Selling Options on Futures? - Options on Futures | futures io social day trading
futures io futures trading


Selling Options on Futures?
Updated: Views / Replies:672,190 / 6,238
Created: by ron99 Attachments:729

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • 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.

-- Big Mike, Site Administrator

Reply
 729  
 
Thread Tools Search this Thread
 

Selling Options on Futures?

  #401 (permalink)
Trading for Fun
Houston, Texas
 
Futures Experience: Advanced
Platform: Interactive Brokers, OptionsXpress
Broker/Data: Options Express
Favorite Futures: Options on Futures
 
MJ888's Avatar
 
Posts: 165 since Sep 2012
Thanks: 37 given, 123 received


ron99 View Post
Raven,

If you want a little more premium how about CLj3 65 puts? Margin 348. Trading at .09 today. 73 DTE. 0.0143 Delta.

ROI% using the 12/31 settlement of 0.11 gets you 4.1%.

CL has dropped in Jan 6 years in a row. An average of $10. I sold the Marchs because they are far enough out of the money that the normal drop will not affect them because the DTE is low. Apr puts may be affected if we get the normal drop.

If you are worried about that then wait until about Jan 22nd when the bottom usually happens in CL in Jan.

But I suspect this year we won't have as much a drop because OI dropped dramatically on many commodities. CL OI dropped 80,000 in Dec. Grains dropped a ton. Probably because of traders worried about the FC.

The specs will need to add positions in the new year. More than likely they will add longs. Driving the price higher.

Problem is that the end of Feb we have to worry about the debt ceiling talks in Congress. Man I am so sick of the US Congress and how they screw the markets.

Ron

I guess you answered part of my question on your CL position as I was asking it!

Reply With Quote
 
  #402 (permalink)
Elite Member
Milton Keynes UK
 
Futures Experience: Intermediate
Platform: Investor/RT, Sierra Chart
Favorite Futures: Futures Options, CL
 
Posts: 156 since Jun 2009
Thanks: 74 given, 115 received


ron99 View Post
If futures are up and you see puts bid higher than settlement, grab them. Instant profit in your pocket.

Now that's my kind of trading. Very nice, if only I wasn't stuck in a boring office all day.

Reply With Quote
 
  #403 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,652 since Jul 2011
Thanks: 770 given, 4,582 received
Forum Reputation: Legendary



MJ888 View Post
Ron99 thanks for sharing your 2012 results and posting your first trades of the New Year. And before I forget, thank you for replying to an earlier post of mine from two weeks ago.

On your new trades for 2013, I have some questions about the CLh3 position. As you stated, CL futures were higher today. In fact, CL futures has been on an uptrend since around December 7th but yet you choose to sell puts into this uptrend. Wouldn't a pullback affect your position? I mean I highly doubt CL will drop below $75-$80 but even a $7-$8 sell off would cause your position to go negative.

If the drop of 7-8 is slow, it will not affect a 65 put that is <45 days from expiration. Higher time erosion of the premium of an option close to expiration will offset the futures drop.

Why not sell some far OTM calls? Like maybe the April 130 or 135 calls. Delta is below 0.02 and the premium is about the same if not a bit higher than the March CL 65 puts. Just curious as to your thought process for this position. Does the current trend higher not worry you? Or are you basing your trade on the seasonal tendencies of CL trading higher this time of year?

Yes I am thinking about selling Mar calls too. I just wanted to grab the puts that were bid at the previous days' settlement while I could.

Mar CL has dropped in Jan 6 years in a row. But it then rises quite strongly in Feb. But US CL inventory is 50 mil barrels over the 5 yr ave. That should keep pressure on prices from rising too much.

So oil inventories keep a lid on prices. Getting past fiscal cliff puts upward pressure on prices. Spec buying puts upward pressure on buying. Seasonal trend for Jan is down then strong up in Feb.

Net effect is probably flat for Jan and up in early Feb. So strangles could be good.


And since you have the March 65 puts in place, are you interested in establishing a strangle by selling an equal amount of March CL calls? Possibly the March 120 or 125 calls?

Wow! Your margin is indeed much much lower at OX compared to mine at IB. To put on the same trade at IB, my IM would be $681 and my MM would be $544 for each. $199 is quite good even though it is 20% above SPAN. So multiply by 65 contracts and what a huge difference! Although my fees would only be $2.32 per but obviously not having to tie up 2x-3x of my money in margin would more than make up for difference in commissions.

Once again thanks for your input!

SPAN margin for the CLh3 65 put is $166. So IB is charging 310% over SPAN?

Reply With Quote
 
  #404 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,652 since Jul 2011
Thanks: 770 given, 4,582 received
Forum Reputation: Legendary


britkid99 View Post
Nice push higher today after bullish divergence. Now moved back in to 147/155 range. This is the first proper attempt to create a HH (Higher High) after a series of LH and LL's. If we can muster a Higher Low or stay in the range that will be good for my 120/200 strangle which has already eroded over 50% each side. Anyone else still in?

I still have my Mar 250s. With the steady downward trend in futures I wasn't up for selling puts. But I think now may be the time to sell them. May 110s? Of course I should have done that on Monday.

Reply With Quote
 
  #405 (permalink)
Trading for Fun
Houston, Texas
 
Futures Experience: Advanced
Platform: Interactive Brokers, OptionsXpress
Broker/Data: Options Express
Favorite Futures: Options on Futures
 
MJ888's Avatar
 
Posts: 165 since Sep 2012
Thanks: 37 given, 123 received


ron99 View Post
SPAN margin for the CLh3 65 put is $166. So IB is charging 310% over SPAN?

yeah yeah! I need to MOVE my account out of IB. Margin is sick and is killing my ROI

Reply With Quote
 
  #406 (permalink)
Trading for Fun
Huntsville AL/USA
 
Futures Experience: Intermediate
Platform: optionsXpress
Favorite Futures: Options on Futures
 
Posts: 54 since May 2012
Thanks: 80 given, 26 received


ron99 View Post
Raven,

If you want a little more premium how about CLj3 65 puts? Margin 348. Trading at .09 today. 73 DTE. 0.0143 Delta.

ROI% using the 12/31 settlement of 0.11 gets you 4.1%.

CL has dropped in Jan 6 years in a row. An average of $10. I sold the Marchs because they are far enough out of the money that the normal drop will not affect them because the DTE is low. Apr puts may be affected if we get the normal drop.

If you are worried about that then wait until about Jan 22nd when the bottom usually happens in CL in Jan.

But I suspect this year we won't have as much a drop because OI dropped dramatically on many commodities. CL OI dropped 80,000 in Dec. Grains dropped a ton. Probably because of traders worried about the FC.

The specs will need to add positions in the new year. More than likely they will add longs. Driving the price higher.

Problem is that the end of Feb we have to worry about the debt ceiling talks in Congress. Man I am so sick of the US Congress and how they screw the markets.

Ron

I think those would work great. I am also going to look at the calls. As you mentioned the fundamentals (high inventories) should keep a lid on CL over the next few months.

Reply With Quote
 
  #407 (permalink)
Trading for Fun
Houston, Texas
 
Futures Experience: Advanced
Platform: Interactive Brokers, OptionsXpress
Broker/Data: Options Express
Favorite Futures: Options on Futures
 
MJ888's Avatar
 
Posts: 165 since Sep 2012
Thanks: 37 given, 123 received

Ron99, you mentioned that you also traded some futures contracts. Did you trade them using OX? I signed up for a Virtual Account just now and I am testing it. So far I am not at all impressed with their futures trading setup. Unless the real account platform is something different, it would be hard to day trade any futures contract thru OX. I have to wait for the page to refresh to get real time data.

What I really wanted to do with the Virtual Account was to try out trading futures options but I was told that OX does not have it for the Virtual Account. I suppose it should be fine for trading far OTM options but I still don't like that the page needs to be refreshed to get real time quotes.

Am I missing something here?

MJ888

Reply With Quote
 
  #408 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,652 since Jul 2011
Thanks: 770 given, 4,582 received
Forum Reputation: Legendary


MJ888 View Post
Ron99, you mentioned that you also traded some futures contracts. Did you trade them using OX? I signed up for a Virtual Account just now and I am testing it. So far I am not at all impressed with their futures trading setup. Unless the real account platform is something different, it would be hard to day trade any futures contract thru OX. I have to wait for the page to refresh to get real time data.

What I really wanted to do with the Virtual Account was to try out trading futures options but I was told that OX does not have it for the Virtual Account. I suppose it should be fine for trading far OTM options but I still don't like that the page needs to be refreshed to get real time quotes.

Am I missing something here?

MJ888

They have streaming realtime charts for futures. You can trade off of that page. The options chains page can be set to streaming for realtime quotes.

Admittedly it is not as fast as other places, but since I don't day trade, I don't need the speed.


Last edited by ron99; January 3rd, 2013 at 12:14 AM.
Reply With Quote
 
  #409 (permalink)
Trading Apprentice
Toronto/Canada
 
Futures Experience: Advanced
Platform: Sierra Charts
Favorite Futures: Options
 
Posts: 25 since Oct 2012
Thanks: 20 given, 5 received


britkid99 View Post
Nice push higher today after bullish divergence. Now moved back in to 147/155 range. This is the first proper attempt to create a HH (Higher High) after a series of LH and LL's. If we can muster a Higher Low or stay in the range that will be good for my 120/200 strangle which has already eroded over 50% each side. Anyone else still in?

Hi Brit

I have Feb 135 X 200 and Mar 120 X 200 Both doing well although the 135 got a little hot for awhile.
Whats your outlook going into spring for Coffee? I'm thinking prices will stay down.
Cheers & good trading

Reply With Quote
 
  #410 (permalink)
Trading Apprentice
Toronto/Canada
 
Futures Experience: Advanced
Platform: Sierra Charts
Favorite Futures: Options
 
Posts: 25 since Oct 2012
Thanks: 20 given, 5 received



ron99 View Post

Sold 1 RBg3 2.30 put for 0.0013. It was bid there 1 time. Settled at 0.0008. Futures are way higher today. Margin 751 (OX 20% higher than SPAN) cash excess 1502. 27 DTE. 5.21 fees. ROI 2.4% per month.

Margin on IB for this is 3298 to sell 1 option!!

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)

July Journal Challenge w/$1100 in prizes from TopstepTrader

July
 

An Afternoon with FIO member Softsoap

Elite only

Battlestations: Show us your trading desks and win $750 in prizes

August
 

Extended Ask Me Anything w/Brett Steenbarger

Elite only

Prototyping Python Strategies (part 3) w/Ran Aroussi

Elite only

Brannigan Barrett w/Axia Futures

Elite only

Introduction to Phillip Capital futures brokerage services

Aug TBD

How Monte Carlo Analysis Can Help Your Trading w/Kevin Davey

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 11:00 AM
Recommend futures, options Broker? sam1197 Reviews of Brokers and Data Feeds 17 March 27th, 2013 12:42 AM
Trading Futures with options as protection Gooffy2010 Commodities Futures Trading 6 October 2nd, 2012 04:55 PM
Selling Njniatrader sam1197 NinjaTrader 22 June 28th, 2012 12:40 PM
Zen-Fire Futures options tici88 Reviews of Brokers and Data Feeds 1 July 30th, 2011 09:16 AM


All times are GMT -4. The time now is 04:48 PM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-07-27 in 0.10 seconds with 20 queries on phoenix via your IP 54.198.104.234