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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:569,132 / 5,728
Last Reply:December 6th, 2016 (05:26 PM) Attachments:642

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Selling Options on Futures?

Old July 20th, 2015, 12:17 PM   #4561 (permalink)
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datahogg View Post
With zero (0) open interest you may not be able to open a position.

As far as I know the ESX options just started trading.

My tool shows 1100 ESX C1700 traded today, the bid / ask spread is 0.75 (5.5 / 6.25). This is larger than for the corresponding October (0.2) or December (0.5) options.

Keep in mind that ES options below 5 are traded in 0.1 steps, above 5 in 0.25 steps.

I would not trade the November contract at current bid / ask spreads.

Best regards, Myrrdin

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Old July 20th, 2015, 02:15 PM   #4562 (permalink)
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Open Sell: CL october 2015 40 put @ 250$.

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Old July 20th, 2015, 02:27 PM   #4563 (permalink)
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jawadde001 View Post
Open Sell: CL october 2015 40 put @ 250$.

There is a number of reasons why Crude Oil could move lower in the coming weeks: Higher / earlier than expected exports from Iran, Interest hike in the US, economical problems in China, seasonals. Thus, I prefer to hold short calls (CLZ C70).

While I am writing these lines CLU makes a new low ...

Best regards, Myrrdin

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Old July 20th, 2015, 02:53 PM   #4564 (permalink)
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myrrdin View Post
There is a number of reasons why Crude Oil could move lower in the coming weeks: Higher / earlier than expected exports from Iran, Interest hike in the US, economical problems in China, seasonals. Thus, I prefer to hold short calls (CLZ C70).

While I am writing these lines CLU makes a new low ...

Best regards, Myrrdin

True, but there are also a number of reasons why it could move higher.
Those things you mentioned are known facts, so it is reasonable to assume that this is already priced into the market.

I'm not going to hold this for a long period. If the price jumps today of tomorrow i will close it.

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Old July 20th, 2015, 04:38 PM   #4565 (permalink)
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Futures Edge on FIO

Are you a NinjaTrader user?

 
I am still neutral on CL (entered late last week)
Selling November 67 and 39

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Old July 20th, 2015, 06:32 PM   #4566 (permalink)
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rsm005 View Post
Hey all,

I tried to put in a couple of extra positions to begin my experiment about expiry dates and how long they take to reach 50% but have a question.

OESX5 P1700 which expires on Nov. 20th is the standard monthly contract has 0 open interest and 0 volume
OESW5 P1700 which expires on Nov. 30th seems to be a weekly contract has 320 open interest and 0 volume

Here's my question. Is there a difference or issue trading the Nov. 30th rather than the standard monthly contract? Are there liquidity issues as they ramp up over time? I'm tempted to wait until the standard Nov. 20th builds up some volume before trading but wanted some feedback.

Thanks,
/rsm005/

OESW5 P1700 is an end of month (EOM) contract not a weekly contract. It may have more OI now but the monthly contract will surpass it quickly.

As long as the market makers are there, then there will be no problem getting in and out of positions. The bid/ ask spread may be wide but I have found that I get filled about half way between bid/ask. Never place offer to sell at the bid price. The market maker will come up in most cases.

As far as I know OX is the only one I have found that doesn't allow you to do an option with no OI. Others are OK with it. Check with your broker.

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Old July 21st, 2015, 12:18 PM   #4567 (permalink)
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Sold to open 15 1900 OCT put leveraging 1.4 million

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp
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Old July 21st, 2015, 01:19 PM   #4568 (permalink)
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ron99 View Post
OESW5 P1700 is an end of month (EOM) contract not a weekly contract. It may have more OI now but the monthly contract will surpass it quickly.

As long as the market makers are there, then there will be no problem getting in and out of positions. The bid/ ask spread may be wide but I have found that I get filled about half way between bid/ask. Never place offer to sell at the bid price. The market maker will come up in most cases.

As far as I know OX is the only one I have found that doesn't allow you to do an option with no OI. Others are OK with it. Check with your broker.

If you call OX, they will manually enter orders for strikes with no OI.

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Old July 23rd, 2015, 11:07 AM   #4569 (permalink)
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Synthetics

July 23, 2015 (Synthetics)

For those who occasionally hedge positions here are some possibilites.

Futures contracts have no time value. They are pure delta. Today if you were to
purchase an ESU5 futures contract you would have delta of + 50, and a margin requirement
of $5000. (Per TOS) . Or you could buy a ESU5/ESQ5 2105 call and sell a ESU5/ESQ5 2105 put and have a margin requirement of $4963 and a delta of + 50 (per TOS). The futures contract
and the synthetic combination are almost identical. The differences are commissions and the fact that
the synthetic can have some usually small time value. You can construct synthetic futures for
products that do not have normal futures contracts. For IBM you could buy a 160 Sept call and
sell a Sept 160 put and have a delta of 100, but Reg T margin would be astronomical.
(I am assuming that IBM does not have futures contracts.)

There is a variation of the synthetic futures contract that I call a partial synthetic.
Suppose you have a position in crude (CL) and you want a positive delta of 30 to balance
your position to near delta zero. (Just as an example.) Your position is not near your exit point, but you still want to mitigate your delta risk. You can sell a put with a delta of 15 and buy a call with a delta
of 15. Today you could buy a CLU5/LOV5 57.5 call and sell a CLU5/LOV5 43 PUT and have a
delta of + 30 with a margin requirement of 2600 (Per TOS). Some advantages of the partial synthetic are that they are flexible, can be used for positions that have some delta risk but are not
near an exit point, may reduce the overall margin requirement of your position, and affect the greeks
of the position very little. Unlike futures and synthetic futures, the partial synthetics do have a time
component (time decay). In the above example (CL) any gains or losses between the short put and the
long call will decay to approximately zero at expiration. Below the short put and above the long call
the partial synthetic behaves as a futures contract.

Just some thoughts for those that occasionally hedge positions.

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Old July 23rd, 2015, 12:54 PM   #4570 (permalink)
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datahogg View Post
July 23, 2015 (Synthetics)

For those who occasionally hedge positions here are some possibilites.

Futures contracts have no time value. They are pure delta. Today if you were to
purchase an ESU5 futures contract you would have delta of + 50, and a margin requirement
of $5000. (Per TOS) .

Why isn't futures contract delta +100?

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
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