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Selling Options on Futures?
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Created: by ron99 Attachments:729

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Selling Options on Futures?

  #3801 (permalink)
Trading Apprentice
Toronto Ontario Canada
 
Futures Experience: Intermediate
Platform: IB TWS, IB WebTrader
Favorite Futures: ES
 
Posts: 4 since Nov 2011
Thanks: 1 given, 1 received

You're right! I was thinking emini S&P FOP. Once contract needs several thousand margin.

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  #3802 (permalink)
Trading Apprentice
Singapore
 
Futures Experience: Advanced
Platform: OX
Favorite Futures: Options
 
Posts: 1 since Nov 2014
Thanks: 0 given, 0 received

wow... this is indeed a very great forum with many interesting posts on futures options! I am very glad to have found this forum as there aren't many out there which talk about future options so extensively!

hi all in this forum, I have been selling options for a number of years, starting out with stock options initially and then moved into futures options, ES. also doing commodities options like grains, energy, etc.

wd

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  #3803 (permalink)
Market Wizard
Linz Austria
 
Futures Experience: Advanced
Platform: Zaner360, Vantage, Trade Navigator
Broker/Data: DeCarley, RJO
Favorite Futures: Commodities
 
Posts: 974 since Nov 2014
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Option selling positions


I am glad to find a forum of traders selling options. As probably many of you, I was made aware of this topic some years ago reading the book of Cordier & Gross. I trade more or less according to their suggestions, but there are exceptions. Main exception is that in cases where I have a clear opinion of the next move I also sell close to the money options. But this is only a small share of my portfolio. And in some cases I go beyond half a year of time left until expiry.

I would appreciate to discuss current and future positions here. Currently I hold

SN15 C1200
BOH15 C33
WH15 C600
SBH15 P16.5
CTK15 P60
LHJ15 C90
NGH15 C7

Recently I sold the grains, NG and CT options, some months ago SB and LH.

I would appreciate your comments, and further trade suggestions.

Best regards from Austria, Myrrdin


Last edited by myrrdin; November 21st, 2014 at 07:01 AM. Reason: Error
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  #3804 (permalink)
World'sWorstTrader
Knoxville Tennessee USA
 
Futures Experience: Intermediate
Platform: TOS
Favorite Futures: ES, NQ, CL, /6E futures options.
 
Posts: 261 since Oct 2012
Thanks: 126 given, 75 received

Hedge

Has anyone had good or bad experiences with trying to hedge deep out of the money puts with a short future
contract(s) in order to mitigate delta (minimize delta)? Thanks in advance.

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  #3805 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,652 since Jul 2011
Thanks: 770 given, 4,583 received
Forum Reputation: Legendary


myrrdin View Post
I am glad to find a forum of traders selling options. As probably many of you, I was made aware of this topic some years ago reading the book of Cordier & Gross. I trade more or less according to their suggestions, but there are exceptions. Main exception is that in cases where I have a clear opinion of the next move I also sell close to the money options. But this is only a small share of my portfolio. And in some cases I go beyond half a year of time left until expiry.

I would appreciate to discuss current and future positions here. Currently I hold

SN15 C1200
BOH15 C33
WH15 C600
SBH15 P16.5
CTK15 P60
LHJ15 C90
NGH15 C7

Recently I sold the grains, NG and CT options, some months ago SB and LH.

I would appreciate your comments, and further trade suggestions.

Best regards from Austria, Myrrdin

Wow those are extremely risky options. Some of them are ITM. I would never trade anything like those. You need to be a lot further OTM.

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The following user says Thank You to ron99 for this post:
 
  #3806 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,652 since Jul 2011
Thanks: 770 given, 4,583 received
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datahogg View Post
Has anyone had good or bad experiences with trying to hedge deep out of the money puts with a short future
contract(s) in order to mitigate delta (minimize delta)? Thanks in advance.

Mostly bad. The futures would reverse and I ended up losing money on the futures.

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  #3807 (permalink)
Market Wizard
Linz Austria
 
Futures Experience: Advanced
Platform: Zaner360, Vantage, Trade Navigator
Broker/Data: DeCarley, RJO
Favorite Futures: Commodities
 
Posts: 974 since Nov 2014
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ron99 View Post
Wow those are extremely risky options. Some of them are ITM. I would never trade anything like those. You need to be a lot further OTM.

Thank you for your comment.

As I mentioned usually some of my positions are ITM or ATM in case I have a very strong opinion concerning a market and the volatility is not sufficient to get satisfying premium (eg. currently cotton). Most of the time the number of these positions is smaller than currently.

Usually I enter positions betwees 300 and 1000 US$ per option, and delta of 0.1 - 0.2. I never trade very "cheap" options of less than 100 US$, as the number of options for a position would get too big, and, thus, the risk in case of a surprising move to the wrong direction would be significant.

Would you like to share some of your current favourite positions ?

Best regards, Myrrdin

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  #3808 (permalink)
Market Wizard
Linz Austria
 
Futures Experience: Advanced
Platform: Zaner360, Vantage, Trade Navigator
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Favorite Futures: Commodities
 
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datahogg View Post
Has anyone had good or bad experiences with trying to hedge deep out of the money puts with a short future
contract(s) in order to mitigate delta (minimize delta)? Thanks in advance.

I tried it some years ago, but was not able to avoid losses in the futures.

Best regards, Myrrdin

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  #3809 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,652 since Jul 2011
Thanks: 770 given, 4,583 received
Forum Reputation: Legendary


myrrdin View Post
Thank you for your comment.

As I mentioned usually some of my positions are ITM or ATM in case I have a very strong opinion concerning a market and the volatility is not sufficient to get satisfying premium (eg. currently cotton). Most of the time the number of these positions is smaller than currently.

Usually I enter positions betwees 300 and 1000 US$ per option, and delta of 0.1 - 0.2. I never trade very "cheap" options of less than 100 US$, as the number of options for a position would get too big, and, thus, the risk in case of a surprising move to the wrong direction would be significant.

Would you like to share some of your current favourite positions ?

Best regards, Myrrdin

I only do options with deltas < 0.03. No where near as high as you.

Nobody that has posted in this thread sells ATM or ITM options except you.

I suggest you read the thread and see what we have been doing.

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  #3810 (permalink)
Market Wizard
Linz Austria
 
Futures Experience: Advanced
Platform: Zaner360, Vantage, Trade Navigator
Broker/Data: DeCarley, RJO
Favorite Futures: Commodities
 
Posts: 974 since Nov 2014
Thanks: 1,358 given, 1,062 received
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ron99 View Post
I only do options with deltas < 0.03. No where near as high as you.

Nobody that has posted in this thread sells ATM or ITM options except you.

I suggest you read the thread and see what we have been doing.

I am aware that this thread is based on the ideas of Cordier & Gross. And I like these ideas, and most of my option selling trades since around 2005 were according to their concept. But I thought it might be interesting for some traders here to read about other concepts of selling options, which I applied successful in recent years. Anyway, in future I will only communicate and discuss trade ideas within the frame of Cordier & Gross. I hope that is ok for you.

Cordier & Gross suggest to sell options with deltas lower than 0.20 (=20 %). Thus, the trades I would like to discuss here (and I hope you allow for a small tolerance concerning delta) are

SN15 C1200
WH15 C600
NGH15 C7

I am looking forward to an interesting and fruitful discussion on these and other option selling trades.

Best regards, Myrrdin

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