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Selling Options on Futures?
Started: by ron99 Views / Replies:609,487 / 5,869
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Selling Options on Futures?

  #3671 (permalink)
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hummingbird View Post
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.

If you're trading in a taxable account, section 1256 status for regulated, exchange-traded futures and futures options can be a big time saver (accounting) and tax-saver.

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  #3672 (permalink)
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Thanks for the heads up on that 1256. I found a good article explaining more of the details and book marked it.

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  #3673 (permalink)
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San Diego, CA
 
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Ron, et al.

I'm wondering if you can double-check my understanding of this thread. Looking at the SPAN data published today and CL, I see really good ROI for CLX4 trades (23 DTE). For example at 0.03 for the 79 Puts would be a 5.8% return (7.6% monthly) and the 105 Calls would be a 5% ROI (6.5% monthly). These are -2.5 and 1.5 deltas according to TOS.

I thought maybe 23 DTE was too close to enter a trade (being new to this). I can open trades in CLZ4 but the monthly returns I see are about half what they are for CLX4 (~3-3.75%). But clearly, the are much further OOM.

Would you advocate choosing something like the CLZ4 70 Put over the CLX4 79?

I don't have a feel for how CL can move in 23 days yet, but even though the 79 has a 2.5delta, its only 12 points away. I'm guessing CL could move that fast.

Thanks
(Still only 40% through this enormous thread .

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  #3674 (permalink)
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dbh21 View Post
Ron, et al.

I'm wondering if you can double-check my understanding of this thread. Looking at the SPAN data published today and CL, I see really good ROI for CLX4 trades (23 DTE). For example at 0.03 for the 79 Puts would be a 5.8% return (7.6% monthly) and the 105 Calls would be a 5% ROI (6.5% monthly). These are -2.5 and 1.5 deltas according to TOS.

I thought maybe 23 DTE was too close to enter a trade (being new to this). I can open trades in CLZ4 but the monthly returns I see are about half what they are for CLX4 (~3-3.75%). But clearly, the are much further OOM.

Would you advocate choosing something like the CLZ4 70 Put over the CLX4 79?

I don't have a feel for how CL can move in 23 days yet, but even though the 79 has a 2.5delta, its only 12 points away. I'm guessing CL could move that fast.

Thanks
(Still only 40% through this enormous thread .

Well done for getting 40% through the thread - the size of it must put most people off completely.

Your ROIs look fairly close to mine. If you go to the PC-SPAN thread https://futures.io/options-cfd-trading/29125-pc-span.html you'll find Dudetooth's magnificent spreadsheet that calculates ROIs for you, in addition to many other things.

Further on in this thread Ron99 has a rule of thumb for CL - he has a minimum distance of 20 points for Puts and 25 points for Calls. Also, if you move further out in time you can significantly improve your ROI if you buy back your options when the majority of the premium has been earned.

So the bad news is I guess you've got some more reading to do

HTH

Chris

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  #3675 (permalink)
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Thanks Chris.

I've been using Dudetooth's excel sheet. Frankly its the finest VB programming I've seen (VB is very icky).

I'm still reading, but I read 15-20 points for CL on the puts. Also, he'd never touch anything > 75 or less than 120.


Quoting 
Also, if you move further out in time you can significantly improve your ROI if you buy back your options when the majority of the premium has been earned.

I get this concept, but how far out are you talking? The 70Puts 55 days out are 0.03, and the 70 Puts 84 days out are 0.08. So assuming the market is relatively stable, there should be roughly 0.05 of profit within ~30 days of selling the puts 84 days out. Does that sound correct?

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  #3676 (permalink)
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place a trade

I can't even place the trade at OX if there is no open interest at a strike, then who is the first one at each strike to open a trade? wondering...

I plan to STO CLF5 68p and CLF5118C, but I can't place both at OX.

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  #3677 (permalink)
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daydayup8 View Post
I can't even place the trade at OX if there is no open interest at a strike, then who is the first one at each strike to open a trade? wondering...

I plan to STO CLF5 68p and CLF5118C, but I can't place both at OX.

Someone at a brokerage that allows trading 0 interest strikes...

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
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  #3678 (permalink)
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kevinkdog View Post
Someone at a brokerage that allows trading 0 interest strikes...

I remember RON once said in this thread he sometimes is the first one to open a trade. i maybe wrong, just have this impression.

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  #3679 (permalink)
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daydayup8 View Post
I remember RON once said in this thread he sometimes is the first one to open a trade. i maybe wrong, just have this impression.

He doesn't use OX.

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
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  #3680 (permalink)
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kevinkdog View Post
He doesn't use OX.

I know he has DeCarley, does that mean some brokerages have advantages over other brokers?

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