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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:567,733 / 5,727
Last Reply:3 Hours Ago (12:40 PM) Attachments:642

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Selling Options on Futures?

Old July 31st, 2015, 05:13 PM   #4611 (permalink)
Trading Apprentice
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I would like to share a link I've found interesting:

Think Tank Charts 2 - David Larew - Public ChartList - StockCharts.com

It is very profitable to sell PUTS in the green dots. You don't need to wait for 1 month to lose 50% of the value. In my case my record is in 4 days. I hope this link will help you in the future

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Old July 31st, 2015, 05:14 PM   #4612 (permalink)
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ron99 View Post
But a higher delta.

Thanks for the study.

Why do the spreads have a higher delta?

For study I used ~ 100 point spread (for example, ESJ3 1250/1150) .

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Old July 31st, 2015, 06:45 PM   #4613 (permalink)
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I'm going to walk through an example here to see if I have the right idea.

Using data for the ES futures option from: CMEGROUPOPTIONS

Ok, lets take the 1800 strike put for September.

The last price was 1.70. 1.70 divided by .25 (tick value) times $12.50 = $85 premium to the seller minus fees and commissions? (assume we could sell at the last price)

I've got to be doing something wrong because that seems incredible.

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Old July 31st, 2015, 07:41 PM   #4614 (permalink)
Market Wizard
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TheTradeSlinger View Post
I'm going to walk through an example here to see if I have the right idea.

Using data for the ES futures option from: CMEGROUPOPTIONS

Ok, lets take the 1800 strike put for September.

The last price was 1.70. 1.70 divided by .25 (tick value) times $12.50 = $85 premium to the seller minus fees and commissions? (assume we could sell at the last price)

I've got to be doing something wrong because that seems incredible.

It's easier to multiply price by 50.

Why is that incredible?

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Old July 31st, 2015, 07:46 PM   #4615 (permalink)
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Futures Edge on FIO

ron99 View Post
It's easier to multiply price by 50.

Why is that incredible?

Its something I've never studied and it seems like a potentially useful way of making steady income.

Thank you for the webinar you did ron99,

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Old July 31st, 2015, 07:48 PM   #4616 (permalink)
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uuu1965 View Post
For study I used ~ 100 point spread (for example, ESJ3 1250/1150) .

FYI he used a short leg with a 9.72 delta and a long leg with a 4.23 delta.

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Old August 1st, 2015, 05:17 AM   #4617 (permalink)
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TheTradeSlinger View Post
Its something I've never studied and it seems like a potentially useful way of making steady income.

Obviously someone who hasn't been active in the stock market for a long period.
A 10% drop is perfectly possible for so many trading weeks.

Please calculate how many succesful months you have to make to recover from one losing month.

I don't say you should not make this trade. But i shiver when i hear words like "incredible" and "steady income". It suggests that you were not in the market in 2008 or 2001. Those who were, would never use that kind of words, because history told them a very valuable lesson.

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Old August 1st, 2015, 10:28 AM   #4618 (permalink)
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Safe trading

Hi,
I try to develop further as far as possible safe put selling on ES (behind a IM cushion, low delta etc.) and establish some rulles or parametrs (without any predictions - that remain for other guys).
It's clear that no one strategy give you a 100% safety and there isn't any Holy grail. By being in the market you take the risk and try to manage it.

1. September and October 2008: largest drop in 30 days = 379.75 points
(worldwide mortage and credit crisis, bank collapse etc.) - best solution: avoid to sell puts (we were previously aware of that).
2. August 2011: largest drop in 30 days = 231.25 points
(debt crisis in Europe, USA government bailout, Standard&Poor's downgraded America's credit reiting) - best solution: avoid to sell puts (we were previously aware of that).
3. October 2014: largest drop in 30 days = 157.75 points - what the reasons? or just normal market correction? Could we know before? Any ideas?

P.S. Thanks Ron for data of largest drop.

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Old August 1st, 2015, 10:36 AM   #4619 (permalink)
Market Wizard
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jawadde001 View Post
Obviously someone who hasn't been active in the stock market for a long period.
A 10% drop is perfectly possible for so many trading weeks.

Please calculate how many succesful months you have to make to recover from one losing month.

I don't say you should not make this trade. But i shiver when i hear words like "incredible" and "steady income". It suggests that you were not in the market in 2008 or 2001. Those who were, would never use that kind of words, because history told them a very valuable lesson.

Please read the whole thread before you come in here making comments like this.

We have risk controls in place to limit losses.

The only word he used that would be inaccurate is "steady". The income from this trading style is not steady monthly. It is up and down. But on a yearly basis you could say steady.

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Old August 1st, 2015, 10:44 AM   #4620 (permalink)
Market Wizard
OH
 
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uuu1965 View Post
Hi,
I try to develop further as far as possible safe put selling on ES (behind a IM cushion, low delta etc.) and establish some rulles or parametrs (without any predictions - that remain for other guys).
It's clear that no one strategy give you a 100% safety and there isn't any Holy grail. By being in the market you take the risk and try to manage it.

1. September and October 2008: largest drop in 30 days = 379.75 points
(worldwide mortage and credit crisis, bank collapse etc.) - best solution: avoid to sell puts (we were previously aware of that).
2. August 2011: largest drop in 30 days = 231.25 points
(debt crisis in Europe, USA government bailout, Standard&Poor's downgraded America's credit reiting) - best solution: avoid to sell puts (we were previously aware of that).
3. October 2014: largest drop in 30 days = 157.75 points - what the reasons? or just normal market correction? Could we know before? Any ideas?

P.S. Thanks Ron for data of largest drop.

There was no way to predict the Oct 14 drop. No red flag like the other drops. If you stay with IMx3 and a lower delta then the max drawdown is not catastrophic. Each person needs to decide what max drawdown they are comfortable with and trade accordingly.

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