Selling Options on Futures? (Page 58) - Options on Futures | futures.io
futures.io futures trading
 

Go Back   futures.io

> Futures Trading, News, Charts and Platforms > Traders Hideout > Options on Futures


Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:570,189 / 5,734
Last Reply:December 9th, 2016 (01:01 AM) Attachments:642

Welcome to futures.io.

Welcome, Guest!

This forum was established to help traders (especially futures traders) by openly sharing indicators, strategies, methods, trading journals and discussing the psychology of trading.

We are fundamentally different than most other trading forums:
  • We work extremely hard to keep things positive on our forums.
  • We do not tolerate rude behavior, trolling, or vendor advertising in posts.
  • We firmly believe in openness and encourage sharing. The holy grail is within you, it is not something tangible you can download.
  • 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, and we will never resell your private information.

-- Big Mike
     

Reply
 642  
 
Thread Tools Search this Thread

Selling Options on Futures?

Old January 26th, 2013, 11:48 PM   #571 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,330 since Jul 2011
Thanks: 634 given, 3,910 received


opts View Post
One thing I noticed about this forum and this thread in particular is that nobody is ripping on anyone here for selling options on futures. There's no "Your and idiot for even thinking about that"...etc. That's worth a lot also

When I started this thread and almost nobody responded at first I wondered if I was a lone wolf selling options.

I am so glad that many have visited here and contributed. Thanks. I have learned a lot from you.

Reply With Quote
     
The following 2 users say Thank You to ron99 for this post:
     

Old January 27th, 2013, 08:43 PM   #572 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,330 since Jul 2011
Thanks: 634 given, 3,910 received

Last week I was busy "feeding the beast" almost everyday.

When time erodes the margins and premiums, I then have cash freed up to put on new positions. It seemed like almost every day I was adding positions to keep the accounts full.

I notice the accounts do better if you stay on top of keeping the accounts full. But there are times when you want more cash when markets are crazy. Experience will tell you when. The school of hard knocks will teach you too.

With Friday's new margins being lower I need to add more positions on Monday. Plus I have a bunch of options expiring on Monday.

Reply With Quote
     
The following user says Thank You to ron99 for this post:
     

Old January 27th, 2013, 09:42 PM   #573 (permalink)
Elite Member
Cleveland Ohio/United States
 
Futures Experience: Advanced
Platform: Tradestation
Broker/Data: various
Favorite Futures: futures
 
Posts: 2,196 since Jul 2012
Thanks: 1,004 given, 3,970 received



ron99 View Post
Last week I was busy "feeding the beast" almost everyday.

When time erodes the margins and premiums, I then have cash freed up to put on new positions. It seemed like almost every day I was adding positions to keep the accounts full.

I notice the accounts do better if you stay on top of keeping the accounts full. But there are times when you want more cash when markets are crazy. Experience will tell you when. The school of hard knocks will teach you too.

With Friday's new margins being lower I need to add more positions on Monday. Plus I have a bunch of options expiring on Monday.

Regarding adding on to positions as margins decrease, do you ever find that the margins decrease, you sell more options, and then the margins pop back up, and your margin + 2X rule is violated? Do you do anything special (like exit positions) to handle that situation, and get you back to margin + 2x cushion?

Thanks

Reply With Quote
     
The following 2 users say Thank You to kevinkdog for this post:
     

Old January 27th, 2013, 09:57 PM   #574 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,330 since Jul 2011
Thanks: 634 given, 3,910 received

Yes sometimes the margins pop back up.

Depends on why the margins went back up as to what I will do next. If I don't think it is a long term trend against me I will hang on and don't add any more positions. That is what the excess is for.

If I have positions close to expiration I will hang on.

Only if there is a fundamental change, like the drought last summer, or the silver futures margins rising from 11,745 to 21,600 in 10 trading days (2011), will I bail on positions.

Reply With Quote
     
The following 2 users say Thank You to ron99 for this post:
     

Old January 27th, 2013, 10:12 PM   #575 (permalink)
Trading for Fun
Houston, Texas
 
Futures Experience: Advanced
Platform: Interactive Brokers, OptionsXpress
Broker/Data: Options Express
Favorite Futures: Options on Futures
 
MJ888's Avatar
 
Posts: 165 since Sep 2012
Thanks: 37 given, 123 received

Futures Edge on FIO

Are you a NinjaTrader user?

 
Ron99, when you "add" positions to keep your account full, does that mean you may add additional positions to a contract month that you are already holding short positions or are you referring to a new market/month entirely?

For example, let's say you are already short DOTM May CL puts but then, cash is freed up from other positions due to decay, would you add on more May CL puts at around the same strike?

Reply With Quote
     
The following user says Thank You to MJ888 for this post:
     

Old January 27th, 2013, 10:32 PM   #576 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,330 since Jul 2011
Thanks: 634 given, 3,910 received

MJ888, I will add on whatever looks good.

I look for the best bang for my buck first. Fundamentals, seasonals, ROI, DTE, other market factors like US economy, ability to get decent fills, all are used to determine my next move.

I also like to have some diversity in my accounts. At least 5 different commodities if possible. A mixture of puts and calls in different markets.

That way if there is a market moving event like the US credit rating downgrade, and all markets move down, not all of my positions are losing money.

MJ888, is that your yacht in the photo by your name?

Reply With Quote
     
The following user says Thank You to ron99 for this post:
     

Old January 27th, 2013, 10:46 PM   #577 (permalink)
Trading for Fun
Houston, Texas
 
Futures Experience: Advanced
Platform: Interactive Brokers, OptionsXpress
Broker/Data: Options Express
Favorite Futures: Options on Futures
 
MJ888's Avatar
 
Posts: 165 since Sep 2012
Thanks: 37 given, 123 received


ron99 View Post
MJ888, is that your yacht in the photo by your name?

Hahahahaha! That is my submarine! Next time you are in Hawaii, you and your family are welcomed to join us to see the sharks and Coral Reefs.

Reply With Quote
     

Old January 28th, 2013, 09:14 AM   #578 (permalink)
Market Wizard
OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,330 since Jul 2011
Thanks: 634 given, 3,910 received

Here's a lesson on why you don't want to go too far out in time selling options.

I sold SB puts on Jan 2nd when SBh3 futures were 19.69. Futures have dropped to 18.49 but the premium has dropped, so far, because I was far OTM and close in time to expiration. 16.00 Mar puts.

But the Jul 16.00 puts have gone up from 0.07 to 0.13 in the same time frame.

Time erosion gets stronger the closer you get to expiration. Thus margin and premium drop quicker. The further out in time you are the more that the option will follow the future instead of ignoring it.

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

Old January 28th, 2013, 08:39 PM   #579 (permalink)
Elite Member
Cleveland Ohio/United States
 
Futures Experience: Advanced
Platform: Tradestation
Broker/Data: various
Favorite Futures: futures
 
Posts: 2,196 since Jul 2012
Thanks: 1,004 given, 3,970 received

Bias - Long/Short

For Ron (and other far OTM option sellers) -

If you look back at past trades, do you find yourself biased towards selling puts, or selling calls?

I would imagine that for most instruments that selling puts would be more common, since it is less risky (selling calls in crude could be dangerous if a terrorist attack occurs, grains can skyrocket in droughts). For ES options, I would think selling calls might be preferable (think of a stock market crash).

I'm curious about the thoughts of the experienced experts here...

Reply With Quote
     

Old January 28th, 2013, 11:25 PM   #580 (permalink)
Elite Member
NW Florida
 
Futures Experience: Intermediate
Platform: OX and TOS
Favorite Futures: Futures Options, Stocks
 
opts's Avatar
 
Posts: 233 since Aug 2012
Thanks: 29 given, 107 received


Kevin:

Oil is always going to be one of those markets that has the terrorist volatility variable waiting to be added to the current price. I would agree with you that the energies will always have a bias to the upside because of this. I am waiting for oil to drop a few dollars in price and will look to sell puts again because of the ever present terrorist threat. Time is on our side when selling options so I can wait for months if needed. I'm short March 900 wheat calls and my reasoning was that price was in the 50% retracement range even after the last bullish crop progress report in January. I sold 680 puts also. I think the tendency is to want to sell puts. The vast majority of the general public that owns stocks only want stocks to go up. This makes for a price bias on calls that makes them more expensive then puts. The futures markets are a minority but shorting a futures contract is more routine in futures than it is in stocks so why should we be 'scared' of writing call options on futures? Because we're scared that something like a terrorist threat can spike prices. In the grains it can be drought, OJ freezing weather, cotton the boll weevil..etc. But, these 'variables' usually happen with the seasonal aspects of the markets. I wait for those seasonal highs, or what I think might be the seasonal high along with what the charts are saying to let me know when it might be safe to sell calls. But, you are right. I fell more comfortable selling puts but sell calls nonetheless. It's all a waiting game for me and how I interpret charts.

Reply With Quote
     
The following 6 users say Thank You to opts for this post:
     

Reply



futures.io > Futures Trading, News, Charts and Platforms > Traders Hideout > Options on Futures > Selling Options on Futures?

Thread Tools Search this Thread
Search this Thread:

Advanced Search



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

Trading Technologies: ADL hands-on

Dec 13

Normal webinar schedule resumes after the holidays

January

Ernie Chan: Risk Management

Elite only

Dedicated Trading Servers: Advantages/Disadvantages w/sam028

Elite only

An Afternoon with FIO member Massive I

Elite only

Leo Murphy: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Crude Oil (CL) futures inverse pairing options Big Mike Commodities Futures Trading 8 December 12th, 2013 12:00 PM
Recommend futures, options Broker? sam1197 Brokers and Data Feeds 17 March 27th, 2013 01:42 AM
Trading Futures with options as protection Gooffy2010 Commodities Futures Trading 6 October 2nd, 2012 05:55 PM
Selling Njniatrader sam1197 NinjaTrader 22 June 28th, 2012 01:40 PM
Zen-Fire Futures options tici88 Brokers and Data Feeds 1 July 30th, 2011 10:16 AM


All times are GMT -4. The time now is 09:47 AM.

Copyright © 2016 by 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 2016-12-11 in 0.14 seconds with 20 queries on phoenix via your IP 54.159.129.152