Selling Options on Futures? - Options on Futures | futures io social day trading
futures io futures trading


Selling Options on Futures?
Updated: Views / Replies:858,661 / 6,897
Created: by ron99 Attachments:762

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 100,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you dont need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • 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.

-- Big Mike, Site Administrator

Reply
 762  
 
Thread Tools Search this Thread
 

Selling Options on Futures?

  #5751 (permalink)
Elite Member
Buckeye Nation
 
Futures Experience: Intermediate
Platform: Ninja Trader
Broker/Data: Amp/CQG, TOS
Favorite Futures: CL, 6E, YM and ES
 
Posts: 201 since Jul 2010
Thanks: 146 given, 234 received


ron99 View Post
Be very careful trading an IRA. Remember if you lose the money or go negative there is a limit on how much money you can put into the IRA.

The ES spreads were all short puts with long puts below the shorts. The other commodities were mixed put or call spreads.

That book is a good start. Carley Garner has some books too. A couple of threads here would be the next place to go.

Besides your thread, what she the thread discusses selling options?

Reply With Quote
 
  #5752 (permalink)
Elite Member
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,932 since Jul 2011
Thanks: 874 given, 5,248 received


kulu View Post
Besides your thread, what she the thread discusses selling options?

https://futures.io/options-futures/36932-diversified-option-selling-portfolio.html

Reply With Quote
 
  #5753 (permalink)
Trading Apprentice
Philadelphia Pennsylvania
 
Futures Experience: None
Platform: Etrade
Favorite Futures: Options
 
Posts: 4 since Mar 2015
Thanks: 6 given, 6 received


Ron,
Could you explain the purpose of the 2 long puts at 1.5 delta?
Is it to provide more protection, or does it somehow reduce the margin required?
If protection, are you able to provide an example of this? Using SPX options I am unable to see how 2 long puts provides any significant protection in the case of a big market drop - it seems so minor that it wouldn't be worth the extra put - and would be more beneficial to simply buy 1 and collect more $$.

Going back to your last reply to me regarding commissions: trading options on futures has higher commission costs but lower margin requirements, whereas regular SPX options has lower commissions but much higher margin requirements. Overall your ROI is higher than what I calculate using regular SPX options with the same strategy!

thanks.

Reply With Quote
The following 3 users say Thank You to foxtrot444 for this post:
 
  #5754 (permalink)
Elite Member
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,932 since Jul 2011
Thanks: 874 given, 5,248 received


foxtrot444 View Post
Ron,
Could you explain the purpose of the 2 long puts at 1.5 delta?
Is it to provide more protection, or does it somehow reduce the margin required?
If protection, are you able to provide an example of this?

Both. The longs give you protection from crashes of the ES futures market. They also lower margin.

ES futures were 2091 on 20150817. They were 1862 on 20150824. That's a 229 drop in 7 calendar days.

IM on 8/17/15 for a naked short ESx5p1740 was 540. For a ESx5p1740p1570(2) spread was 210. Possible ROI if you exited at 30 days held and a 50% drop in net premium was 1.7% for the naked put with 9x IM for cash excess and 2.4% for the spread with 6x IM for cash excess.

The table below shows the naked 1740 and a spread. They are both using 6x IM. On 20150824 the naked put is showing a $2,641.12 loss or a 47% drawdown and is using 93.8% of account balance for margin. Extremely close to being on margin call.

The spread on 20150824 is actually showing a $131.64 profit because the 2 longs made more money than the short lost.

The tables use the margin on 20150817 but use the premium for 20150818 as if you entered the position on 20150818. On that day you were using the IM from 20150817.
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


I have also attached a spreadsheet with various other strategies on 20150817.

Attached Files
Register to download File Type: xlsx 81715.xlsx (132.9 KB, 15 views)
Reply With Quote
The following 6 users say Thank You to ron99 for this post:
 
  #5755 (permalink)
Trading Apprentice
Zurich
 
Futures Experience: Intermediate
Platform: Amibroker
Favorite Futures: Fesx
 
Posts: 39 since Feb 2011
Thanks: 63 given, 11 received

Hi Ron, thanks for all yor work. Am I correct that you only trade the Delta 1xS5 2xL1,5 IM6 with quaterly options and DTE 90+? Which to select if you replace one next week?

Thanks

Reply With Quote
 
  #5756 (permalink)
Trading Apprentice
Philadelphia Pennsylvania
 
Futures Experience: None
Platform: Etrade
Favorite Futures: Options
 
Posts: 4 since Mar 2015
Thanks: 6 given, 6 received


ron99 View Post
Both. The longs give you protection from crashes of the ES futures market. They also lower margin.

ES futures were 2091 on 20150817. They were 1862 on 20150824. That's a 229 drop in 7 calendar days.

IM on 8/17/15 for a naked short ESx5p1740 was 540. For a ESx5p1740p1570(2) spread was 210. Possible ROI if you exited at 30 days held and a 50% drop in net premium was 1.7% for the naked put with 9x IM for cash excess and 2.4% for the spread with 6x IM for cash excess.

The table below shows the naked 1740 and a spread. They are both using 6x IM. On 20150824 the naked put is showing a $2,641.12 loss or a 47% drawdown and is using 93.8% of account balance for margin. Extremely close to being on margin call.



.

I owe you an apology. I didn't word my question right.
What I was trying to ask is why do you do buy 2 puts instead of just 1 (not asking about naked). Does 2 vs 1 change your margin requirement? Do 2 long puts really provide that much more protection vs 1 long put?

thanks.

Reply With Quote
 
  #5757 (permalink)
Elite Member
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,932 since Jul 2011
Thanks: 874 given, 5,248 received


Forex37 View Post
Hi Ron, thanks for all yor work. Am I correct that you only trade the Delta 1xS5 2xL1,5 IM6 with quaterly options and DTE 90+? Which to select if you replace one next week?

Thanks

I also trade the EW3 options.

If I were adding new positions today I would add EW3J7p1830 short and EW3J7p1600 longs. 108 DTE IM is $272

Reply With Quote
The following 4 users say Thank You to ron99 for this post:
 
  #5758 (permalink)
Elite Member
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,932 since Jul 2011
Thanks: 874 given, 5,248 received


foxtrot444 View Post
I owe you an apology. I didn't word my question right.
What I was trying to ask is why do you do buy 2 puts instead of just 1 (not asking about naked). Does 2 vs 1 change your margin requirement? Do 2 long puts really provide that much more protection vs 1 long put?

thanks.

The spreadsheet in the previous posts has some examples of spreads with only one long. They do not offer enough protection during a flash crash.

The IM for a spread with one long is $290. For a spread with 2 longs it is $254. The same short contract and about the same delta.

In this example both spreads are about 2.00 net delta, the short is the same contract. Only difference is one or two longs. The spread with one long had a drawdown of 35.4% or a loss of $617.24 on 20150824. With 2 longs there wasn't a drawdown on 20150824. It was a profit of $131.64.
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


On 20150929 the drawdowns were similar and the 2 long spread used a little less account balance for IM.


Last edited by ron99; January 5th, 2017 at 08:06 AM.
Reply With Quote
The following 8 users say Thank You to ron99 for this post:
 
  #5759 (permalink)
Market Wizard
Houston, TX
 
Futures Experience: Advanced
Platform: XTrader
Broker/Data: Advantage Futures
Favorite Futures: Energy
 
Posts: 2,541 since Dec 2013
Thanks: 2,053 given, 4,369 received
Forum Reputation: Legendary

Writing Puts, Or Just Pretending To.
Writing Puts, Or Just Pretending To. ? Throwing Good Money After Bad

Interesting blog post on the "CBOEs put-write index" and put writing, and its performance vs the outright market (S&P500)

Reply With Quote
The following 5 users say Thank You to SMCJB for this post:
 
  #5760 (permalink)
Elite Member
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,932 since Jul 2011
Thanks: 874 given, 5,248 received


After reading the above article I decided to make a chart comparing the 4 years of my backtest for my ES put spread strategy vs the change in the ES futures price.

On Jan 3, 2013 ES futures was 1450. On Dec 22, 2016 (date last spread position was closed) it was 2255. That's a 55.5% increase.

My strategy in the same time frame was up 127.1%

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).

Reply With Quote
The following 8 users say Thank You to ron99 for this post:

Reply



futures io > > > > Selling Options on Futures?

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

September Journal Challenge (sponsored by TopstepTrader)

September

Battlestations! Win $947 in prizes for showing us your trading desk!

October
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Trading Futures with options as protection Gooffy2010 Commodities Futures Trading 7 November 7th, 2017 11:06 AM
Crude Oil (CL) futures inverse pairing options Big Mike Commodities Futures Trading 8 December 12th, 2013 11:00 AM
Recommend futures, options Broker? sam1197 Reviews of Brokers and Data Feeds 17 March 27th, 2013 12:42 AM
Selling Njniatrader sam1197 NinjaTrader 22 June 28th, 2012 12:40 PM
Zen-Fire Futures options tici88 Reviews of Brokers and Data Feeds 1 July 30th, 2011 09:16 AM


All times are GMT -4. The time now is 02:34 PM. (this page content is cached, log in for real-time version)

Copyright © 2018 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@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 2018-10-22 in 0.22 seconds with 15 queries on phoenix