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Selling Options on Futures?
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Created: by ron99 Attachments:731

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Selling Options on Futures?

  #5691 (permalink)
Market Wizard
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rsm005 View Post
All,

There's been a lot of discussions around process and methods but one area that I wanted to talk about was psychology. One of the biggest things that gets to me and probably always will is the fear of being completely wiped out. A sudden drop or a long trend down that shows no sign of stopping. Yes the methods discussed here can stand a large drop or even a consistent drop up to a point but by then a lot of money has been lost. Now, some threads and blogs say to invest without margin, at least there's comfort in knowing you own an asset that may eventually come back. Others have said to simply eat your loss and move one. No matter what the method I wanted to see how people on this thread deal with the fear, the nerves, paranoia, and manage the constant stream of "what ifs" playing out in your mind?

/rsm005/

After experiencing several large drops in my trading career, a large drop now doesn't faze me as much anymore. You can't go back and change what happened so you learn to move on and recover.

rsm005, you are doing the correct thing by using more excess/trading less positions if that makes it easier for you to sleep at night.

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  #5692 (permalink)
Elite Member
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Keep the portfolio down to about 30% of net liq and somewhat short delta?

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  #5693 (permalink)
Market Wizard
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ron99 View Post
After experiencing several large drops in my trading career, a large drop now doesn't faze me as much anymore. You can't go back and change what happened so you learn to move on and recover.

rsm005, you are doing the correct thing by using more excess/trading less positions if that makes it easier for you to sleep at night.

I should also add learn from your mistakes and never make them again.

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  #5694 (permalink)
Market Wizard
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suko View Post
Keep the portfolio down to about 30% of net liq and somewhat short delta?

It's not that simple. Read the thread.

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  #5695 (permalink)
Market Wizard
St Thomas, USVI
 
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SPX was down for the 8th consecutive day yesterday. This has only happened 3 other times since 1982 on 9/10/91, 6/19/96 and 10/10/08.

The last time the SPX dropped 9 days in a row was 12/11/1980.

The 8 day 2.9% decline is the smallest 8 day decline since 6/19/96 (1.7%) and the second smallest 8 day decline since 1966

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  #5696 (permalink)
Market Wizard
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This is for actual SP 500.
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https://twitter.com/MktOutperform/status/794353631361384457

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  #5697 (permalink)
Market Wizard
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ron99 View Post
This is for actual SP 500.

SPX is the symbol of the actual S&P500 Index!

Anyway, Friday we were down, for the 9th day in a row... this has only happened 24 times in history with most of those being 50+ years ago, with 3 in the 1930's, 1 in the 1950's, 11 in the 1960's, 7 in the the 1970's and the most recent being 11 December 1980. So it hasn't happened in almost 36 years! The average 9 day decline of the 23 previous occurrences was 7% with the only decline's smaller than the current 3.07% being 2.74% on 23-Feb-66 and 3.06% on 22-Jul-63. (So it's a long, but not significantly big streak). I'm not sure I would read anything into what happened in similair situations 50+ years ago but the next day the market is up only 56% of the time, but is up 70% of the time on Day 2. Interestingly though for Days 4 thru 10 the market was up less than 35% of the time. Of course this year, I think it will all come down to the result on Tuesday (US Presidential election for the non-Americans).

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Selling Options on Futures?-161106-9-down-days.jpg  
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  #5698 (permalink)
Market Wizard
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ron99 View Post
This is for actual SP 500.
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


https://twitter.com/MktOutperform/status/794353631361384457

I couldn't understand why this chart didn't match my analysis and I finally found it. The chart is slightly wrong.

For example the market did decline 12 consecutive days from 92.42 on 21-Apr-66 to 86.32 on 9-May-66 which is a 6.6% decline. But its a 6.6% 12 day decline NOT a 6.6% 8 day decline as labeled.

Also if you want analysis "ALL" the 8 day declines, you need to realize that technically speaking there were five 8 day declines in that 12 day period
-2.57 or -2.8% from 92.42 on 21-Apr to 89.85 on 3-May
-2.88 or -3.1% from 92.27 on 22-Apr to 89.39 on 4-May
-4.15 or -4.5% from 92.08 on 25-Apr to 87.93 on 5-May
-4.15 or -4.5% from 91.99 on 26-Apr to 87.84 on 6-May
-5.44 or -5.9% from 91.76 on 27-Apr to 86.32 on 9-May

Hence Charlie Bilello's twitter claim of only 26 occurrences of 8 consecutive down days is also incorrect. There might have been 26 occurrences of 8 consecutive down days, when the market goes up the next day but there were actually 54 occurrences of 8 consecutive down days.

Anyway... time to stop geeking out.

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  #5699 (permalink)
Market Wizard
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SMCJB View Post
Hence Charlie Bilello's twitter claim of only 26 occurrences of 8 consecutive down days is also incorrect. There might have been 26 occurrences of 8 consecutive down days, when the market goes up the next day but there were actually 54 occurrences of 8 consecutive down days.

Reviewing my statement, I guess he actually said "has declined 8+ days in a row 26 times". It is true that we have only had 26 losing streaks of 8 or more days, but that's technically not the same thing.

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  #5700 (permalink)
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@SMCJB

Where are you getting your market data going back so far?

Thanks,
/rsm005/

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