Selling Options on Futures? (Page 471) - 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 August 11th, 2015, 05:37 PM   #4701 (permalink)
Elite Member
Huntington WV
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: ES, CL
 
TheTradeSlinger's Avatar
 
Posts: 402 since Jun 2015
Thanks: 638 given, 499 received

Funded my experimental options account today, should be in business tomorrow.

I'll be posting updates as I put on positions over the next few weeks.

How's everyone doing, any position updates?

Reply With Quote
     

Old August 11th, 2015, 05:39 PM   #4702 (permalink)
Elite Member
Korea, South
 
Futures Experience: Intermediate
Platform: NinjaTrader
Favorite Futures: Crude CL
 
Posts: 54 since Jun 2015
Thanks: 121 given, 47 received


CobblersAwls View Post
Dear @ron99 and others with experience,

I was wondering, do you ever take a 'directional bias' when writing options? I have been toying with TOS and took the following trades in order to test out things and get a feel of how option trades play out. I took the below with the bias that Shell would outperform Exxon in the near term by selling RDS Puts and XOM Calls. I sold ATM then used the high premium to buy OTM options that were fairly close to the current strike.

Now this is a demo account so I will let them run to expiry, but i was wondering if anyone that uses these techniques could give some pointers on stops. Could the same IMx3 apply here? Also, what are the most obvious dangers with a trade like this?

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



Regards,

Awls.

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


You are basically betting on this pairs trade to keep moving lower. Essentially, what you did here is similar to long 72 shares of RDS and Short 93 shares of Exxon, except the share numbers will change as the prices move. I guess the downside to this is that theta is slightly against you.
Additionally, with companies like XOM and RDS, extreme price changes in one without the other (as they are highly correlated) are not as likely, so big losses aren't as worrisome. If RDS keeps lagging against XOM it will be a losing trade however.

IMx3 rule is more geared for theta decay while withholding enough reserve margin to weather out the corrections when they happen. I doubt it's a useful way to keep track for this trade. The stops will be more discretionary, how much are you willing to lose before you decide to bail when the pair price goes against you?

Also, stock options don't use span margin.

Reply With Quote
     
The following user says Thank You to Opstar for this post:
     

Old August 11th, 2015, 05:50 PM   #4703 (permalink)
Elite Member
Korea, South
 
Futures Experience: Intermediate
Platform: NinjaTrader
Favorite Futures: Crude CL
 
Posts: 54 since Jun 2015
Thanks: 121 given, 47 received

Which broker should we use?


I just wanted to see which broker everyone else are using for futures options. I know this has been discussed before and DeCarley seems like one of the favorites but I find their fees a bit expensive ($7 round trip). I currently use TOS (TD) for my individual account and am happy with their services. (Mainly trade /es /cl /ng /zb)

However, I would like to start trading futures options in my tiny ROTH IRA account which TOS doesn't allow until I have minimum $25k balance within the IRA account. I noticed DeCarley requires a custodian to sign-up which I understand may require hundreds of dollars a year in fees. Does anyone know a great broker for IRA accounts to trade futures options?

Thanks in advance

Reply With Quote
     

Old August 11th, 2015, 11:06 PM   #4704 (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

Christ what a day. One of my positions was close to exit yesterday, the other about 50%, then...bam. One is in the red and the other is holding on for dear life. Looks like there will be more selling before this is all over. I was hoping the winds of fortune would allow me to exit both positions this week..but that's probably not going to happen.

On a side note I should really stop watching the ticks of my trade every few minutes. I think I'm ripe for an ulcer.

/rsm005/


Last edited by rsm005; August 12th, 2015 at 01:17 AM.
Reply With Quote
     
The following user says Thank You to rsm005 for this post:
     

Old August 12th, 2015, 12:37 AM   #4705 (permalink)
Trading for Fun
Ottawa
 
Futures Experience: Advanced
Platform: Many
Favorite Futures: Options
 
Posts: 87 since May 2015
Thanks: 67 given, 87 received

Futures Edge on FIO

rsm005 View Post
Christ what a day. One of my positions was close to exit yesterday, the other about 50%, then...bam. One is in the red and the other is holding on for dear life. Looks like there will be more selling before this is all over. I was hoping the winds of fortune would allow me to exit both positions this week..but that's probably not going to happen.

Also, on a side note I should really stop watching the status of my trades update every few minutes. I think I'm ripe for an ulcer.

/rsm005/


Ya, we can thank the Chinese for that one. Pulling a little currency manipulation.

Reply With Quote
     

Old August 12th, 2015, 05:14 AM   #4706 (permalink)
Trading Apprentice
Boise, ID
 
Futures Experience: Advanced
Platform: Thinkorswim
Favorite Futures: ES
 
Posts: 10 since Feb 2015
Thanks: 7 given, 7 received

All the major crashes in history seem to have happened in August, September and October (Wall Street Crash of 1929, Black Monday of 1987, Asian Crisis of 1997, Russian Crisis of 1998, Terrorist attack of 2001, Subprime Mortgage of 2008, European Crisis of 2011, Ebola of 2014, just to name a few) so you gotta be extra cautious when selling naked ES options in these months. I usually sit on the sidelines and wait for a major spike in volatility before stepping in. Ron's IMx3 still works and can withstand a lot of turbulence, but a draw down of 30%, for instance, will really test your nerve and not everyone can endure it. I think you may want to do one of the following: (1) sit on the sidelines and be opportunistic, (2) cut losses if the value of the short option doubles and roll down further out of the money, (3) use the proceeds from selling deep out of money options to buy some closer to the money options for some insurance, (4) short ES itself for some protection. Live to fight another day!

Reply With Quote
     
The following user says Thank You to hain241 for this post:
     

Old August 12th, 2015, 08:38 AM   #4707 (permalink)
Elite Member
London, United Kingdom
 
Futures Experience: Intermediate
Platform: N/A
Broker/Data: Bloomberg
Favorite Futures: Energies
 
CobblersAwls's Avatar
 
Posts: 253 since Jul 2014
Thanks: 800 given, 308 received


ron99 View Post
Have you researched the ROI of stock options vs futures options? Backtested strategies? Have you researched the risk on stock options vs futures options? Those things need to be done before you work on strategy of stock options.

Hey Ron,

From my understanding with stock options, there are different risks to consider such as dividend payments and potential stock splits. I will look into the ROI differentials but have not back-tested any strategies, instead I am forward testing some stuff just to get used to options in general. I will look to focus on options on futures in the future, in particular energy commodities, but TOS doesn't allow you to trade them on paper. Great points to consider non-the-less.


Opstar View Post
You are basically betting on this pairs trade to keep moving lower. Essentially, what you did here is similar to long 72 shares of RDS and Short 93 shares of Exxon, except the share numbers will change as the prices move.

Interesting, I thought all stock options were worth 100 shares. Is your calculation based off of the delta? Hence why it could change?

Reply With Quote
     

Old August 12th, 2015, 09:18 AM   #4708 (permalink)
Elite Member
Korea, South
 
Futures Experience: Intermediate
Platform: NinjaTrader
Favorite Futures: Crude CL
 
Posts: 54 since Jun 2015
Thanks: 121 given, 47 received


CobblersAwls View Post



Interesting, I thought all stock options were worth 100 shares. Is your calculation based off of the delta? Hence why it could change?

Indeed. Also they are indeed worth 100 shares but the price does not move like 100 shares until it is deep in the money.

Reply With Quote
     
The following user says Thank You to Opstar for this post:
     

Old August 12th, 2015, 11:11 AM   #4709 (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


rsm005 View Post
Christ what a day. One of my positions was close to exit yesterday, the other about 50%, then...bam. One is in the red and the other is holding on for dear life. Looks like there will be more selling before this is all over. I was hoping the winds of fortune would allow me to exit both positions this week..but that's probably not going to happen.

On a side note I should really stop watching the ticks of my trade every few minutes. I think I'm ripe for an ulcer.

/rsm005/

Good thing you don't trade futures. You would have had a heart attack!

The reason you sell far OTM options is so that you don't have to worry about price changes by the minute.

When I was on vacation I checked prices at 8 am, 10 am, 1 pm and 4 pm. That's it.

One place I trade at, QST, has online app. In that app I can set an alarm to go off when ES futures hit a certain level. If no alarm then no worry about my options.

With experience you will realize that option selling allows you to be less worried about the markets.


Last edited by ron99; August 12th, 2015 at 12:29 PM.
Reply With Quote
     
The following 4 users say Thank You to ron99 for this post:
     

Old August 12th, 2015, 11:23 AM   #4710 (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



Opstar View Post
I just wanted to see which broker everyone else are using for futures options. I know this has been discussed before and DeCarley seems like one of the favorites but I find their fees a bit expensive ($7 round trip). I currently use TOS (TD) for my individual account and am happy with their services. (Mainly trade /es /cl /ng /zb)

However, I would like to start trading futures options in my tiny ROTH IRA account which TOS doesn't allow until I have minimum $25k balance within the IRA account. I noticed DeCarley requires a custodian to sign-up which I understand may require hundreds of dollars a year in fees. Does anyone know a great broker for IRA accounts to trade futures options?

Thanks in advance

I think that DeCarley is well worth the money. Multiply the number of trades you do a year times the extra cost at DeCarley and then think if that much extra money is worth the cost for the best customer service in the industry.

As far as small ROTH IRA, I doubt you will find any place that allows you to trade futures in them and doesn't require a custodian. Most custodians are around $300 per year.

Reply With Quote
     
The following 2 users say Thank You to ron99 for this post:
     

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 0.25 seconds with 20 queries on phoenix via your IP 54.205.150.215