Selling Options on Futures? - Options on Futures | futures.io
futures io futures trading


Selling Options on Futures?
Started: by ron99 Views / Replies:598,492 / 5,838
Last Reply: Attachments:654

Welcome to futures io.

Welcome, Guest!

This forum was established to help traders (especially futures traders) by openly sharing indicators, strategies, methods, trading journals and discussing the psychology of trading.

We are fundamentally different than most other trading forums:
  • We work extremely hard to keep things positive on our forums.
  • We do not tolerate rude behavior, trolling, or vendor advertising in posts.
  • We firmly believe in openness and encourage sharing. The holy grail is within you, it is not something tangible you can download.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.


You'll need to register in order to view the content of the threads and start contributing to our community. It's free and simple, and we will never resell your private information.

-- Big Mike

Reply
 654  
 
Thread Tools Search this Thread
 

Selling Options on Futures?

  #3661 (permalink)
Elite Member
Dallas, TX
 
Futures Experience: Advanced
Platform: T4, Zaner360, TOS
Broker/Data: DeCarley Trading
Favorite Futures: Options
 
Posts: 104 since Sep 2013
Thanks: 133 given, 50 received

Hummingbird, the most you can lose when you buy an option is the cost of the option.


Sent from my iPad using Tapatalk HD

Reply With Quote
 
  #3662 (permalink)
Trading Apprentice
Yreka, CA United States
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: stocks
 
Posts: 11 since Sep 2014
Thanks: 0 given, 2 received

Thanks for the response, but that doesn't answer my question. I know that part about not loosing more than the call is worth, but what about the part when I sell to close my call a week before expiry when the price of the underlying instrument went against my position by more than the price of the call? Will I just loose part of its' time value or all of it?

Reply With Quote
 
  #3663 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,420 since Jul 2011
Thanks: 663 given, 4,117 received
Forum Reputation: Legendary



hummingbird View Post
I am a newbie to options and hope someone can help me with a question. I have read a few books and am still unsure how much money I can loose if the trade goes against me. Let's say I buy a call for 75 cents and the trade goes against me by a $1.50, but there is still one week to expiry when I scratch the trade. Will I loose the entire 75 cents or just the time value. Hope this makes sense.

This thread is options on futures. A question about options on stocks needs to be placed in a different thread.

Reply With Quote
 
  #3664 (permalink)
Trading Apprentice
Yreka, CA United States
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: stocks
 
Posts: 11 since Sep 2014
Thanks: 0 given, 2 received

Then I guess you don't know the answer

Reply With Quote
 
  #3665 (permalink)
Trading for Fun
St Paul, MN, USA
 
Futures Experience: Advanced
Platform: Abacus
Broker/Data: RJO, Interactive Brokers
Favorite Futures: Commodity Futures & Options
 
Posts: 193 since Jan 2014
Thanks: 112 given, 182 received

Futures Edge on FIO

Which time slot for our live webinar events works best for you?

 

hummingbird View Post
Thanks for the response, but that doesn't answer my question. I know that part about not loosing more than the call is worth, but what about the part when I sell to close my call a week before expiry when the price of the underlying instrument went against my position by more than the price of the call? Will I just loose part of its' time value or all of it?

An exchange-traded option, in or out of the money, stock or futures, is going to have *some* time value right up to the moment of expiration, and if you want to be really precise, you could say it will also expire with one tick (smallest price increment) of time value. An OTM option is worthless at that point, but if you look at an option matrix with closing prices on expiration day (might depend on product or data vendor) you'll see all the OTM options closing with 1 tick of value.

The second thing you asked about was "how much of its time value have I lost?" If the volatility has been steady or declining, you've held the option for several weeks or more, and you're selling it a week before expiration, then you've lost most of the time value that existed when you purchased the option. Even with an out of the money option, it's possible for a fair amount of time value to remain with one week to expiration, but that's only going to happen if the volatility increased since you bought it. That's a generalization - it can get a lot more complicated depending on how close to the money your about to expire option is and the skew (shape of the implied volatility curve).


Last edited by CafeGrande; September 23rd, 2014 at 12:33 AM.
Reply With Quote
 
  #3666 (permalink)
Trading Apprentice
Yreka, CA United States
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: stocks
 
Posts: 11 since Sep 2014
Thanks: 0 given, 2 received

Thanks for the reply. So let me see if I can get this straight. I purchased a monthly call for 75 cents, price goes against my position by $5, I have a week to expiry and I sell to close my call. Will this call have any value at all or have I just lost the full purchase price of that call?

Reply With Quote
 
  #3667 (permalink)
Trading for Fun
St Paul, MN, USA
 
Futures Experience: Advanced
Platform: Abacus
Broker/Data: RJO, Interactive Brokers
Favorite Futures: Commodity Futures & Options
 
Posts: 193 since Jan 2014
Thanks: 112 given, 182 received


hummingbird View Post
Thanks for the reply. So let me see if I can get this straight. I purchased a monthly call for 75 cents, price goes against my position by $5, I have a week to expiry and I sell to close my call. Will this call have any value at all or have I just lost the full purchase price of that call?

Yes, it will have some value. It's time value or extrinsic value. If you're talking about a US stock option that trades in nickle increments, it might only be worth a few nickles (or less). Sometimes, again it's the same with futures or stock options, you sell it while it still has some value, as long as commissions don't make it a wash (or a loss)

Reply With Quote
The following user says Thank You to CafeGrande for this post:
 
  #3668 (permalink)
Trading Apprentice
Yreka, CA United States
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: stocks
 
Posts: 11 since Sep 2014
Thanks: 0 given, 2 received

Thanks for your answer. It probably seemed like a stupid question, but it wasn't clear in the books I read. By the way, I didn't know you could trade futures using options, that's interesting. I always thought, for example, that if you wanted to buy options in say the emini s&p 500, you would buy them in the spy.

Reply With Quote
 
  #3669 (permalink)
World'sWorstTrader
Knoxville Tennessee USA
 
Futures Experience: Intermediate
Platform: TOS
Favorite Futures: ES, NQ, CL, /6E futures options.
 
Posts: 258 since Oct 2012
Thanks: 126 given, 75 received

Info


hummingbird View Post
Thanks for your answer. It probably seemed like a stupid question, but it wasn't clear in the books I read. By the way, I didn't know you could trade futures using options, that's interesting. I always thought, for example, that if you wanted to buy options in say the emini s&p 500, you would buy them in the spy.

You need to learn much more before you buy or sell anything. (Constructive advice.)

Reply With Quote
The following 2 users say Thank You to datahogg for this post:
 
  #3670 (permalink)
Trading Apprentice
Yreka, CA United States
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: stocks
 
Posts: 11 since Sep 2014
Thanks: 0 given, 2 received


That's good advice, thank you. I mostly scalp the Emini S&P 500 but would like swing trade other instruments on hourly and daily time frames using options to limit my risk. I have never traded with options and don't know much about them, so I thought I would stop by this forum and ask a few questions.

Reply With Quote

Reply



futures io > > > > Selling Options on Futures?

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)
 

NinjaTrader 8: Tips and Tricks (part 2)

Mar 2
 

An Afternoon With FIO member @michaelleemoore

Elite only
 

Jigsaw Trading: Keys to successfully trading the open

Mar 9

Macro view: Trump Market Risk w/Piers Curran @ Amplify Trading

Elite only

Reading the Psychology of the Market w/Brett Steenbarger & Trading Technologies

Elite only

Hybrid Machine Learning (R and TradeStation) w/Murray Ruggiero

Elite only

Spring Grains Outlook w/Sean Lusk @ Walsh Trading

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Crude Oil (CL) futures inverse pairing options Big Mike Commodities Futures Trading 8 December 12th, 2013 12:00 PM
Recommend futures, options Broker? sam1197 Brokers and Data Feeds 17 March 27th, 2013 01:42 AM
Trading Futures with options as protection Gooffy2010 Commodities Futures Trading 6 October 2nd, 2012 05:55 PM
Selling Njniatrader sam1197 NinjaTrader 22 June 28th, 2012 01:40 PM
Zen-Fire Futures options tici88 Brokers and Data Feeds 1 July 30th, 2011 10:16 AM


All times are GMT -4. The time now is 09:14 PM.

no new posts
Page generated 2017-02-25 in 0.13 seconds with 20 queries on phoenix via your IP 54.158.100.26