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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:568,106 / 5,727
Last Reply:December 2nd, 2016 (12:40 PM) Attachments:642

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Selling Options on Futures?

Old March 18th, 2015, 01:34 PM   #4081 (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
Not sure if this has been discussed in this thread...I searched but didn't see anything.

How do the more sr. guys scale their operations? Is it as simple as larger positions on each trade? I've made a few other trades since my last post...mostly /ES and /GC...so it's given me time to think.

Given how far out of the money these trades normally are it's difficult to find enough volume to go beyond 5-10 contracts, so do you guys limit yourselves to that amount per trade or do you move closer to the money?

Thoughts welcome.

/rsm005/

Depends on the commodity. Some commodities I feel lucky if I can find any bids. Others I get all I want. Especially ES.

I do not move closer to ITM.

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Old March 18th, 2015, 02:29 PM   #4082 (permalink)
Elite Member
Linz Austria
 
Futures Experience: Advanced
Platform: Zaner360, Vantage, Trade Navigator
Broker/Data: DeCarley, RJO
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rsm005 View Post
Not sure if this has been discussed in this thread...I searched but didn't see anything.

How do the more sr. guys scale their operations? Is it as simple as larger positions on each trade? I've made a few other trades since my last post...mostly /ES and /GC...so it's given me time to think.

Given how far out of the money these trades normally are it's difficult to find enough volume to go beyond 5-10 contracts, so do you guys limit yourselves to that amount per trade or do you move closer to the money?

Thoughts welcome.

/rsm005/

For large orders, for which you do not find enough volume in the electroni markets, you should ask your broker to place the order in the pit. Here you should be able to get fills.

Best regards, Myrrdin

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Old March 19th, 2015, 04:52 AM   #4083 (permalink)
Trading Apprentice
Singapore
 
Futures Experience: Beginner
Platform: TOS
Favorite Futures: Futures Options
 
Posts: 2 since Mar 2015
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TradeStation Margins


Dear all

Just starting out and still hunting around for a broker with good option selling margins.

Has anybody sold FOs on TradeStation? Do they stick to SPAN or do they add a whole lot more like IB?

Many thanks

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Old March 19th, 2015, 05:43 AM   #4084 (permalink)
Trading Apprentice
Singapore
 
Futures Experience: Beginner
Platform: TOS
Favorite Futures: Futures Options
 
Posts: 2 since Mar 2015
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zhumify View Post
Dear all

Just starting out and still hunting around for a broker with good option selling margins.

Has anybody sold FOs on TradeStation? Do they stick to SPAN or do they add a whole lot more like IB?

Many thanks

Just to add on, I will consider any platform that offers information on deltas, IV and probabilities as well within the option chain, so long as they stick to SPAN.

Thanks

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Old March 19th, 2015, 08:44 AM   #4085 (permalink)
Trading Apprentice
Barcelona
 
Futures Experience: Advanced
Platform: NinjaTrader
Broker/Data: TS
Favorite Futures: Future options
 
Posts: 13 since Mar 2015
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Tradestation

Futures Edge on FIO

Are you a NinjaTrader user?

 
Hi guys!

I have been selling FOPS for a while. As many of you I began when I found Cordier's book. I like currencies futures better to commodities. I write ES options as well. I read the whole post. It took me some time but it was really interesting. I just know 2 other guys in my country they use this system to make money.

My 2 cents:

I use TS and since they improved their future's platform it is a good broker to use. They use SPAN margin.

My system is writing options 100-150 DTE with delta 0.1-0.2. I use 50% of my margin
Now I feel that RON's system is "safer" as he just use 30% of the margin and deltas<4

I discovered the wonderful SPAN margin spreadsheet and I have to thank his author to share it.

What makes me more unconformable is having a big account >500k in 1 or 2 brokers. What will it happen if a broker is in trouble are you are shorting options? I know that if you have stocks you are saved as they are assets and not cash. But when you are selling options you have liabilities.
Ron, how do you deal with it?

cheers

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Old March 19th, 2015, 09:05 AM   #4086 (permalink)
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London, UK
 
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Broker/Data: TradeStation
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Hills View Post
What makes me more unconformable is having a big account >500k in 1 or 2 brokers.

Buy LEAPS puts on your broker's own stock?



Nick

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Old March 19th, 2015, 10:48 AM   #4087 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
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Hills View Post
What makes me more unconformable is having a big account >500k in 1 or 2 brokers. What will it happen if a broker is in trouble are you are shorting options? I know that if you have stocks you are saved as they are assets and not cash. But when you are selling options you have liabilities.
Ron, how do you deal with it?

cheers

Welcome. I have accounts at 2 brokers. I was at 4 at one time but since CME added data fees at each broker I am down to two.

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Old March 19th, 2015, 02:56 PM   #4088 (permalink)
Elite Member
vancouver BC/Canada
 
Futures Experience: Beginner
Platform: Zaner360, OX
Broker/Data: DeCaley
Favorite Futures: options
 
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Thanks: 13 given, 172 received

Interesting development happening over the past few days. Thought I'd share and see if anyone has thoughts.

I built a margin calculator that tracks the margins my current positions have, DTE, P/L, etc and lets me know when I have enough free margin relative to cash to make another trade and how big that trade can be. Pretty handy.

This morning the margins on my outstanding positions dropped to the point where I could make another trade but it was rejected by my platform because I have "too many outstanding contracts". I had a limit on my account of 30 contracts total. My broker said they can lift the number but I should be very careful to do that.

Question: When you calculate risk do you calculate margins as well as the total number of outstanding contracts? Do you have contract limits on your accounts?

Does having too many contracts open, even when you're in compliance with all the margin excesses really expose your account to that much more risk?

Thanks,
/rsm005/

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Old March 19th, 2015, 03:06 PM   #4089 (permalink)
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Cleveland Ohio/United States
 
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rsm005 View Post
Interesting development happening over the past few days. Thought I'd share and see if anyone has thoughts.

I built a margin calculator that tracks the margins my current positions have, DTE, P/L, etc and lets me know when I have enough free margin relative to cash to make another trade and how big that trade can be. Pretty handy.

This morning the margins on my outstanding positions dropped to the point where I could make another trade but it was rejected by my platform because I have "too many outstanding contracts". I had a limit on my account of 30 contracts total. My broker said they can lift the number but I should be very careful to do that.

Question: When you calculate risk do you calculate margins as well as the total number of outstanding contracts? Do you have contract limits on your accounts?

Does having too many contracts open, even when you're in compliance with all the margin excesses really expose your account to that much more risk?

Thanks,
/rsm005/


I know one account I have has limits, I just ask them to increase them if I need to.

Having more contracts absolutely exposes you to more risk. And you need more contracts to make $ with low delta options.

I always try to limit the number of contracts I trade, just for risk control. Maximize $ premium, minimize # of contracts, respect delta limits is my goal...

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
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Old March 19th, 2015, 03:27 PM   #4090 (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, 3,902 received
Forum Reputation: Legendary



rsm005 View Post
Interesting development happening over the past few days. Thought I'd share and see if anyone has thoughts.

I built a margin calculator that tracks the margins my current positions have, DTE, P/L, etc and lets me know when I have enough free margin relative to cash to make another trade and how big that trade can be. Pretty handy.

This morning the margins on my outstanding positions dropped to the point where I could make another trade but it was rejected by my platform because I have "too many outstanding contracts". I had a limit on my account of 30 contracts total. My broker said they can lift the number but I should be very careful to do that.

Question: When you calculate risk do you calculate margins as well as the total number of outstanding contracts? Do you have contract limits on your accounts?

Does having too many contracts open, even when you're in compliance with all the margin excesses really expose your account to that much more risk?

Thanks,
/rsm005/

Yes to your last question.

I keep the Initial SPAN Margin from the day I entered the trade until I exit that trade. I do not recalculate my margin each day based on that day's margin to see if I have any excess. Only profits from current positions would possibly give me room to add more contracts.

For example, if I sold an option and the initial margin was $800, I keep $2400 of my total balance tied up for that contract until it is gone.

I used to do like you calculated. But I found that I ended up not having enough excess if the market moved against me later.

I know this way of trading is boring and at first appears to not be as profitable. But you will find that it is more important to keep the losers to a minimum than to make more trades and then blow up because you couldn't ride out a movement against you.

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