Selling Options on Futures? (Page 418) - Options on Futures | futures.io
futures.io futures trading
 

Go Back   futures.io

> Futures Trading, News, Charts and Platforms > Traders Hideout > Options on Futures


Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:568,534 / 5,727
Last Reply:December 2nd, 2016 (12:40 PM) Attachments:642

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
 642  
 
Thread Tools Search this Thread

Selling Options on Futures?

Old May 14th, 2015, 01:58 PM   #4171 (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

The idea of investing in ES really appeals to me ever since I saw the videos from SuperTrader Karen. The only other thing that's kept me from moving forward is this never ending chatter about an upcoming correction. I know there's no way to predict it but for whatever reason, rational or not, that fear has kept me from moving forward with it.

Is there a different psychology to trading ES than other futures?

/rsm005/

Reply With Quote
     

Old May 14th, 2015, 02:18 PM   #4172 (permalink)
Elite Member
Dallas, Texas
 
Futures Experience: Beginner
Platform: TOS
Favorite Futures: IWM Options
 
Posts: 175 since Oct 2012
Thanks: 417 given, 90 received


effective View Post
You will be assigned futures, but this way of thinking really makes no sense in this context. If the violent move occurs you just get out at whatever criteria you SET BEFOREHAND, wait till things settled down, and then get back in.

This would have been the worst possible outcome during the flash crash. Luckily I was away from my computer and phone at the time and I didn't take any drastic measures. I wasn't even assigned any of my positions, even though I held several in the money put contracts at the time during the flash crash

Reply With Quote
     

Old May 14th, 2015, 02:32 PM   #4173 (permalink)
10 out of 10
Sacramento, CA
 
Futures Experience: None
Platform: None
Broker/Data: OX and DeCarley
Favorite Futures: Futures options
 
eudamonia's Avatar
 
Posts: 310 since Jul 2010
Thanks: 299 given, 423 received



ron99 View Post
My QST is a little weird but it does give me option prices for the Nov 2011 970 put for 8/08/11. 38.50. It won't give me the price on 7/11/11 or 8/09/11. It does give me the price on 8/12/11. 19.75. ??? I don't know for sure if that is correct.

It won't give me 2010 option prices at all. It won't give me any volatility numbers at all.

Thanks for your work.

Thanks for providing that. Yes, we should keep in mind that the model will not perfectly match actual option prices for a variety of reasons (buying/selling sentiment, slight errors in data, etc.). Particularly during times of panic the market will price in extra fear factor beyond what the model is predicting.

Reply With Quote
     

Old May 14th, 2015, 02:38 PM   #4174 (permalink)
Elite Member
Dallas, Texas
 
Futures Experience: Beginner
Platform: TOS
Favorite Futures: IWM Options
 
Posts: 175 since Oct 2012
Thanks: 417 given, 90 received


rsm005 View Post
Interesting...would this same strategy work with SPY or SPX? My biggest fear with trading the S&P is getting slammed with a huge move down. I'm almost thinking of trading with enough capital to just tolerate getting assigned, if it happens, and sell calls until I can get out. I know a few people who do this with individual stocks. I'll give it a try with paper trading and see what happens. Right now I'm just waiting out my current positions...

/rsm005/


effective View Post
You will be assigned futures, but this way of thinking really makes no sense in this context. If the violent move occurs you just get out at whatever criteria you SET BEFOREHAND, wait till things settled down, and then get back in.

The futures would be cash settled at expiration of the contract and SPX is cash settled unlike SPY which is a ETF.
IMHO SPY would be the way to go for just starting out. If you were assigned a contract you would be looking 20k versus 200k with SPX and ES

Reply With Quote
     

Old May 14th, 2015, 02:49 PM   #4175 (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
Forum Reputation: Legendary

Futures Edge on FIO

Are you a NinjaTrader user?

 

rsm005 View Post
The idea of investing in ES really appeals to me ever since I saw the videos from SuperTrader Karen. The only other thing that's kept me from moving forward is this never ending chatter about an upcoming correction. I know there's no way to predict it but for whatever reason, rational or not, that fear has kept me from moving forward with it.

Is there a different psychology to trading ES than other futures?

/rsm005/

That chatter about a correction has been going on for years. You have to ignore chatter and study fundamentals that would predict a recession. I missed that in 2008 but I am ready to predict one when it comes.

Karen was the one that gave me the idea for my strategy. I just took her idea and changed it to suit me. For the better IMO.

Look at my table https://futures.io/options-cfd-trading/12309-selling-options-futures-412.html#post490353

The biggest drop since the recession was the gov shutdown and credit downgrade in 2011. That was totally foreseen. They were talking about a shutdown for days before it happened.

The next biggest drop in 30 days was 157.75. That is easily able to be rode out with excess.

Karen says in one of the videos that she doesn't pay attention to outside fundamentals. At first I wondered about that but I have come around to believing that and I now just put puts on without any regard for outside influences. When I think to myself what will ES do in the next 20 days I have no clue. Nobody does really.

But if something like a gov shutdown or war or other thing was about to happen that is when I would get out.

I believe that Karen hasn't had a losing month since 2011. I haven't lost money on a short ES put since 2011. 34,629 options total. 75 losing contracts (lost 3,459 net). 99.8% winners. Made a net profit of $1,633,353.20 on all ES puts in 5 years.

Reply With Quote
     
The following 13 users say Thank You to ron99 for this post:
     

Old May 14th, 2015, 02:50 PM   #4176 (permalink)
10 out of 10
Sacramento, CA
 
Futures Experience: None
Platform: None
Broker/Data: OX and DeCarley
Favorite Futures: Futures options
 
eudamonia's Avatar
 
Posts: 310 since Jul 2010
Thanks: 299 given, 423 received


blb014 View Post
The futures would be cash settled at expiration of the contract and SPX is cash settled unlike SPY which is a ETF.
IMHO SPY would be the way to go for just starting out. If you were assigned a contract you would be looking 20k versus 200k with SPX and ES

Slight correction:

ES notional value at 2116 (current price) is equal to 2116 X 50 (the big point value) = $105,800. However, if you are assigned margin for the ES is ~$5,000 or 21:1 leverage. This would only apply if you were assigned fully ITM at a delta of 1.

If you are assigned ATM for the ES option your delta is 0.5 so notional value is actually $52,900 and margin would be $2500.

Your overall point is still accurate though = trading SPX is inherently less leveraged than ES.

Reply With Quote
     

Old May 14th, 2015, 02:51 PM   #4177 (permalink)
Elite Member
Dallas, Texas
 
Futures Experience: Beginner
Platform: TOS
Favorite Futures: IWM Options
 
Posts: 175 since Oct 2012
Thanks: 417 given, 90 received


rsm005 View Post
The idea of investing in ES really appeals to me ever since I saw the videos from SuperTrader Karen. The only other thing that's kept me from moving forward is this never ending chatter about an upcoming correction. I know there's no way to predict it but for whatever reason, rational or not, that fear has kept me from moving forward with it.

Is there a different psychology to trading ES than other futures?

/rsm005/

This was the same chatter that predicted 3,000 for the DJI in 2008-09 but the DJI has almost tripled since then. No way to predict the future but this fear has kept many on the sidelines during one the best times to be investing in history.

Reply With Quote
     

Old May 14th, 2015, 03:46 PM   #4178 (permalink)
Elite Member
Dallas, Texas
 
Futures Experience: Beginner
Platform: TOS
Favorite Futures: IWM Options
 
Posts: 175 since Oct 2012
Thanks: 417 given, 90 received


eudamonia View Post
Slight correction:

ES notional value at 2116 (current price) is equal to 2116 X 50 (the big point value) = $105,800. However, if you are assigned margin for the ES is ~$5,000 or 21:1 leverage. This would only apply if you were assigned fully ITM at a delta of 1.

If you are assigned ATM for the ES option your delta is 0.5 so notional value is actually $52,900 and margin would be $2500.

Your overall point is still accurate though = trading SPX is inherently less leveraged than ES.

I was referring to the above example of taking assignment of the contract at expiration and selling calls, not margin. If I read that correctly 1 futures option contract = 50 contracts unlike stock, etf and index options which are 1=100.

Reply With Quote
     

Old May 14th, 2015, 03:49 PM   #4179 (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
Forum Reputation: Legendary


blb014 View Post
I was referring to the above example of taking assignment of the contract at expiration and selling calls, not margin. If I read that correctly 1 futures option contract = 50 contracts unlike stock, etf and index options which are 1=100.

One option on future equals one future contract.

One point of ES is equal to $50.

Reply With Quote
     

Old May 14th, 2015, 03:53 PM   #4180 (permalink)
Elite Member
Dallas, Texas
 
Futures Experience: Beginner
Platform: TOS
Favorite Futures: IWM Options
 
Posts: 175 since Oct 2012
Thanks: 417 given, 90 received



ron99 View Post
One option on future equals one future contract.

Thanks, that clarifies his example.

Just looking at open interest there is quite bit more in SPY and SPX than ES

Reply With Quote
     

Reply



futures.io > Futures Trading, News, Charts and Platforms > Traders Hideout > Options on Futures > Selling Options on Futures?

Thread Tools Search this Thread
Search this Thread:

Advanced Search



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

NinjaTrader 8: Features and Enhancements, Tips and Tricks

Dec 6
 

Al Brooks: Stop Losing when a Good Trade goes Bad, Correcting Mistakes

Elite only
 

Trading Technologies: Algo Design Lab hands-on

Dec 13
     

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 12:36 PM.

Copyright © 2016 by 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 2016-12-05 in 0.18 seconds with 20 queries on phoenix via your IP 54.205.150.215