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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:567,999 / 5,727
Last Reply:Yesterday (12:40 PM) Attachments:642

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Selling Options on Futures?

Old December 18th, 2014, 09:08 PM   #3861 (permalink)
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vmaiya73 View Post
So bought the new option selling book from James Cordier's website and signed up for some stuff and got sent a news letter for december.

He is recommending selling the march 8.5 natural gas calls.

any thoughts ?

thanks

V

Nat gas is called the widow maker. If you are going to go with that position I would buy 2 8.45 calls now that nat gas is below 4 and those calls are super cheap, I'll wait for the first spike and then start thinking about selling the 8.5 calls. Because that premium might look awesome now but if the futures explode from 3.66 to 5 for no reason and then they explode again to 6 for no reason... the premium is going to do this to you---->

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Old December 18th, 2014, 09:33 PM   #3862 (permalink)
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irvino81 View Post
Nat gas is called the widow maker. If you are going to go with that position I would buy 2 8.45 calls now that nat gas is below 4 and those calls are super cheap, I'll wait for the first spike and then start thinking about selling the 8.5 calls. Because that premium might look awesome now but if the futures explode from 3.66 to 5 for no reason and then they explode again to 6 for no reason... the premium is going to do this to you---->

Mar 8.45 calls have a OI of 4. Stick with major prices like 8.00 or 8.50 that have vol and OI. Because if you want in or out nobody will be there for you.

I think going over 8.00 is getting too far OTM for buying. A 8.00 call is only one tick or $10 more than a 8.50. 7.00 call is only $50 more than 8.00. And the delta is more than double.

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Old December 18th, 2014, 10:46 PM   #3863 (permalink)
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thanks guys for the input

V

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Old December 22nd, 2014, 02:12 PM   #3864 (permalink)
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Nat gas calls ???

Morning everybody,

So i did end up selling a few contracts based upon Cordier's newsletter----NG 8.5 March Calls

Today even though Natty is down big the March 8.5 calls gained in value. Is this telling me that traders are predicting a big move coming by March or has option prices just not caught up with whats going on today.

thanks

V

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Old December 22nd, 2014, 03:01 PM   #3865 (permalink)
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Futures Edge on FIO
Hi V, I dont think the price increase is due to the drop in the underlying futures. I think those calls went up because they were cheap when you sold them, or there is no real interest in them and what you think is an increase is just the ask price that stays there no mater what, or the price was so close to zero when you sold the calls they cannot go any lower. Selling premium can only be done when premium is there. In my humble opinion.
A better idea due to this huge drop in the futures and considering the winter is only begining would be to sell a put spread.

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Old December 24th, 2014, 01:41 PM   #3866 (permalink)
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options on es as opposed to spx

Can anybody explain to me the pro's and con's of selling OTM spreads on the ES as opposed to the spx. Never really traded futures much and would like to start selling credit spreads on these?
Any advice would be much appreciated
Thanks

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Old December 24th, 2014, 02:48 PM   #3867 (permalink)
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danny770 View Post
Can anybody explain to me the pro's and con's of selling OTM spreads on the ES as opposed to the spx. Never really traded futures much and would like to start selling credit spreads on these?
Any advice would be much appreciated
Thanks

Different size, depending on how you position size.

Margin is generally lower (if you dont have portfolio margining) on the futures INITIALLY. When BIG moves occur, futures margins increases much faster than equities/indices.

Futures has the contract as the underlying in case of exercises, indices only cash is the underlying.

The index has better liquidity and much bigger players.

Futures has longer trading hours.

---

Upto you to decide which suits your conditions better.

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Old December 24th, 2014, 02:59 PM   #3868 (permalink)
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danny770 View Post
Can anybody explain to me the pro's and con's of selling OTM spreads on the ES as opposed to the spx. Never really traded futures much and would like to start selling credit spreads on these?
Any advice would be much appreciated
Thanks

Hi Danny, I would add that when you trade futures on an index from quarter to quarter the futures contracts have different values. The SPX has to accommodate for those differences and at the end of the quarter the SPX can go up or down even if the index is not going anywhere. So unless you are planning on capitalizing on that end of quarter event, I would be mindful of the difference. Good luck.

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Old December 30th, 2014, 02:43 PM   #3869 (permalink)
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broker

which brokers are better to sell options on Futures?
Options xpress? TOS? IB?

Thanks

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Old December 30th, 2014, 03:48 PM   #3870 (permalink)
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danny770 View Post
which brokers are better to sell options on Futures?
Options xpress? TOS? IB?

Thanks

Never ever sell options at IB. They don't want you there selling options. Sky high margins on short options.

TOS doesn't do options on all commodities. I don't know anything else about them. Never traded there.

OX sometimes has higher margin.

Others can tell you about TradeStation.

DeCarley is the best that I have found.

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