
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In my never-ending quest to make sure I'm getting a fair deal and to consolidate brokerages, I opened a trial futures account last week with TradeMonster. I already have money there for stocks and stock options and thought I'd give it a shot. I closed that trial account earlier this week without ever making a trade. One really big reason and one little one:
1. The amount of time it takes to load an options chain is horribly long and when you load SEP for example, you see all the other months, which is OK (and a nice touch had it been structured better) except you don't have access to the price of the underlying for the other months on the same page. So you're flipping back and forth from CHART or QUOTE to OPTIONS all the time. It was so slow that I gave up after only two days.
1.a. Many of the options chains are not complete. You see many zero values or there are garbage calculations for IV, Std Dev, Prob of ITM, etc. They announced their "integration" of FCM-provided quotes to the TradeMonster platform a while back, but the execution has been awful.
1.b. If TradeMonster could have been used for portfolio review and margin review and trading conducted on the Gain Capital/OEC "OEC Trader" platform, I might have stayed. But I asked about that alternative and they said NYET!
2. They charge $15/mo for CME quotes. That's not disclosed on the website and I couldn't find it in the fine print. It was deducted from my account on day one.
It might be an OK set up for futures only, but there is no way I would recommend it to a futures options trader. With the pending merger between TradeMonster and OptionsHouse, I would also be surprised if it gets much attention from the application development people in the coming months.
Last edited by CafeGrande; June 25th, 2014 at 05:31 PM.
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