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Selling Options on Futures?
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Selling Options on Futures?

  #3681 (permalink)
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daydayup8 View Post
I know he has DeCarley, does that mean some brokerages have advantages over other brokers?

They have different rules they adhere to, but that doesn't mean it is an advantage for one broker or not.

You can always call in the order to OX, and I think they allow you to trade 0 interest then.

Question for you: why not just find a comparable option that has open interest, and then trade that?

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  #3682 (permalink)
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kevinkdog View Post
They have different rules they adhere to, but that doesn't mean it is an advantage for one broker or not.

You can always call in the order to OX, and I think they allow you to trade 0 interest then.

Question for you: why not just find a comparable option that has open interest, and then trade that?

CLF5 65P, bid 0.02, ask 0.04, 70P bid 0.04, ask 0.08.
Right now, CLF5 is about 91.7, I want to 24, 25 OTM of the price to be safe, so, 70P feels a little risky, 65P feels too little meat.
I have watched CL for quite some time, I got my first trade yesterday at 0.01 CLZ4 65P (most of you don't even consider or maybe take profit at that price:-). I am trying to get the second trade. I always feel CL or NG risky, so I want to be as much as OTM possible.

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  #3683 (permalink)
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dbh21 View Post
That helps. My understanding of SPAN is it tests 16 different combinations of price and vol movement to come up with the value. In that case while it is not the max of one side, it is not the sum either.

But I am still confused by
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So this says the Min risk is 660, and the Buying Power effect 780. Given these are no where near 229 and 400, it looks like they are adding them. I'm going to have to ask them to clarify. Just want to make sure I am not asking dumb questions.

I finally heard back from TOS (customer support is very lacking). Apparently they have a SOM (Short Option Minimum) of 330 per option. I think this is far in excess of the SPAN minimum, and it ends up overriding the SPAN calculation. The net effect is there is no benefit to trading FOTM strangles at TOS from what I can tell. Bah

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  #3684 (permalink)
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daydayup8 View Post
CLF5 65P, bid 0.02, ask 0.04, 70P bid 0.04, ask 0.08.
Right now, CLF5 is about 91.7, I want to 24, 25 OTM of the price to be safe, so, 70P feels a little risky, 65P feels too little meat.
I have watched CL for quite some time, I got my first trade yesterday at 0.01 CLZ4 65P (most of you don't even consider or maybe take profit at that price:-). I am trying to get the second trade. I always feel CL or NG risky, so I want to be as much as OTM possible.

What is your net profit going to be on those CLZ4 65P? $5? Is that really worth the unlimited risk involved? Your ROI may be over 2%, but you'd have to sell a bunch (20!!!) to make $100. 20 contracts gets unwieldy really fast if prices go against you...

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Last edited by kevinkdog; September 24th, 2014 at 04:10 PM.
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  #3685 (permalink)
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kevinkdog View Post
What is your net profit going to be on those CLZ4 65P? $5? Is that really worth the unlimited risk involved? Your ROI may be over 2%, but you'd have to sell a bunch (20!!!) to make $100. 20 contracts gets unwieldy really fast if prices go against you...



I sold 4 @0.01, IM total 145.2, excess 290.4, delta 0.00, DTE 55, ROI about 5% (still getting free trades in OX). You are right, I will be more cautious, just could not find the right strike. I am still in the testing mode. What CL position you have now if you don't mind?

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  #3686 (permalink)
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Just look at CLF5 70P, it had price 0.12 yesterday, 0.07 today, I wish I had sold that strike with the same timing I sold the CLZ465p.
just couldn't do that as I think 70P is too risky.

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  #3687 (permalink)
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daydayup8 View Post
I sold 4 @0.01, IM total 145.2, excess 290.4, delta 0.00, DTE 55, ROI about 5% (still getting free trades in OX). You are right, I will be more cautious, just could not find the right strike. I am still in the testing mode. What CL position you have now if you don't mind?

I have some Dec 72 and 74, and some Nov 80s. I put most of those on a while ago, though.

Kevin

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  #3688 (permalink)
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What's gotten into natural gas?

The implied volatility has been on a steady march higher and it's accelerated recently. Pretty dramatic, even in the forward months (March shown). Seems odd ... shoulder season, fairly tight trading range for the last two months, building stocks back up at a healthy clip, no hurricanes and so on. Last year the same time period saw IV flat as a board until right after Thanksgiving. Any ideas? I know the storage report is in the a.m. but IV has moved higher right through those for the last couple of weeks.

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  #3689 (permalink)
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dbh21 View Post
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.



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?

Yes that sounds about right. I've had good trades with entries around 0.07/0.08 and exiting at 0.02/0.03.

I've read somewhere one rule of thumb is to exit when 2/3rds of the premium has been gained.

Ron discusses this topic with regards ES from post # 3130 https://futures.io/options-cfd-trading/12309-selling-options-futures-313.html#post398928


Chris

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  #3690 (permalink)
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CafeGrande View Post
The implied volatility has been on a steady march higher and it's accelerated recently. Pretty dramatic, even in the forward months (March shown). Seems odd ... shoulder season, fairly tight trading range for the last two months, building stocks back up at a healthy clip, no hurricanes and so on. Last year the same time period saw IV flat as a board until right after Thanksgiving. Any ideas? I know the storage report is in the a.m. but IV has moved higher right through those for the last couple of weeks.

Summer is over, Winter approaches, time to start banging the drums of fear...

More seriously it is true we have been "building stocks back up at a healthy clip" in fact I believe we have injected more gas this injection season than any other on record. The fact still remains though that stocks are currently 11% below last years stock level and 12% below the 5 year average. ICE's end of season storage futures are currently 3515/3540 which would imply that at the end of the injection season we will still be 8% below last years stock levels. If we go into winter 8% below last year, and then get another winter the same as last year ....

Weekly Natural Gas Storage Report - EIA
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