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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:570,161 / 5,734
Last Reply:December 9th, 2016 (01:01 AM) Attachments:642

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Selling Options on Futures?

Old January 11th, 2013, 08:35 PM   #481 (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?

Corn normally goes up in Jan and Feb right after this report.

Even though Mar corn settled 10.00 higher the Mar corn calls above 7.00 settled lower???

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Old January 11th, 2013, 08:52 PM   #482 (permalink)
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shane: I have been using OX for several years and have no complaints aside from their charts which are very average. Barchart or Ninjatrader (free) is all I need.

Pears:

Take a look here

http://http://www.ccstrade.com/futures/seasonal/

Very important stuff here for seasonal tendencies.

As for the grains: the crop progress report came out today with a bullish bias. However corn (May in particular) settled about 14 cents below the reaction high. The current price is almost at the 50% retracement level. The seasonal tendency for corn this time of year is for prices to be range-bound, pull back towards July, then move up in the summer.

My 2 cents is still range-bound here. I'm giving the grains a few more days to digest this news and see how this snow front will affect wheat prices too. No worries, selling options gives you plenty of time to decide what to do....pun very well intended here.

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Old January 11th, 2013, 09:28 PM   #483 (permalink)
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ron99 View Post
I'm surprised they gave you the lower rate as a new customer. I guess I should have asked sooner when I moved there!

Yeah, I am delighted too and didn't think OX would go that low. But I did start the conversation by telling them that I only pay a flat rate of $2.32 at IB and that is also inclusive of all fees and paying $12.99 plus fees is unjustified no matter how great the services were at OX. They put me on hold for a few minutes and then came back with $3.99 no strings attached. I am glad I asked.

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Old January 11th, 2013, 09:32 PM   #484 (permalink)
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opts View Post
shane: I have been using OX for several years and have no complaints aside from their charts which are very average. Barchart or Ninjatrader (free) is all I need.

Pears:

Take a look here

http://http://www.ccstrade.com/futures/seasonal/

Very important stuff here for seasonal tendencies.

As for the grains: the crop progress report came out today with a bullish bias. However corn (May in particular) settled about 14 cents below the reaction high. The current price is almost at the 50% retracement level. The seasonal tendency for corn this time of year is for prices to be range-bound, pull back towards July, then move up in the summer.

My 2 cents is still range-bound here. I'm giving the grains a few more days to digest this news and see how this snow front will affect wheat prices too. No worries, selling options gives you plenty of time to decide what to do....pun very well intended here.

In 2012 Mar corn was down 40 cents on the bearish report on Jan 12th. The next day it was down 12 more cents. From that point to the end of Feb it was up 54 cents even though there was a bearish report.

In 2011 Mar corn was up 24 cents on a bullish report. From 1/12 to 2/25 Mar corn was up 81 more cents.

Corn OI gained 80-90,000 in those 6 weeks. Hedging and speculating for the new year.

With the bullish report, I can easily see corn running higher for 6 weeks.

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Old January 11th, 2013, 09:33 PM   #485 (permalink)
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opts View Post
As for the grains: the crop progress report came out today with a bullish bias. However corn (May in particular) settled about 14 cents below the reaction high. The current price is almost at the 50% retracement level. The seasonal tendency for corn this time of year is for prices to be range-bound, pull back towards July, then move up in the summer.

My 2 cents is still range-bound here. I'm giving the grains a few more days to digest this news and see how this snow front will affect wheat prices too. No worries, selling options gives you plenty of time to decide what to do....pun very well intended here.

I am considering selling some May corn calls, particularly strikes above 850, even 900

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Old January 12th, 2013, 11:36 AM   #486 (permalink)
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MJ888 View Post
Yeah, I am delighted too and didn't think OX would go that low. But I did start the conversation by telling them that I only pay a flat rate of $2.32 at IB and that is also inclusive of all fees and paying $12.99 plus fees is unjustified no matter how great the services were at OX. They put me on hold for a few minutes and then came back with $3.99 no strings attached. I am glad I asked.

That is great. I called and negotiated with them about a year ago. The gave me $6.99 per contract. I really like OX. I have two accounts with them and their customer service is top notch.

I am having one problem right now with the trade calculator. It works for a market order but if I type in a limit price it won't work. I never place market orders.

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Old January 12th, 2013, 03:17 PM   #487 (permalink)
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Raven View Post
That is great. I called and negotiated with them about a year ago. The gave me $6.99 per contract. I really like OX. I have two accounts with them and their customer service is top notch.

I am having one problem right now with the trade calculator. It works for a market order but if I type in a limit price it won't work. I never place market orders.

I leave the market price line checked and click calculate. If you then hit the Trade Now button it will bring up the correct futures options order form. If you click on the bid price, if that is the price you want to sell the option, it puts that price in the limit price box.

I suspect the limit price on trade calc are for something other than futures options.

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Old January 13th, 2013, 11:37 AM   #488 (permalink)
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Long Term Oil

I have said previously that I was bullish on Oil and twice bought calls which made a couple of dollars each.
The reason for my bullish mode can be seen from the chart below.

There was massive buying in October when consolidating at the 90-95 range. These buyers mainly held despite the crash down to 85's where they rebought or new buyers entered.

The subsequent pushes to 90 have been met with selling creating a distribution effect. The resolution of the Fiscal Cliff has rocketed prices as high as 94. At the same time the selling has continued and the volume delta has now touched the blue line. From a delta analysis point of view this says that the buyers from the lows at 85 have mainly covered their longs, or an inventory grab has occured.

This means we need new buyers to come in (or sellers to buy to cover) for prices to move on up. There aren't many sellers holding shorts as much of the selling was long covering. What there still is though, is 40000 buyers holding from the 90-95's area, so they are basically at break even at the moment.

It maybe they are long term bulls waiting for the 100's. I would expect some further consolidation in this range and it will be interesting to see if the delta bleeds off further or a seaonal dip down is bought into.

On a personal note I missed the latest advance due to fiscal cliff worries so I would love to see a pull back to 90-91 area, resistance becoming support, as an area to buy calls again or at least sell puts.

Thoughts anyone?
Brit

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Last edited by britkid99; January 13th, 2013 at 11:59 AM. Reason: spelling
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Old January 13th, 2013, 03:54 PM   #489 (permalink)
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Hey Brit, pretty much agree with your analysis..... I'll be looking for a close above 95 with targets of 100 to get long. There were some decent pushes from 92.50 last week.

Enjoying everyone's thinking in this thread. I am fairly new to options, but am impressed with what I have researched so far.

Cheers

Crez

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Old January 14th, 2013, 08:39 PM   #490 (permalink)
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How much income from selling option contracts?


Hey Ron99 and anyone else who is doing this full time,

I was wondering how big of a bank roll one would likely need to be able to do this full time and make $100,000/yr.

Also wondering if anyone thinks a hedge fund could could be started based on selling OTM options as is discussed here?

Thanks!

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