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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:569,146 / 5,728
Last Reply:December 6th, 2016 (05:26 PM) Attachments:642

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Selling Options on Futures?

Old August 1st, 2015, 04:42 PM   #4631 (permalink)
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jawadde001 View Post
I think you can expect very soon a call from Goldman Sachs. I bet they would be thrilled hiring someone who can make +30% 40% consistently and with lower risk than a S&P investment. You would be the BEST trader that have ever existed if this was true. There was nobody in history who did that before, but maybe you are the first one.

Oh, and about Karen. Have you seen here last result (2013)? It was (slightly) less (!) than the S&P. The big returns are not that easy to repeat apparently...
But it is possible that Karen beats the S&P during a 10 year period. But this comes with higher risk and it won't be so good as the previous years (the coming years will prove that).

I read Cordier's book, improved his strategy to the point I was making well more than him. I had had an account with him for a while. So I know how he was doing.

I then took Karen's strategy, improved upon it to where I am making well more than she is now.

I spent hours and hours researching of the numbers. That is how you perform better than others. Not reading books.

Many, many posters have contributed to this thread. I have learned from them. I think some have learned things from me. I am a better trader because of what I have learned from this thread.

It looks like all you want to do is tell me I am doing it wrong because that is not what the books say should happen. Well guess what. I am not typical.

If you can't handle the truth, then move on.


Last edited by ron99; August 1st, 2015 at 05:14 PM.
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Old August 1st, 2015, 04:56 PM   #4632 (permalink)
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ron99 View Post
The debt ceiling was only raised once by congress in 2011. Not every month.

Uh no. Dec ES was 1284.25 the last trading day of Aug 2008. It never settled that high in Sep.

Peak was 1307 on 8/11/08.

It was down $40 from mid July to mid Sep. I'd call that tanking.

It's not good when you have to make up stuff to support your point.

I have no angle in this discussion to "make up stuff".

Go look at chart if you don't believe. CL ran up $40 + from Jan 2008 to July. Then CL sold off the gains it had made for the year. And didnt start tanking below $100 Jan 2008 low until after, the fall of Lehman Brothers. All the way down 30ish at the 2008. Besides Do you think the recent fall in CL signals another financial crisis and great recession? I think not

Since I'm making this "stuff up" here's a CL chart

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Here's a ES chart

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And the debt ceiling has been raised so many times over the years that would not have been a precursor to the S&P downgrade in 2011

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There's your proof, I have no reason to make up anything.

My last post on this hindsight trading topic, no sense in arguing about it.

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

Last edited by blb014; August 1st, 2015 at 07:42 PM.
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Old August 2nd, 2015, 01:42 AM   #4633 (permalink)
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Ron,

Quick question. Based on the comments from blb014 and some of your earlier statements, what was the thought process that kept you out of the market around August 15th after the move down had happened and the market seemed to find a floor? I wasn't in the market then and am curious as to the fundamentals that guided you? Here's the chart I was looking at based on the last few comments in this thread.

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I agree with you on the debt ceiling debate and avoiding puts, most people could see the political parties not agreeing on a budget from a mile away and the results from something like that are never good for the market..even if you didn't know a credit rating downgrade was the result.

I can't remember the news and other information leading up to the collapse in mid Sept though and was hoping for more color on where your head was.

As far as my next few trades I'm going to be doing spreads with a higher number of contracts at a lower delta. I'm expecting more swings to the downside right after interest rates go up in Sept.

/rsm005/


Last edited by rsm005; August 2nd, 2015 at 03:25 AM.
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Old August 2nd, 2015, 03:30 AM   #4634 (permalink)
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Hi Ron
Many Thanks again for your thread & the way you share your research

Perhaps this discussion might be helped if you tell us how long you have been writing ES Puts & other similar trading techniques

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Old August 2nd, 2015, 09:03 AM   #4635 (permalink)
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Collator View Post
Hi Ron
Many Thanks again for your thread & the way you share your research

Perhaps this discussion might be helped if you tell us how long you have been writing ES Puts & other similar trading techniques

I sold my first ES puts in 2011.

I have lost money only one time on an ES put trade. Sold 50 ESv5p800 on 9/19/11. Lost $2,500. And actually if then I had followed my current plan that trade would not have been a loser because I hadn't hit the exit point. I just thought that things would get worse and got out after only holding 3 days. Beginner nerves for ES trading.

784 out of 785 trades were winners. No losers since 2011. 41,688 total short ES put contracts. The net profit is $2.3 million.

I have been selling options since 2005.


Last edited by ron99; August 2nd, 2015 at 10:22 PM.
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Old August 2nd, 2015, 09:08 AM   #4636 (permalink)
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rsm005 View Post
Ron,

Quick question. Based on the comments from blb014 and some of your earlier statements, what was the thought process that kept you out of the market around August 15th after the move down had happened and the market seemed to find a floor? I wasn't in the market then and am curious as to the fundamentals that guided you? Here's the chart I was looking at based on the last few comments in this thread.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).



I agree with you on the debt ceiling debate and avoiding puts, most people could see the political parties not agreeing on a budget from a mile away and the results from something like that are never good for the market..even if you didn't know a credit rating downgrade was the result.

I can't remember the news and other information leading up to the collapse in mid Sept though and was hoping for more color on where your head was.

As far as my next few trades I'm going to be doing spreads with a higher number of contracts at a lower delta. I'm expecting more swings to the downside right after interest rates go up in Sept.

/rsm005/

I wasn't selling ES puts then. I was selling options in other commodities like CL and NG and KC.

I will give a more in depth answer later.

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Old August 2nd, 2015, 04:23 PM   #4637 (permalink)
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jawadde001 View Post
Ron,

You said you could foresee the previous crashes. Guess what, nobody could. And if you could it once (by chance), do not even think you are capable of forecasting all the next crashes.

You don't think there is link between risk/return and making 30% is easy and with low risk.
Buffett and all those hedge funds with the most brilliant workforce don't make consistently that much money and in addition you laugh at the assumptions made by finance professors.

Sorry, but how you think and what you believe makes me laugh. I've been trading for +10 years and i've read a lot of books about investing and derivatives and what you say contradicts with everything i've personally experienced or read about it.

Please Ron, read the story of Victor Niederhoffer who blew up several of his hedge funds by selling puts.

I prefer to end this discussion. I don't want to be rude, but it seems to me that you are missing elementary knowledge. I thought the relation risk/return is common knowledge and that everybody would agree that making 30% (not to mention your +50%) is exceptional (with high risk and in the long run not maintainable. Or it must be that you are smarter and better than Buffet, Goldman sachs,...).

jawadde001 you are right. If you take an average person (even a college finance professor)
and throw them into the options arena, they would lose all. But some of us on this thread
are not average (such as Ron99). We have spent a lot of effort and time reading, analyzing,
and working in the options arena. If we were to give a class on options, Cordier and Gross
should attend, because they would learn a lot. I have invested in crude (CL) this entire year
and have not had a losing position. (I know CL moved much more in 2014 than so far in 2015.)
I have had a losing position in 6EG5 (-$63.04), and in EWN5 (-$40.76). That is all for this
year. Conditional probabilities can vastly decrease risk and improve your probablility of success.
For example, look at black jack.

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Old August 2nd, 2015, 05:31 PM   #4638 (permalink)
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jawadde001 View Post
I thought the relation risk/return is common knowledge and that everybody would agree that making 30% (not to mention your +50%) is exceptional (with high risk and in the long run not maintainable. Or it must be that you are smarter and better than Buffet, Goldman sachs,...).

Just now reading this thread, and I invite @ron99 to place you on ignore if you continue to basically call the people here liars.

I want to chime in that I was > 200% YTD return personally, on about 10x the risk rate of ES. I say "was" because I stopped posting all my broker statements because of users like you, so these days I don't share my returns any more because it wasn't worth the headache of defending them. The 200% figure was as of March 31, the last time I publicly shared all my statements.

I have nothing to sell, I spend time posting simply to help others -- as does @ron99. Ron runs a great thread, and I don't want him getting discouraged just because some people can't see the value. Ron has nothing to sell, same as me. He isn't a vendor. It's fine to question people that have ulterior motives and there is plenty of that on other trading forums, but there is none here.

You also need to understand there is a big difference between an individual trader that is trading a six or seven figure account, and an institution trading ten figure accounts (or more). It should go without saying that returns are not symmetrical with the invested money at play.

I'm not a fantastic trader, nor am I smart enough to trade options. So I have no difficulty believing that @ron99 would consistently outperform me in terms of risk to return.

If you want to call me a liar or continue trolling, go ahead, and that will be the end of your invitation to visit futures.io (formerly BMT).

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Old August 2nd, 2015, 05:38 PM   #4639 (permalink)
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Chubbly View Post
Oil fell about 21% in July, worst since October 2008 and I was still able to make money this month trading CL (I only lost 1 trade)

I suggest you go back and read the entire thread from the start

I don't doubt that, however, for the new people it should be noted that you had some implied volatility tail winds, or at least they weren't head winds.

During the month of July, ATM IV increased by about 3 points and put skew, as measured by 10-delta risk reversals, actually declined from about -.10 to -.07 during the month. For the newbies, the latter is a good thing if you were short puts coming into July.

So a short put position during a month of a 20% decline in the underlying could have worked. But a similar position from Oct 2014 to March 2015 could have led to painful losses, or at best a long, painful wait until expiration was nearer and IV/IV skew stabilized.

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Old August 2nd, 2015, 09:00 PM   #4640 (permalink)
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Ron,

Just came to this thread for the first time. I have option experience with equities, but not futures. I hope to learn from your and other's experience.

It's good to see an option thread here, don't know how I missed it.

(And ignore the nay-sayers. I don't know why people will troll when they can just go somewhere else....)

Bob.

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