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Selling Options on Futures?


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Selling Options on Futures?

  #5761 (permalink)
 rsm005 
vancouver BC/Canada
 
Experience: Beginner
Platform: Zaner360, OX
Broker: DeCaley
Trading: options
Posts: 264 since Jan 2015
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Ron and all selling puts


What are your thoughts on this article?


https://www.bloomberg.com/news/articles/2017-01-06/wall-street-is-starting-to-get-nervous-about-all-the-money-pouring-into-u-s-stocks

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  #5762 (permalink)
Flintsone99
Springfield USA
 
Posts: 18 since Jan 2017
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rsm005 View Post
Ron and all selling puts


What are your thoughts on this article?


I think people held a lot of money back before the election, then things shot up as everyone started buying.
I personally can't see it sustaining, but if it does then that is good for put sellers.

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  #5763 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785




I have decided that it is almost impossible to predict direction of markets.

So unless you think that the market is going to drop lower than the strike of your short position, keep putting positions on.

Several people, me included, were worried about Trump being elected and that it might crash the markets. The opposite happened.

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  #5764 (permalink)
Flintsone99
Springfield USA
 
Posts: 18 since Jan 2017
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ron99 View Post
I have decided that it is almost impossible to predict direction of markets.

So unless you think that the market is going to drop lower than the strike of your short position, keep putting positions on.

Several people, me included, were worried about Trump being elected and that it might crash the markets. The opposite happened.

You are right. As long as the market doesn't hit your strike in 90 days

Trump still has 4 years to cause a market crash, most likely start it with a tweet (but that is a topic for another thread )

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  #5765 (permalink)
Flintsone99
Springfield USA
 
Posts: 18 since Jan 2017
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Just a question about Victor Niederhoffer and him going bust in 1997 selling puts. I was just curious if anyone knew more about his position?
From this article all I can gleam is that an 8% move wiped him out and that he was naked.
Anyone know what time frame he was trading and how far OTM he was?

It is a old article but we can use it as an example of what not to do

Victor Niederhoffer Thinks He Caused The Stock Market Crash Of 1997 - Business Insider


An interesting line in his Wikipedia entry may give us clues (I have no idea how to get prices from that far back to tell if that was ATM or OTM)
"In statistical terms, I figure I have traded about 2 million contracts, with an average profit of $70 per contract (after slippage of perhaps $20). This average is approximately 700 standard deviations away from randomness."

https://en.wikipedia.org/wiki/Victor_Niederhoffer

An interview with him shortly after the 1997 crash. He still looks shell shocked

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  #5766 (permalink)
uwevoelker
Hamburg, Germany
 
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ron99 View Post
It costs me $6.12 per option round turn.

Actually that is not too much. I pay 8.62 (also at DeCarley). A friend of mine is at Iron Beam and pays around 2.50.

(As a reference, IB is 2.82 - with higher margin requirements like Ron mentioned.)

Ron, do you enter your ratio spread as combo order? Or in 2 single orders? What trading platform are you using?

Thanks for all your hard work!

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  #5767 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785


uwevoelker View Post
Actually that is not too much. I pay 8.62 (also at DeCarley). A friend of mine is at Iron Beam and pays around 2.50.

(As a reference, IB is 2.82 - with higher margin requirements like Ron mentioned.)

Ron, do you enter your ratio spread as combo order? Or in 2 single orders? What trading platform are you using?

Thanks for all your hard work!

2 orders. One for shorts and one for longs.

Zaner360. I also have QST from another firm.

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  #5768 (permalink)
Flintsone99
Springfield USA
 
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ron99 View Post
2 orders. One for shorts and one for longs.

Zaner360. I also have QST from another firm.

Do you do that because you get better quotes or because of a platform limitation on entering put spreads?

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  #5769 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785


Flintsone99 View Post
Do you do that because you get better quotes or because of a platform limitation on entering put spreads?

Platform

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  #5770 (permalink)
 kulu 
Buckeye Nation
 
Experience: Intermediate
Platform: Ninja Trader
Broker: Amp/CQG, TOS
Trading: CL, 6E, YM and ES
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ron99 View Post
Platform

@ron99

Did you enter any put position in /ES today? Also, I was looking at the trade you describe for ES Put Selling, and I am not sure I understand the 2 long puts. You say you want delta = 1.5. I am finding that the deltas on my platform (TOS) are not in that magnitude. I couldn't find a delta 1.5 put. The short 5 delta was no issue, but I couldn't find any 1.5 delta option.

I would like to demo this trade for the rest of the month and start small when I have enough occurrences to go live.

Thanks

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