Selling Options on Futures? (Page 535) - 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:568,414 / 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 March 15th, 2016, 01:11 PM   #5341 (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
@ron99

So I put on a smallish position 4 days ago against ES and have noticed some interesting behavior.

Position
ESM6P1620 Price = $8
ESM6P1370 Price = $2.20


Since the position was opened the market has remained fairly flat but what I've seen is the long put decay much faster than the short.

As of today the prices reflect
ESM6P1620 Price = $8
ESM6P1370 Price = $1.90


Margin hold is about the same at OX.

It's unnerving to watch the longs decay that since i'm counting on them to protect me from a market shock. I'm using position sizing to mitigate the loss against a long grind down. Just thought I'd share.

Thanks,
/rsm005/

The longs settled and have only traded at 1.95. The short settled at 7.50. So the net is 3.60 for when you entered the trade and 3.60 for yesterday's settlements.

Reply With Quote
     
The following user says Thank You to ron99 for this post:
     

Old March 17th, 2016, 11:15 PM   #5342 (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

Getting a better fill.

I wanted to bring this question up for the broader forum to see if anyone can shed some light on some ways to get a better fill when you open or close a position. Are there any tricks, strategies, or times when you open positions or close positions? I'd love to hear people's thoughts on this. Thanks a lot, have a great weekend.

/rsm005/

Reply With Quote
     

Old March 18th, 2016, 08:27 AM   #5343 (permalink)
Elite Member
Linz Austria
 
Futures Experience: Advanced
Platform: Zaner360, Vantage, Trade Navigator
Broker/Data: DeCarley, RJO
Favorite Futures: Commodities
 
Posts: 679 since Nov 2014
Thanks: 1,031 given, 550 received



rsm005 View Post
I wanted to bring this question up for the broader forum to see if anyone can shed some light on some ways to get a better fill when you open or close a position. Are there any tricks, strategies, or times when you open positions or close positions? I'd love to hear people's thoughts on this. Thanks a lot, have a great weekend.

/rsm005/

I prefer to sell options during US day trading hours, the former pit hours. Usually the volume is highest after the former pit opening and before its close. ES options and other options with a high volume can be traded during the complete former pit hours. For some options you will receive acceptable fills also during night hours, for some of them (eg. energies) fills during night hours are terrible.

I do not sell very thinly traded options (eg. lumber).

I prefer selling options on Fridays, but of course there are other criteria for the best day.

I always place the order in the middle between bid and ask. Often there will be a fill, if not I will move the order tick by tick. Fills in the ES are easier to get than in coffee options.

It is preferable to enter a spread as a spread order. There are traders claiming there excellent experience legging into spreads (and making some additional money). I am not among them.

Best regards, Myrrdin

Reply With Quote
     
The following 6 users say Thank You to myrrdin for this post:
     

Old March 18th, 2016, 10:27 AM   #5344 (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

A few other points.

I have sometimes found that if you have an ES open order, a few ticks from bid, right near the close, 4pm ET, that it will get hit.

I like to sell late Thursday. I find that weekend time erosion of the premium starts happening on Friday.

Reply With Quote
     
The following 7 users say Thank You to ron99 for this post:
     

Old March 21st, 2016, 12:24 AM   #5345 (permalink)
Membership Temporarily Revoked
Springfield USA
 
Futures Experience: Advanced
Platform: ToS and IB
Favorite Futures: ES,SPX
 
Posts: 13 since Jan 2016
Thanks: 10 given, 16 received

Futures Edge on FIO

ron99 View Post
A few other points.

I have sometimes found that if you have an ES open order, a few ticks from bid, right near the close, 4pm ET, that it will get hit.

I like to sell late Thursday. I find that weekend time erosion of the premium starts happening on Friday.

Yes, I remember an interview a few years ago from a MM on the floor and he said they price in the weekend decay early-mid friday because of the people who were coming in late friday hoping to snag the weekend decay and get out Monday.


Lately I have been doing spreads on both ES and SPX just depending on which broker I am using. Last week I put a spread on ES for $3.45 and I immediately get an Ask for $3.30 which is decent and then it filled 60 min later. I put the same spread on SPX and the Ask is $1.20 it sat all day and didn't budge from $1.20 till 3:45 pm then got filled.
(I did 2x on ES to make it equal)
I believe this has to do with SPX still being monopolized on one exchange and ES being on multiple exchanges.

Anyone else have similar experience?


Last edited by chubbly2; March 21st, 2016 at 12:46 AM.
Reply With Quote
     
The following 2 users say Thank You to chubbly2 for this post:
     

Old March 21st, 2016, 08:52 PM   #5346 (permalink)
Membership Temporarily Revoked
Springfield USA
 
Futures Experience: Advanced
Platform: ToS and IB
Favorite Futures: ES,SPX
 
Posts: 13 since Jan 2016
Thanks: 10 given, 16 received

As I mentioned in an earlier post I am still working on finding optimal hedging for selling puts. Part of the problem is figuring out how much of a market decline are you looking to protect against and what % of your portfolio are you looking to protect. Unfortunately a hedge really bites into profits if you miscalculate it. In a semi-slow grind down like we had in Jan a hedge as @ron99 suggested does offer some protection but it works much better in a sudden Aug 24 type drop. Also the longer and slower the grind downward takes the less effective it becomes

This link has an interesting graphic I just found. Basically there have been 11 Bear markets since 1956. This document a bull (bear) market is defined as a positive (negative) move greater than 15% that lasts at least 3 months.

https://www.mackenzieinvestments.com/en/assets/documents/marketingmaterials/mm-bull-bear-markets-sp500-en.pdf

This link also has a few interesting points about bull/bear markets

8 things you need to know about bear markets


Of course the problem is you never know when it will happen and you don't know a bear market till you are firmly in it and our issue is put spreads take 25-45 days to work.

Finally here is a good link on biggest up and down days in SP500

https://en.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_S%26P_500_Index

Reply With Quote
     
The following 5 users say Thank You to chubbly2 for this post:
     

Old March 21st, 2016, 09:21 PM   #5347 (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


chubbly2 View Post
As I mentioned in an earlier post I am still working on finding optimal hedging for selling puts. Part of the problem is figuring out how much of a market decline are you looking to protect against and what % of your portfolio are you looking to protect. Unfortunately a hedge really bites into profits if you miscalculate it. In a semi-slow grind down like we had in Jan a hedge as @ron99 suggested does offer some protection but it works much better in a sudden Aug 24 type drop. Also the longer and slower the grind downward takes the less effective it becomes

This link has an interesting graphic I just found. Basically there have been 11 Bear markets since 1956. This document a bull (bear) market is defined as a positive (negative) move greater than 15% that lasts at least 3 months.

https://www.mackenzieinvestments.com/en/assets/documents/marketingmaterials/mm-bull-bear-markets-sp500-en.pdf

This link also has a few interesting points about bull/bear markets

8 things you need to know about bear markets


Of course the problem is you never know when it will happen and you don't know a bear market till you are firmly in it and our issue is put spreads take 25-45 days to work.

Finally here is a good link on biggest up and down days in SP500

https://en.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_S%26P_500_Index

I'm experimenting with position sizing as well. It makes a big impact on draw down especially when the market grinds down. I usually keep between 6x and 9x as a reserve now. The upside is smaller but I sleep so much better at night.

/rsm005/

Reply With Quote
     
The following 2 users say Thank You to rsm005 for this post:
     

Old March 21st, 2016, 10:33 PM   #5348 (permalink)
Membership Temporarily Revoked
Springfield USA
 
Futures Experience: Advanced
Platform: ToS and IB
Favorite Futures: ES,SPX
 
Posts: 13 since Jan 2016
Thanks: 10 given, 16 received


rsm005 View Post
I'm experimenting with position sizing as well. It makes a big impact on draw down especially when the market grinds down. I usually keep between 6x and 9x as a reserve now. The upside is smaller but I sleep so much better at night.

/rsm005/

Yes, I am using more margin as well. The thing you must decide is how far will you let a position go against you and what % of damage will that do to your account if it happens.

We have had 4 swings of 10+% up/down in the past 7 months and I don't think option prices have gone up that much to compensate us for taking the risk of writing. Maybe I am wrong?

I am also looking at strategies trading VIX as well since it has top and bottom limits and always is mean reverting. @ron99 if you would like me to start a new thread on vix just let me know so I don't pollute your thread

Reply With Quote
     
The following 2 users say Thank You to chubbly2 for this post:
     

Old March 21st, 2016, 10:49 PM   #5349 (permalink)
Silver bullet
Valencia / Spain
 
Futures Experience: None
Platform: MC
Broker/Data: IB
Favorite Futures: ES, EURUSD
 
PK 1's Avatar
 
Posts: 45 since Aug 2011
Thanks: 105 given, 29 received


chubbly2 View Post
Of course the problem is you never know when it will happen and you don't know a bear market till you are firmly in it and our issue is put spreads take 25-45 days to work.
...
Finally here is a good link on biggest up and down days in SP500

Good post!

knowing statistics from the past for bigger drawdowns on a daily and a longer base can be helpful. Doing option selling plus other kind of trades can help a lot to diversify and reduce risk. But also one has to find a good balance between subsequent regularly selling options and using the market conditions to sell even more options for a better premium. At least that's the way I do it.

Regularly short and longer term options and keeping lots of reserve for times VIX is going up. If it does and I think the momentum is slowing down I sell another portion and one more after 1-2 days if possible ... The higher premium and greater likelyhood of premium to drop after a few days pays out. Combined with regularly selling I feel quite comfortable with this.

Reply With Quote
     

Old March 21st, 2016, 10:59 PM   #5350 (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



chubbly2 View Post
Yes, I am using more margin as well. The thing you must decide is how far will you let a position go against you and what % of damage will that do to your account if it happens.

We have had 4 swings of 10+% up/down in the past 7 months and I don't think option prices have gone up that much to compensate us for taking the risk of writing. Maybe I am wrong?

I am also looking at strategies trading VIX as well since it has top and bottom limits and always is mean reverting. @ron99 if you would like me to start a new thread on vix just let me know so I don't pollute your thread

Yeah you probably should start a new thread if you are going to discuss trading VIX.

Reply With Quote
     

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 04:31 AM.

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 0.17 seconds with 20 queries on phoenix via your IP 54.205.140.252