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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:568,065 / 5,727
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Selling Options on Futures?

Old January 11th, 2013, 06:52 PM   #471 (permalink)
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britkid99 View Post
Closed out 4 of my KC 120 puts for 0.0003 today. Originally sold for 0.0030 so 90% gain (less commissions) with 4 weeks still to go.

I have been trying to buy back over the past couple of days at 0.0005/6 but no takers. Today there was no bid at all until I put mine in and it eventually got hit at the close. Quite surprising to see with todays advance.

On the chart we made another HH and HL and todays advance was mainly due to sellers at the 150 area, who had been holding divergently, capitulating and buying to cover as stops are hit. This is evidenced by the vertical nature of the last few delta bars, that is short covering in a hurry not new buyers coming in.

If we can push through the 155 area there is a ton of shorts still holding which will propel us even higher if they all start to cover.

Kudos on the java.

My order to exit my CL puts was not filled but will exit next week. 80% return on those. My wheat puts should jsut dissolve into nothingness...

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Old January 11th, 2013, 06:53 PM   #472 (permalink)
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shanemcdonald28 View Post
hi
How can you sell OTM options on futures ?
I use TOS, and was wondering of a good place to do options on futures. They are ok with stock options, but not so much on futures options.

Also, I cannot sell options at TOS unless I own the stock or have a certain amount of capital. How does that work when selling options on futures ?

thanks
shane

Welcome Shane,

See Rons post above about TOS not being option futures friendly.
You can sell OTM options on futures with brokers such as Optionsxpress or Interactive Brokers. You get charged a margin which is like escrow in your account, so a certain amount of money is set aside as a deposit against any losses. This margin varies with distance strike is from price, time to expiry etc. When you close out the trade or the option expires worthless your margin is released.

Brit

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Old January 11th, 2013, 07:00 PM   #473 (permalink)
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shanemcdonald28 View Post
Well done !
what platform is that allowing you to set ticks for renko bars ?

good work !

shane

That is Investor/RT although many others can do the same such as Ninjatrader or Sierra Chart.
I like I/RT , which is a cheaper relative to Market Delta, for its volume delta analysis abilities

Brit

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Old January 11th, 2013, 07:12 PM   #474 (permalink)
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shanemcdonald28 View Post
hi
How can you sell OTM options on futures ?
I use TOS, and was wondering of a good place to do options on futures. They are ok with stock options, but not so much on futures options.

Also, I cannot sell options at TOS unless I own the stock or have a certain amount of capital. How does that work when selling options on futures ?

thanks
shane

I have been using Interactive Brokers to sell options on futures since 2003. But I am going to switch over to Options Express soon. As Ron99 said in an earlier post, he checked out TOS and it is not friendly to options sellers.

For the past week I have been comparing IB with OX. Hands down IB has the better overall trading platform and lowest commissions, I pay under $3 for each option traded. But for the purpose of selling far OTM options, I would use OX because the margin requirements are as close to SPAN as you can find. If you scroll back and read this post, me and Ron99 have found that at times the margin requirements at IB can be more than 600% higher compared to OX. For example, I currently have an April CL strangle for three options at 70 Puts and 105 Calls. My initial margin requirement at IB is close to $15,000 whereas with XO, my margin would be about $7,600. Huge difference! I can use the extra margin to place additional positions!

Last week I called OX and told them how cheap my commissions were at IB, after some back and forth negotiating, OX gave me a rate of $3.99 per option with no minimum trade quotas. To me, this is great because I can easily make up for the difference in commissions by being able to trade twice the size I normally do at IB.

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Old January 11th, 2013, 07:33 PM   #475 (permalink)
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Futures Edge on FIO
thanks for all of the info everyone !

I have only been buying puts and calls on a couple of stocks like aapl, goog and a few others at TOS.
Mostly I spend my time trading futures on Ninja. I did not like trading futures on TOS due to sluggishness when the market volume picked up.

I use AMP for futures and there are no options on futures there.

I have a Margin account at TOS, but still cannot sell any options. It is frustrating. I will check into these ideas you have shared.

thanks for all of your help
sincerely,
shane

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Old January 11th, 2013, 08:05 PM   #476 (permalink)
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Today's corn action

Hey does anybody have any thoughts on today's corn action? It would be great if someone with access to a good quote screen could fill us newbie's in on the changes in volatility and pricing that occurred from yesterday to today. Considering the size of the spike and how it reversed direction, it should have shaken things up quite a bit! This may make a good case study of why it is important to be selling far out of the money.

Thoughts?

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Old January 11th, 2013, 08:17 PM   #477 (permalink)
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shanemcdonald28 View Post
hi
How can you sell OTM options on futures ?
I use TOS, and was wondering of a good place to do options on futures. They are ok with stock options, but not so much on futures options.

Also, I cannot sell options at TOS unless I own the stock or have a certain amount of capital. How does that work when selling options on futures ?

thanks
shane

Hi Shane,

It probably would be best if you googled "options on futures" and checked out some of the links. It would take a while to type out a full explanation of options on futures here.

Stock options and futures options are very different beasts.


Last edited by ron99; January 11th, 2013 at 08:22 PM.
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Old January 11th, 2013, 08:26 PM   #478 (permalink)
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MJ888 View Post
I have been using Interactive Brokers to sell options on futures since 2003. But I am going to switch over to Options Express soon. As Ron99 said in an earlier post, he checked out TOS and it is not friendly to options sellers.

For the past week I have been comparing IB with OX. Hands down IB has the better overall trading platform and lowest commissions, I pay under $3 for each option traded. But for the purpose of selling far OTM options, I would use OX because the margin requirements are as close to SPAN as you can find. If you scroll back and read this post, me and Ron99 have found that at times the margin requirements at IB can be more than 600% higher compared to OX. For example, I currently have an April CL strangle for three options at 70 Puts and 105 Calls. My initial margin requirement at IB is close to $15,000 whereas with XO, my margin would be about $7,600. Huge difference! I can use the extra margin to place additional positions!

Last week I called OX and told them how cheap my commissions were at IB, after some back and forth negotiating, OX gave me a rate of $3.99 per option with no minimum trade quotas. To me, this is great because I can easily make up for the difference in commissions by being able to trade twice the size I normally do at IB.

I'm surprised they gave you the lower rate as a new customer. I guess I should have asked sooner when I moved there!

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Old January 11th, 2013, 08:26 PM   #479 (permalink)
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psears View Post
Hey does anybody have any thoughts on today's corn action? It would be great if someone with access to a good quote screen could fill us newbie's in on the changes in volatility and pricing that occurred from yesterday to today. Considering the size of the spike and how it reversed direction, it should have shaken things up quite a bit! This may make a good case study of why it is important to be selling far out of the money.

Thoughts?

the grains had the very important USDA report today.
A lot of jockeying for position on that report.
It creates a lot of volatility and is perhaps the most important report for grains.

shane

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Old January 11th, 2013, 08:26 PM   #480 (permalink)
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ron99 View Post
Hi Shane,

It probably would be best if you googled "options on futures" and checked out some of the links. It would take a while to type out a full explanation of options on futures here.

Stock options and futures options are very different beasts.

thanks

shane

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