Selling Options on Futures? - Options on Futures | futures.io
futures.io futures trading


Selling Options on Futures?
Started: by ron99 Views / Replies:585,057 / 5,780
Last Reply: Attachments:649

Welcome to futures.io.

Welcome, Guest!

This forum was established to help traders (especially futures traders) by openly sharing indicators, strategies, methods, trading journals and discussing the psychology of trading.

We are fundamentally different than most other trading forums:
  • We work extremely hard to keep things positive on our forums.
  • We do not tolerate rude behavior, trolling, or vendor advertising in posts.
  • We firmly believe in openness and encourage sharing. The holy grail is within you, it is not something tangible you can download.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.


You'll need to register in order to view the content of the threads and start contributing to our community. It's free and simple, and we will never resell your private information.

-- Big Mike

Reply
 649  
 
Thread Tools Search this Thread
 

Selling Options on Futures?

  #3981 (permalink)
Market Wizard
Linz Austria
 
Futures Experience: Advanced
Platform: Zaner360, Vantage, Trade Navigator
Broker/Data: DeCarley, RJO
Favorite Futures: Commodities
 
Posts: 720 since Nov 2014
Thanks: 1,077 given, 588 received


irvino81 View Post
Thank you so much for sharing, I can relate to your story in oil and silver. Too many times I go naked and get burned but I figured what if I could protect my short puts with a short futures contract or the short call with a long futures contract. In theory the trade is bullet proof. The problems come with the slippage and all the other chinanigans. Any thoughts on my risk management?

I do not like to protect my short options with futures, as there is a significant danger to get whipsawed, and loose money on the future and the option.

What you can do to reduce risk is either buy a call option above the call you have sold, or - in case of a short-time risk for your short option - buy a short-dated cheap call closer to the money.

Best regards, Myrrdin

Reply With Quote
 
  #3982 (permalink)
Trading Apprentice
dade fl
 
Futures Experience: Intermediate
Platform: Zaner 360, Tradestation, T4
Favorite Futures: Oil futures and options
 
Posts: 21 since Nov 2014
Thanks: 21 given, 7 received

I agree with buying a call/put for protection but getting whipsawed is a matter of speed and I think that's what algos are for. BTW anybody have experience with CQG professional service, Eccenica, RTS Tango from Bloomberg or any of the other Algorithm vendors with respect to price of their services?

Reply With Quote
 
  #3983 (permalink)
Trading Apprentice
Richmond, VA/USA
 
Futures Experience: None
Platform: NinjaTrader
Favorite Futures: stocks
 
Posts: 29 since Nov 2012
Thanks: 3 given, 8 received


Hey everyone,
Anyone have any thoughts on selling options on Lean Hogs lately? According to the hogs guy on Commodity Charts.com the volatility is sky high right now (limit move up yesterday, and sharp decline today) so I figure the premiums must be pretty fat right now (although I can't say for sure because I haven't been following them). His forecast is for further weakness. Would you be selling calls, because the price is moving away, or would you be selling puts because the premiums should be going up (I realize this is a "catching a falling knife" scenario...).
Which brings me to my next question: looking at the seasonal hogs charts from 5 to 30 years, hogs should be traditionally going UP into April, then leveling off for a few months. This however flies directly in the face of this guy's downward call, as well as the current chart action for 2015 so far. How are you supposed to trade seasonals if the current charts are completely out of whack with the historic charts? This seems to be happening in cattle as well, where recently the only trend has been straight up!
Very frustrating!
Someone please clue me in!

Reply With Quote
 
  #3984 (permalink)
Market Wizard
Linz Austria
 
Futures Experience: Advanced
Platform: Zaner360, Vantage, Trade Navigator
Broker/Data: DeCarley, RJO
Favorite Futures: Commodities
 
Posts: 720 since Nov 2014
Thanks: 1,077 given, 588 received


psears View Post
Hey everyone,
Anyone have any thoughts on selling options on Lean Hogs lately? According to the hogs guy on Commodity Charts.com the volatility is sky high right now (limit move up yesterday, and sharp decline today) so I figure the premiums must be pretty fat right now (although I can't say for sure because I haven't been following them). His forecast is for further weakness. Would you be selling calls, because the price is moving away, or would you be selling puts because the premiums should be going up (I realize this is a "catching a falling knife" scenario...).
Which brings me to my next question: looking at the seasonal hogs charts from 5 to 30 years, hogs should be traditionally going UP into April, then leveling off for a few months. This however flies directly in the face of this guy's downward call, as well as the current chart action for 2015 so far. How are you supposed to trade seasonals if the current charts are completely out of whack with the historic charts? This seems to be happening in cattle as well, where recently the only trend has been straight up!
Very frustrating!
Someone please clue me in!


1. I like trading seasonals, and have excellent experience with ist. But in case the chart is not in agreement with the seasonal, I do not trade them.

2. Regarding hogs, I made a lot of money selling calls. Now I am looking for selling puts. My problem: As far as I read one important reason for the weak hog prices is the strike at the ports on the west coast. Hogs that cannot be exported to China have to be sold in the US, and pressure prices. As a European, I have no idea how long this strike can go on. Anybody has an idea ?

Best regards, Myrrdin

Reply With Quote
The following user says Thank You to myrrdin for this post:
 
  #3985 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,378 since Jul 2011
Thanks: 650 given, 4,037 received
Forum Reputation: Legendary

Futures Edge on FIO

Which products do you trade?

 
First of all seasonals do not work every year.

The seasonal for Apr LH is down Feb and Mar.

Reply With Quote
 
  #3986 (permalink)
Trading Apprentice
Richmond, VA/USA
 
Futures Experience: None
Platform: NinjaTrader
Favorite Futures: stocks
 
Posts: 29 since Nov 2012
Thanks: 3 given, 8 received

Ron99, the charts I'm looking at are courtesy of Signal Trading (got the link on this thread). They have the hogs flat until mid Jan, then a sharp increase, then flat again until mid march , then another steep rise going into April, then flat again until late summer.
Who's charts are you looking at? They both can't be right

Reply With Quote
 
  #3987 (permalink)
Market Wizard
Linz Austria
 
Futures Experience: Advanced
Platform: Zaner360, Vantage, Trade Navigator
Broker/Data: DeCarley, RJO
Favorite Futures: Commodities
 
Posts: 720 since Nov 2014
Thanks: 1,077 given, 588 received


psears View Post
Ron99, the charts I'm looking at are courtesy of Signal Trading (got the link on this thread). They have the hogs flat until mid Jan, then a sharp increase, then flat again until mid march , then another steep rise going into April, then flat again until late summer.
Who's charts are you looking at? They both can't be right

According to MRCI data, it depends on which contract months you look. For the February - March period the April, May, and June contracts move downwards, July is neutral, and August and October contracts move upwards.

Best regards, Myrrdin

Reply With Quote
 
  #3988 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,378 since Jul 2011
Thanks: 650 given, 4,037 received
Forum Reputation: Legendary


psears View Post
Ron99, the charts I'm looking at are courtesy of Signal Trading (got the link on this thread). They have the hogs flat until mid Jan, then a sharp increase, then flat again until mid march , then another steep rise going into April, then flat again until late summer.
Who's charts are you looking at? They both can't be right

I'm looking at Apr using my own charts for the last 9 years. I throw out the abnormal years from the average. Like 2014.

Only 2 years out of 8 were up in Feb & Mar. 2010 & 2014.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


Here's an old chart from MRCI. Down in Feb and Mar. Notice how 30 year line is not same as 5 & 15 year lines in March. I never use the 30 year line.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


Using data from more than 10 years ago is a waste of time. Things have changed so much that current markets are nothing like 10-30 years ago. One big difference is electronic trading and large specs that weren't there years ago.

Reply With Quote
 
  #3989 (permalink)
Trading Apprentice
Richmond, VA/USA
 
Futures Experience: None
Platform: NinjaTrader
Favorite Futures: stocks
 
Posts: 29 since Nov 2012
Thanks: 3 given, 8 received

Thanks for the replies, Myrrdin and Ron99!
Ron99, those are some busy looking charts; are you actually able to glean repeatable directional trade opportunities from that kind of jumbled mess alone? Do you two combine the seasonal charts with market commentary and fundamentals?
Is it consistent enough to make recurring profits?

Reply With Quote
 
  #3990 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,378 since Jul 2011
Thanks: 650 given, 4,037 received
Forum Reputation: Legendary



psears View Post
Thanks for the replies, Myrrdin and Ron99!
Ron99, those are some busy looking charts; are you actually able to glean repeatable directional trade opportunities from that kind of jumbled mess alone?

Yes. That is why I have the yearly average on it.

Do you two combine the seasonal charts with market commentary and fundamentals?

Definitely. I wouldn't trade without doing that.

Is it consistent enough to make recurring profits?

Sometimes. That is why I sell far OTM because no one can project markets accurately. Being far OTM gives me some leeway if I am somewhat wrong.

Seasonals are a tool. They should not be your primary info to decide what to trade. Fundamentals should be the primary.

Reply With Quote

Reply



futures.io > > > > Selling Options on Futures?

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)
 

Anthony Drager: Pulling the trigger with confidence

Elite only
 

Leo Murphy: The Art and Science of Technical Analysis

Elite only
 

FuturesTrader71: Ask Me Anything

Elite only

FuturesTrader71: Information Risk in-depth

Elite only

Kevin Davey: Algorithmic Trading

Elite only

Al Brooks: TBA

Elite only

Ernie Chan: Quants (TBA)

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Crude Oil (CL) futures inverse pairing options Big Mike Commodities Futures Trading 8 December 12th, 2013 12:00 PM
Recommend futures, options Broker? sam1197 Brokers and Data Feeds 17 March 27th, 2013 01:42 AM
Trading Futures with options as protection Gooffy2010 Commodities Futures Trading 6 October 2nd, 2012 05:55 PM
Selling Njniatrader sam1197 NinjaTrader 22 June 28th, 2012 01:40 PM
Zen-Fire Futures options tici88 Brokers and Data Feeds 1 July 30th, 2011 10:16 AM


All times are GMT -4. The time now is 05:19 PM.

no new posts
Page generated 2017-01-24 in 0.15 seconds with 21 queries on phoenix via your IP 54.211.179.232