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Selling Options on Futures?
Started: by ron99 Views / Replies:583,176 / 5,776
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Selling Options on Futures?

  #541 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
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Selim View Post
Ron99 I think you are just really good at this it must be an innate talent, were you an institutional trader before trading on your own?
Self taught.

Man I have questions but I feel I'm intruding on your time I hope you don't mind me picking your brain???
I don't mind. Some days I have time and some days I don't.

First and foremost thanks for the prompt response. First question has any of your selling option gone in the money even after you bought it back at a loss.
Not quite sure of your question. Are you asking if I got out of a position and then it turned and would have made money? Absolutely.

Are you a net seller of options do you buy just to hedge.
Almost always a seller of options. Sometimes buy but that is a totally different trading strategy I use (very volatile. Either I hit a home run or I strike out).

And last but not the last what advice, trading advice would you give to a newbie like myself what should I aim for ie cash on reserve etc.
66% cash. Paper trade for a long while before you trade your money. Do low risk trades to start.

Ron99 must stand for 99% Ron will make you money. I think I'm a bit too excited thanks dude, dude is very American right?

dude. That's funny

Don't get too excited. Trading is not as easy as it looks. I lost money for 3 years selling options before I started to regularly make a profit every year. Mainly because I wasn't far enough out of the money.

Been trading 14 years total. Selling options 7 years.

I read stats that 85% of traders lose money. Somebody is losing the money I make.

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  #542 (permalink)
Elite Member
Voula -- Athens,Greece
 
Futures Experience: Beginner
Platform: Saxo
Favorite Futures: Oil
 
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Hey spj77, wow from one side of the world to another. Spj77 can you give me an example of ron99 66% rule for example with a hypothetical 100,000 account thanks mate. There is a dude to the west of me a mate to the east of me life is good.

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  #543 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
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spj77 View Post
Such great advice Ron, you have drummed into me sooooooo many times that keeping the delta low and always having 66% excess cash being two of the most important factors to adhere to but i never tire of it being reinforced. Take note of this Selim, at first it might seem like you are too far OTM and the premium is too low, but the margin is correspondingly lower so the return on funds invested (margin + excess) is still healthy and you will find you have to bail on less positions making for better long term returns, its about small steady accumulations, not trying to hit home runs.

Scott is up early before work starts.

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  #544 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,374 since Jul 2011
Thanks: 650 given, 4,029 received
Forum Reputation: Legendary


Selim View Post
Hey spj77, wow from one side of the world to another. Spj77 can you give me an example of ron99 66% rule for example with a hypothetical 100,000 account thanks mate. There is a dude to the west of me a mate to the east of me life is good.

Maximum 34,000 Initial Margin required for all positions. 66,000 cash in reserve. If you have less than 66,000 cash you shouldn't add any more positions.

For the more experienced traders, I reduce the excess per position for positions that are near to expiring and still far OTM.

For example I have Feb 1200 GC puts. 4 days from expiring. I don't carry any excess for that position. I use excel spreadsheets to keep track of excess per position. and excess per account.

The sooner excess is freed up the more positions I can add.

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  #545 (permalink)
Elite Member
Qld, Australia
 
Futures Experience: Beginner
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Futures Edge on FIO

Which products do you trade?

 
Sure thing.
Right now the CL 75P expiring on 15 March is bid at $80 premium. This option has a delta of .0187 per my data. Current OX margin 615, therefore with premium of 80, total margin + excess = 2085, fees 6.5, 49 days held equates to an annualised ROI of 26.3%

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  #546 (permalink)
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You are going to laugh Ron, but i am having a sick day today!!!!!!

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  #547 (permalink)
Market Wizard
Cleveland, OH
 
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Favorite Futures: Options on Futures
 
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spj77 View Post
You are going to laugh Ron, but i am having a sick day today!!!!!!


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  #548 (permalink)
Elite Member
Voula -- Athens,Greece
 
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Posts: 27 since Jan 2013
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Selling options

Yes I did mean that ron99 about all your far out of the options not going into the money, ron99 during the financial crises of 2007 to 2009 how did you trade those markets for example oil was at 147 and went all the way to 30 something after it shot back up to the 90's even then your otm options woudnt have gone in the money? Cheers.

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  #549 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,374 since Jul 2011
Thanks: 650 given, 4,029 received
Forum Reputation: Legendary


spj77 View Post
Sure thing.
Right now the CL 75P expiring on 15 March is bid at $80 premium. This option has a delta of .0187 per my data. Current OX margin 615, therefore with premium of 80, total margin + excess = 2085, fees 6.5, 49 days held equates to an annualised ROI of 26.3%

Actually with margin at 615 you would have excess of 1230 for a total of 1845.

Funny that since you are already on Friday you show 49 DTE and I show 50 because it is still Thursday here..

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  #550 (permalink)
Elite Member
Qld, Australia
 
Futures Experience: Beginner
Platform: Excel/Hoadley/PC-SPAN
Broker/Data: OX
Favorite Futures: Options
 
Posts: 28 since Mar 2012
Thanks: 6 given, 39 received


I be conservative in my calcs and add the premium in as well, and then try to seek > 25% annualised return initially, which as you say will in effect be more over time as the margin free's up

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