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Selling Options on Futures?
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Selling Options on Futures?

  #5781 (permalink)
Market Wizard
Cleveland, OH
 
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ron99 View Post
Sold today ESj7p1800p1540(2) for 2.25.

On 12/20/16 I sold ESj7p1800p1540(2) for 2.25. Exited today at 1.30. Days held was 35. Using 6X IM the monthly ROI was 1.6%.

Sold today ESk7p1825p1580(2) for 1.80.

Low possible ROI now.

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  #5782 (permalink)
Trading Apprentice
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ron99 View Post
On 12/20/16 I sold ESj7p1800p1540(2) for 2.25. Exited today at 1.30. Days held was 35. Using 6X IM the monthly ROI was 1.6%.

Sold today ESk7p1825p1580(2) for 1.80.

Low possible ROI now.


Anyone else feeling like option prices are very low recently?
I will be honest I have stayed out of the put selling for now.

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  #5783 (permalink)
Market Wizard
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Flintsone99 View Post
Anyone else feeling like option prices are very low recently?
I will be honest I have stayed out of the put selling for now.

That's a question I don't have an answer to. Do you make more money always having positions on and not trying to time entry or do you make more by timing the entry.

I thought about not selling new positions yesterday after exiting prior positions hoping for lower prices today. But since ES is up 10.00 right now I am glad I sold new positions yesterday.

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  #5784 (permalink)
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ron99 View Post
That's a question I don't have an answer to. Do you make more money always having positions on and not trying to time entry or do you make more by timing the entry.

I thought about not selling new positions yesterday after exiting prior positions hoping for lower prices today. But since ES is up 10.00 right now I am glad I sold new positions yesterday.


I definitely agree with you on that. I don't know what the price will be tomorrow or the next day (anyone who claims they do is a liar).

When I look at ATM historical prices it seems like we are very low. That was I why I decided against opening a position yesterday.

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  #5785 (permalink)
Market Wizard
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ron99 View Post
On 12/20/16 I sold ESj7p1800p1540(2) for 2.25. Exited today at 1.30. Days held was 35. Using 6X IM the monthly ROI was 1.6%.

Sold today ESk7p1825p1580(2) for 1.80.

I was curious if moving to a new position on Jan 24th was the correct thing to do or if I should have just stayed with my old position.

The ESj7p1800p1540(2) spread that I had on would have made $12.50 on Jan 25th.

The ESk7p1825p1580(2) spread I opened on Jan 24th made $22.50 on Jan 25th.

So moving was the correct thing to do.

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  #5786 (permalink)
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ron99 View Post
That's a question I don't have an answer to. Do you make more money always having positions on and not trying to time entry or do you make more by timing the entry.

I thought about not selling new positions yesterday after exiting prior positions hoping for lower prices today. But since ES is up 10.00 right now I am glad I sold new positions yesterday.

According to my experience it is best for ES put sellers to be invested all time, as long as there are no clear warning signs that a severe move downwards is highly probable. Or a stop loss has been hit.

For me as for many others it is not possible to foresee if a small move upwards or downwards is ahead. Thus, it is better to take profit from time value.

This is only true for stock markets (ES puts). For option selling of various commodities it is essential to enter at a suited price level.

Best regards, Myrrdin

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  #5787 (permalink)
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Do you add to your position? and if so how would you determine the 6xIM?

For example enter ESj7p1800p1540(2) at a certain IM, and later(few days later) add to that position with a different IM. Do I take the average of both IM's to determine the 6xIM?

Thoughts please?

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  #5788 (permalink)
Market Wizard
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rajab View Post
Do you add to your position? and if so how would you determine the 6xIM?

For example enter ESj7p1800p1540(2) at a certain IM, and later(few days later) add to that position with a different IM. Do I take the average of both IM's to determine the 6xIM?

Thoughts please?

The IM for the ESk7p1825p1580(2) spread when I entered the position was $267. I multiply 6 times 267 to get $1,602. I hold that amount for the entire time I have on that spread.

If the account had on 20 spreads at $1,602 ($32,040), only if the account had more than $32,040 would I enter into more positions.

Let's say the account had $44,000. Let's also say the IM for a new spread is $250 each or $1,500 for 6xIM, I could add 8 more spreads.

But now you can't put on any new positions until you exit some or all of the positions you hold. This excess is needed in case the market moves against you. You can't cut corners and expect to survive the unexpected crash that will happen.

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  #5789 (permalink)
Market Wizard
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ron99 View Post
I was curious if moving to a new position on Jan 24th was the correct thing to do or if I should have just stayed with my old position.

The ESj7p1800p1540(2) spread that I had on would have made $12.50 on Jan 25th.

The ESk7p1825p1580(2) spread I opened on Jan 24th made $22.50 on Jan 25th.

So moving was the correct thing to do.

OK on day 2 of the roll,

The ESj7p1800p1540(2) spread that I had on would have made $0 on Jan 26th. Combine the 2 days and it made $12.50.

The ESk7p1825p1580(2) spread I opened on Jan 24th made $7.50 on Jan 26th. Combine the 2 days and it made $30.00.

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  #5790 (permalink)
Trading Apprentice
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ron99 View Post
The IM for the ESk7p1825p1580(2) spread when I entered the position was $267. I multiply 6 times 267 to get $1,602. I hold that amount for the entire time I have on that spread.

If the account had on 20 spreads at $1,602 ($32,040), only if the account had more than $32,040 would I enter into more positions.

Let's say the account had $44,000. Let's also say the IM for a new spread is $250 each or $1,500 for 6xIM, I could add 8 more spreads.

But now you can't put on any new positions until you exit some or all of the positions you hold. This excess is needed in case the market moves against you. You can't cut corners and expect to survive the unexpected crash that will happen.

With the example you gave. How far would you let the position go against you before you got out. (I assume well before your $1602 was lost of course.)

My model show the position down approx $600 if we dropped to 2000 (this is assuming no vol changes) To me that would seem like the place to get out for a max loss to retain approx 2/3 of capital. (although that would wipe approx 12 months of gains, put still a rare event)

Do you accept the loss at a certain point or do you start buying puts when the /ES drops X# of points and try and salvage it? I believe you said you don't roll in earlier posts, which makes sense. I don't like to roll either.
Or do you use a strategy of maybe close 1/3 to 1/2 the positions at a certain loss level and then then close anther 1/3 if it drops another X points?


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Last edited by Flintsone99; January 28th, 2017 at 12:57 AM.
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