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Selling Options on Futures?
Started: by ron99 Views / Replies:599,307 / 5,838
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Selling Options on Futures?

  #4521 (permalink)
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dvbattul View Post
Thanks, Ron. The table shows opening different strikes at 63/90/120DTEs. This is not what I meant. What I meant is adding to the same strike opened at 90 DTE but after 10/20 days ie at 80/70 DTE if position is still open but keeping same target of exiting at 50% of original premium at 90DTE. If after 10/20 days, ES is down you may require more cash for new additional options and if ES up then less cash and new premium may have increased or decreased accordingly.

Why is everyone so into selling OTM for "boring" account growth? You're generally risking 3 units to make 1/2 and then one or two losses will wipe out all of your winners. Am I missing something?

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  #4522 (permalink)
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vitrader View Post
Why is everyone so into selling OTM for "boring" account growth? You're generally risking 3 units to make 1/2 and then one or two losses will wipe out all of your winners. Am I missing something?

yes you are

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  #4523 (permalink)
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Closed the Sept '15 1630 Puts (~50% winner). Managed to close 10 out of 12 contracts of the Sept'15 1650 Puts (~50% winner as well).

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Looking to redeploy tonight.

Realised profit so far is +894.84 (net of commissions) since I started in June 15.

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  #4524 (permalink)
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kevinkdog View Post
yes you are

Well put KkD, made me chuckle.

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  #4525 (permalink)
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virileblood View Post
Closed the Sept '15 1630 Puts (~50% winner). Managed to close 10 out of 12 contracts of the Sept'15 1650 Puts (~50% winner as well).

Current positions:
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Looking to redeploy tonight.

Realised profit so far is +894.84 (net of commissions) since I started in June 15.


How long were these positions held open?
/rsm005/

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  #4526 (permalink)
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blb014 View Post
I don't sell puts that far out of the money (around .10 to .20 delta) and not at that quantity or margin used. There are theta time decay graphs for around that delta, I would have to locate one.

Time decay will be accelerated on the front end for far out of the money options. I have sold the longer dated options before on equities and indices and I have found the sweet spot (for me) to be between 80 and 40 days, minimizing vega risk. Especially with futures with the amount money be leveraged. I look at it from a risk perspective. If I'm am leveraging 850,000; I am going have to get a decent premium, with less quantity and be in the trade for hopefully a shorter time period. And with a less margin being used, the ability to roll down if there is a vol pop or sudden gap down.

Having traded options through since 2006 with all the ups and down, that has shaped my perspective on risk. I embrace volatility and it is needed for premium sellers. I also respect it and analyze what if scenarios before I sell a put. If there is a vol pop or gap down would I be ok losing 14,000 or 750,000. Just a different perspective, I appreciate your perspective and this thread and your help for others.

Would you explain your approach with some example (does it mean that you didn`t trade when volatility is low)?
For my study the faster time decay for OTM options is ~ 90-60 days (for ITM last 30 days).

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  #4527 (permalink)
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rsm005 View Post
How long were these positions held open?
/rsm005/

Sold the 1630 Puts on June 22, and the 1650 Puts in clips between June 23 and June 25.. so they have been held for 22-24 days

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  #4528 (permalink)
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ron99 View Post
Here is how my Sep IMx3 contracts performed

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My IMx4 contracts made 2.7%.

I added some ESv15p1650 today. I also added some 1700-1500 spreads.

Ron,

What was the reasoning behind the spread? When do you decide to use those vs naked puts?

Thanks,
/rsm005/

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  #4529 (permalink)
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kevinkdog View Post
yes you are

And what is that? The risk/reward ratio is horrible.

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  #4530 (permalink)
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vitrader View Post
And what is that? The risk/reward ratio is horrible.


The risk/reward is irrelevant, as a standalone statistic. That is true for all trading.

Win percentage is also irrelevant, as a standalone statistic.

Combine these two into expectancy, then you have something meaningful.

If you try to sell options in a way that produces negative expectancy, then I agree that is a terrible way to go.

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