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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:568,944 / 5,728
Last Reply:16 Hours Ago (05:26 PM) Attachments:642

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Selling Options on Futures?

Old February 24th, 2015, 05:08 PM   #4001 (permalink)
World'sWorstTrader
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jokertrader View Post
Ron, Others

I know we want to sell options at about 0.02 delta say about 60 days out.
a) How did u navigate the big fall in CL.. is 20 bucks below enough.. maybe now yes.. but what about when oil was falling?
b) what kinda of position would u open right now?
say May (51 days) 30 puts? gives about 0.12
if oil falls say even 5 bucks that would be 0.33.. if today
but i do see thats its not bad if its gradual
and if its only by March 20th its 5 bucks below.. still we would have made money (value would be at 0.06)

So i guess patience

b) what kinda of position would u open right now?

For the CL now I would use the ratio credit spread.

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Old February 24th, 2015, 05:16 PM   #4002 (permalink)
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ron99 View Post
Wow. We made it to 4,000 posts. Thanks to everyone who contributed.

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Old February 24th, 2015, 07:14 PM   #4003 (permalink)
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Old February 24th, 2015, 07:37 PM   #4004 (permalink)
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Second try

All,

So after a bit of a reset I'm up and running again with a different broker and looking at new trades after learning my lesson the hard way with CL.

Here's what I'm thinking based on what I see in the market

1. Sell put for Coffee at $87.5 May 15th
2. Sell put for ES at $1500 April 15th
3. Sell put for CL at $29 May 15th

All of these have a delta between .01 and .02. Just wanted to get some thoughts on this. I'm waiting for a week or so to see if there's a pullback in the S&P off of the last high.
The CL is the one that gives me the most pause for thought. I may just avoid putting it on entirely given ron99's previous advice of being at least $25-$30 OTM.

I'd love to get some feedback.

Thanks
/rsm005/


Last edited by rsm005; February 24th, 2015 at 08:14 PM.
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Old February 25th, 2015, 01:29 AM   #4005 (permalink)
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rsm005 View Post
All,

So after a bit of a reset I'm up and running again with a different broker and looking at new trades after learning my lesson the hard way with CL.

Here's what I'm thinking based on what I see in the market

1. Sell put for Coffee at $87.5 May 15th
2. Sell put for ES at $1500 April 15th
3. Sell put for CL at $29 May 15th

All of these have a delta between .01 and .02. Just wanted to get some thoughts on this. I'm waiting for a week or so to see if there's a pullback in the S&P off of the last high.
The CL is the one that gives me the most pause for thought. I may just avoid putting it on entirely given ron99's previous advice of being at least $25-$30 OTM.

I'd love to get some feedback.

Thanks
/rsm005/

I am also looking fpr selling puts in coffee and WTI crude oil, but I am not sure if we have bottomed alreads. The funds started adding shorts in December, and there is still a lot of way to go. In Crude my potential entry point is around 45 $.

I do not think we will reach 87.5 $ in coffee or 29 $ in Crude, but I suggest you check the value of your options at 120 $ (coffee) and 45 $ (crude oil) - they might be rather expensive.

Best regards, Myrrdin

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Old February 25th, 2015, 01:49 AM   #4006 (permalink)
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One thought I did have for coffee was to do the following strangle.

Sell 3 calls at $300 for May 15th
Sell 3 puts for $85 for May 15th

This gets me one strike further on the put side and gives me a bit more premium. You're right about a higher downside for coffee in the near term, I read that in the latest hightower report. I'm thinking of selling the calls now and legging into the put side when the opportunity is a bit better.

I'm using TOS to give me these numbers right now so I'm not sure what the deltas, premiums, volume, and margin will be once the market goes live.

/rsm005/

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Old February 25th, 2015, 09:27 AM   #4007 (permalink)
World'sWorstTrader
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rsm005 View Post
All,

So after a bit of a reset I'm up and running again with a different broker and looking at new trades after learning my lesson the hard way with CL.

Here's what I'm thinking based on what I see in the market

1. Sell put for Coffee at $87.5 May 15th
2. Sell put for ES at $1500 April 15th
3. Sell put for CL at $29 May 15th

All of these have a delta between .01 and .02. Just wanted to get some thoughts on this. I'm waiting for a week or so to see if there's a pullback in the S&P off of the last high.
The CL is the one that gives me the most pause for thought. I may just avoid putting it on entirely given ron99's previous advice of being at least $25-$30 OTM.

I'd love to get some feedback.

Thanks
/rsm005/

3. Sell put for CL at $29 May 15th

For May CL put options I have the following position:

-8 28.5 P @ 0.19 .
Don't anticipate any problems , but you never know.

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Old February 25th, 2015, 11:44 AM   #4008 (permalink)
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rsm005 View Post
One thought I did have for coffee was to do the following strangle.

Sell 3 calls at $300 for May 15th
Sell 3 puts for $85 for May 15th

This gets me one strike further on the put side and gives me a bit more premium. You're right about a higher downside for coffee in the near term, I read that in the latest hightower report. I'm thinking of selling the calls now and legging into the put side when the opportunity is a bit better.

I'm using TOS to give me these numbers right now so I'm not sure what the deltas, premiums, volume, and margin will be once the market goes live.

/rsm005/

I intend doing it the other way round: Selling puts near a low, and selling calls some time in spring, if there is a chance.

Best regards, Myrrdin

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Old February 25th, 2015, 02:27 PM   #4009 (permalink)
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So it appears my idea of a coffee strangle is just not going to work. There's just not enough volume far enough out to make the risk tolerable. Also given the slightly higher fees on ICE is not really going to make enough money to make the trade worth it, at least not right now.

I did end up selling the strangle with oil
3 CL P25 April 16th for .04 Margin $525
3 CL C80 April 16th for .05 Margin $355

Watching coffee and S&P e-mini until the current trend shakes itself out before I step in and make a trade on the put side.

/rsm005/


Last edited by rsm005; February 25th, 2015 at 02:37 PM.
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Old February 25th, 2015, 02:40 PM   #4010 (permalink)
Market Wizard
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rsm005 View Post
So it appears my idea of a coffee strangle is just not going to work. There's just not enough volume far enough out to make the risk tolerable. Also, given the slightly higher fees on ICE is not really going to make enough money to make it palatable. At least not right now.

I did end up selling the strangle with oil
3 CL P25 April 16th for .04 Margin $525
3 CL C80 April 16th for .05 Margin $355

Watching coffee and S&P e-mini until the current trend shakes itself out before I step in and make a trade on the put side.

/rsm005/

Your margin for the call is wrong. It is 355 each not for all 3. $1065 for 3.

Do you realize that the margin for the strangle is 339 each? $1017 for 3.

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