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Selling Options on Futures?
Started: by ron99 Views / Replies:596,709 / 5,834
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Selling Options on Futures?

  #5211 (permalink)
Trading Apprentice
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rajab View Post
Any one selling puts on ES?
Just wondering if one should wait till ES tests the AUG lows?

I had a bunch of short es 1550 puts for Feb, sold at around $3.
when it rallied to $6, i got nervous and covered by the end of the day at around $4.50 average. Sucks because theres like 23 trading days or so, and I know I should've stuck with the trade, but my size was too large…

U live and learn.

by the way, hello to all. Been following the forum for awhile but just signed up.

I follow Tastytrade, and like to sell puts on various stocks and ES with 45-55 DTE as far out as I can and still collect decent premium. Not as far as Karen the Supertrader, but I do like how she goes into a trade.. First , just assume the market is 10% lower- and then go even further out from there to sell premium...

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  #5212 (permalink)
Market Wizard
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rsm005 View Post
Genuinely wondering if the fundamental picture of the economy, both US and abroad, has changed.

/rsm005/

Yep.

Quoting 
Prospect of the Islamic Republic (Iran) pumping an additional 500,000 barrels a day sends stock markets in Dubai and Saudi Arabia into tailspin

Stock markets across the Middle East collapsed as the lifting of economic sanctions against Iran threatened to unleash a fresh wave of oil onto global markets that are already drowning in excess supply.

All seven stock markets in Gulf states tumbled as panic gripped traders. Dubai's DFM General Index slumped 4.8pc to 2,682.56, while Saudi Arabia's Tadawul All Share Index collapsed by 7pc to 5,409.35, its lowest level in almost five years.

https://uk.finance.yahoo.com/news/iran-sanctions-middle-east-stock-102835505.html

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  #5213 (permalink)
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This is something I just don't understand. Why would the collapse in the price of oil affect the market overall?

- The US economy is very diverse.
- Lower energy costs lead to lower transport and production costs.
- Sure some companies are hurt but a majority benefit, especially consumer focused businesses because lower energy costs translate to more money for people to spend.
- There's usually a lagging effect on energy prices but this has been happening for a while now.

What am I missing?

/rsm005/

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  #5214 (permalink)
Market Wizard
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rsm005 View Post
This is something I just don't understand. Why would the collapse in the price of oil affect the market overall?

- The US economy is very diverse.
- Lower energy costs lead to lower transport and production costs.
- Sure some companies are hurt but a majority benefit, especially consumer focused businesses because lower energy costs translate to more money for people to spend.
- There's usually a lagging effect on energy prices but this has been happening for a while now.

What am I missing?

/rsm005/

Two issues I am thinking about:

I assume that oil producing countries hold a lot of stocks. They might sell now to get some cash.

Oil producing companies in the US probably needed a lot of money from banks. Some of these companies might get into trouble, and not pay back. Thus, also banks get into trouble.

But I do not have any figures in this regard.

Best regards, Myrrdin

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  #5215 (permalink)
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Almost 9ET on MLK day US markets closed today.
ES currently trading approximately unchanged (1873) but has had a 30 point range overnight (1860-1890)

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  #5216 (permalink)
Market Wizard
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rsm005 View Post
This is something I just don't understand. Why would the collapse in the price of oil affect the market overall?

- The US economy is very diverse.
- Lower energy costs lead to lower transport and production costs.
- Sure some companies are hurt but a majority benefit, especially consumer focused businesses because lower energy costs translate to more money for people to spend.
- There's usually a lagging effect on energy prices but this has been happening for a while now.

What am I missing?

/rsm005/

You also have all of the related industries affected by lower oil. Railroads transporting less oil. Steel for oil drilling. Equipment used by oil industry. Housing and construction in oil drilling areas. Banks lending to oil and related companies. I'm sure there are more.

This article answers your question very well.
http://www.reuters.com/article/usa-oil-kemp-idUSL8N1522IN
Quoting 
In the United States, businesses engaged in oil and gas extraction and refining spent almost $200 billion on new equipment and structures in 2013, the most recent year for which data are available.

Oil and gas extraction and refining accounted for more than 14 percent of all new capital expenditures in the United States in 2013, according to the U.S. Census Bureau.

Oil and gas drilling and associated services on their own accounted for more than 13 percent of whole-economy capital expenditures ("Annual Capital Expenditures Survey" Table 4a).


Quoting 
The impact is not confined to the United States. Oil and gas projects around the world worth $380 billion have been postponed or cancelled since 2014 according to Wood Mackenzie, an energy consultancy.

Several hundred thousand jobs have been lost at exploration and production companies and oil field services firms.

But these are only the direct spending cuts and job losses. The downturn in oil and gas is rippling all along the supply chain.

The oil and gas industry is not just a major producer of inputs used by other manufacturers, service suppliers and households, it is also a major consumer of raw materials, manufactured items and services itself.



Last edited by ron99; January 18th, 2016 at 11:02 AM.
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  #5217 (permalink)
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SMCJB View Post
Almost 9ET on MLK day US markets closed today.
ES currently trading approximately unchanged (1873) but has had a 30 point range overnight (1860-1890)


Crude at 29....

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  #5218 (permalink)
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I'm a Tastytrade fan too, and am a 30 year veteran of futures and futures options trading. With the very high implied volatility, I've just been shorting puts in 6C (March .685) and CL (March 29.00). I believe both will consolidate and rally over the next few weeks, and love the potential for volatility crush, theta decay, and favorable directional moves.

As to ES, I like short puts here too as a near term directional trade, but the volatility just isn't high enough yet, as it was last August. I think we will see a 1-2 week rally here, but then we are heading much lower, to about 1500.

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  #5219 (permalink)
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Warren534 View Post
I've just been shorting puts in 6C (March .685) .

I hope you have the fact, that there is a rate decision on Wednesday for 6C on your radar ?

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  #5220 (permalink)
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rleplae View Post
I hope you have the fact, that there is a rate decision on Wednesday for 6C on your radar ?

Betach, yes I am aware of it, but it plays no role in my trading.

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