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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:568,414 / 5,727
Last Reply:December 2nd, 2016 (12:40 PM) Attachments:642

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Selling Options on Futures?

Old January 28th, 2015, 01:28 PM   #3921 (permalink)
World'sWorstTrader
Knoxville Tennessee USA
 
Futures Experience: Intermediate
Platform: TOS
Favorite Futures: ES, NQ, CL, /6E futures options.
 
Posts: 257 since Oct 2012
Thanks: 126 given, 75 received

CL


rsm005 View Post
I've gone through a bulk of the Gross/Cordier materials and they have said that a "naked" option isn't an automatic death sentence if it's managed properly. I have a hard and fast exit if the premium reaches 200% of what I paid, no exceptions. However I can see that I'm closer to the money than my gut would like, as john mentioned it would explain the nerves. Combine that with the feedback I received on this thread lead me to modify my trade this morning to include some protection in the event the price moves against me.

I bought 4 March15 calls at $57.5 putting me into a 1/3 ratio spread. Given the price decline this morning it was a very cheap insurance policy at $200.

Interesting observation, even though the price of oil moved in my favor OX increased my MM because of "volatility" accoring to the broker moving the MM from ~15k to ~21k. The addition of the insurance policy brought it down substantially, from ~21k to ~13k but still. Ron's rule of 3x in cash is proving to be a necessity more than a best practice.

I don't have enough cash to place a trade on the downside but would probably do another Ratio Spread on the put side at the $25 mark given it's trading at .05 right now. Maybe if the margins come down a bit more as time keeps marching on.

Thanks,
/A/

I don't have enough cash to place a trade on the downside
You might check. put side may not increase the margin much.

I bought 4 March15 calls at $57.5
What strike?

This thread is a great place to obtain information and ideas, but your money is at risk.
Decisions are yours alone.

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Old January 28th, 2015, 01:31 PM   #3922 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,323 since Jul 2011
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rsm005 View Post
I've gone through a bulk of the Gross/Cordier materials and they have said that a "naked" option isn't an automatic death sentence if it's managed properly. I have a hard and fast exit if the premium reaches 200% of what I paid, no exceptions. However I can see that I'm closer to the money than my gut would like, as john mentioned it would explain the nerves. Combine that with the feedback I received on this thread lead me to modify my trade this morning to include some protection in the event the price moves against me.

I bought 4 March15 calls at $57.5 putting me into a 1/3 ratio spread. Given the price decline this morning it was a very cheap insurance policy at $200.

Interesting observation, even though the price of oil moved in my favor OX increased my MM because of "volatility" accoring to the broker moving the MM from ~15k to ~21k. The addition of the insurance policy brought it down substantially, from ~21k to ~13k but still. Ron's rule of 3x in cash is proving to be a necessity more than a best practice.

I don't have enough cash to place a trade on the downside but would probably do another Ratio Spread on the put side at the $25 mark given it's trading at .05 right now. Maybe if the margins come down a bit more as time keeps marching on.

Thanks,
/A/

CL was higher yesterday, which was moving against you. That is why your margin increased. Margin is calculated mainly based on the prior day's price movement (and other factors). Most FCMs do not recalculate it during the day.

Mar CL $25 puts are offered at 0.01.

A lot of times if you have on a call spread you can put on a put spread for no additional margin. (except at OX, who if they haven't fixed it yet, still charge too much for the first spread but correctly charge for the remaining spreads)

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Old January 28th, 2015, 01:33 PM   #3923 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,323 since Jul 2011
Thanks: 634 given, 3,903 received
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datahogg View Post
I don't have enough cash to place a trade on the downside
You might check. put side may not increase the margin much.

I bought 4 March15 calls at $57.5
What strike?

This thread is a great place to obtain information and ideas, but your money is at risk.
Decisions are yours alone.

His strike is 57.50.

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Old January 28th, 2015, 01:53 PM   #3924 (permalink)
Elite Member
vancouver BC/Canada
 
Futures Experience: Beginner
Platform: Zaner360, OX
Broker/Data: DeCaley
Favorite Futures: options
 
Posts: 213 since Jan 2015
Thanks: 13 given, 172 received


ron99 View Post
CL was higher yesterday, which was moving against you. That is why your margin increased. Margin is calculated mainly based on the prior day's price movement (and other factors). Most FCMs do not recalculate it during the day.

Mar CL $25 puts are offered at 0.01.

A lot of times if you have on a call spread you can put on a put spread for no additional margin. (except at OX, who if they haven't fixed it yet, still charge too much for the first spread but correctly charge for the remaining spreads)



Sorry, I meant to say the CL April15 not March15. Taking your advice of looking futher out.

/A/

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Old January 29th, 2015, 02:45 PM   #3925 (permalink)
Market Wizard
OH
 
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Futures Edge on FIO
Here are my 2014 results for selling options. These are options closed in 2014.

I did 9 losing trades of 245 contracts that were net losers of $76,042.58. 7 of these were NG closed in Jan 2014.
I did 364 profitable trades of 10,191 contracts that had a net profit of $349,488.68.

So total was net +$273,446.10. Winning percentage of trades was 97.6%.

I had sold options in CC, CL, CT, DA, ES, GC, HO, KC, LC, NG, RB, & S.

Since 2008 I have made 4,797 trades selling 60,484 contracts with a net profit of $639,598.12.

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Old January 29th, 2015, 02:54 PM   #3926 (permalink)
Elite Member
Chicago, IL USA
 
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Congratulations! That's great. It sounds like 2014 may have been your best year ever ... hopefully 2015 will be even better!

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Old January 29th, 2015, 04:06 PM   #3927 (permalink)
World'sWorstTrader
Knoxville Tennessee USA
 
Futures Experience: Intermediate
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Favorite Futures: ES, NQ, CL, /6E futures options.
 
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Thanks: 126 given, 75 received

Curious


ron99 View Post
Here are my 2014 results for selling options. These are options closed in 2014.

I did 9 losing trades of 245 contracts that were net losers of $76,042.58. 7 of these were NG closed in Jan 2014.
I did 364 profitable trades of 10,191 contracts that had a net profit of $349,488.68.

So total was net +$273,446.10. Winning percentage of trades was 97.6%.

I had sold options in CC, CL, CT, DA, ES, GC, HO, KC, LC, NG, RB, & S.

Since 2008 I have made 4,797 trades selling 60,484 contracts with a net profit of $639,598.12.

What was the percentage gain for 2014?

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Old January 29th, 2015, 04:19 PM   #3928 (permalink)
Elite Member
Prague, Czech Republic
 
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datahogg View Post
What was the percentage gain for 2014?

I had the same question :-)

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Old January 29th, 2015, 05:37 PM   #3929 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
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Thanks: 634 given, 3,903 received
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datahogg View Post
What was the percentage gain for 2014?

I don't have an accurate number for that looking at the increase in my accounts because I made several other types of trades in my accounts.

If I take the monthly ROI for each selling option trade and do a weighted average based on number of contracts, I get a monthly ROI of 3.8%.

There were 21 trades that I only held 7-20 days and the monthly return was 34-162% on them. 52 of the trades were at 10-20%. 56 at 5-10%. 235 at <5%.

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Old January 30th, 2015, 07:57 AM   #3930 (permalink)
Trading Apprentice
TPE, TW
 
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Excellent results, power of compounding..you made 273k in '14 compared to 366k of previous 6 years. Every year will look better and better !

I also had my best year in terms of low draw downs.
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I added futures selling in June, I only traded CL, can't find enough liquidity in other symbols. I find utilizing the excess cash to do other trades (that can be closed any time whenever CL margin increases.) makes a great combination.

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