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


Selling Options on Futures?
Updated: Views / Replies:706,579 / 6,354
Created: by ron99 Attachments:735

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 90,000 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 Ė 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 donít 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
 735  
 
Thread Tools Search this Thread
 

Selling Options on Futures?

  #621 (permalink)
Elite Member
Portland OR
 
Futures Experience: Intermediate
Platform: None
Favorite Futures: Stocks
 
Posts: 56 since Dec 2012
Thanks: 87 given, 29 received


britkid99 View Post
Selim,
Here is a quote of my first trade posted here and also Ron's very informative reply.
I was going for deltas in the region o 05-10. I would now be unlikey to go above 05
I am nothing special still just a beginner BUT it is not that difficult and there is good advice and support available here.
Brit
ps: No bets from me on football (soccer) 50:50, you get better odds selling options

Hi Britkid99, you had posted a chart on CL options with price and volume sometime back. Are you able to chart that on IB software or on I/RT using some independent data feed?

Reply With Quote
 
  #622 (permalink)
Elite Member
Milton Keynes UK
 
Futures Experience: Intermediate
Platform: Investor/RT, Sierra Chart
Favorite Futures: Futures Options, CL
 
Posts: 156 since Jun 2009
Thanks: 74 given, 115 received


Barrington View Post
Hi Britkid99, you had posted a chart on CL options with price and volume sometime back. Are you able to chart that on IB software or on I/RT using some independent data feed?

Hi Barrington,

The option price chart comes direct from IB's Trader Workstation (TWS)

Reply With Quote
The following user says Thank You to britkid99 for this post:
 
  #623 (permalink)
Elite Member
NW Florida
 
Futures Experience: Intermediate
Platform: OX and TOS
Favorite Futures: Futures Options, Stocks
 
opts's Avatar
 
Posts: 234 since Aug 2012
Thanks: 29 given, 107 received


Watching the April Crude 75 puts that are a little out of parity here:

Bids:

The 77 is at .09
The 76 is at .05
The 75 is at .07 - very high OI
The 74 is at .04

April still heading down so it the further OTM puts gain some premium I'll start looking a little lower than the 75's as long as the premium is decent.

The next 'chart target' to the downside is the price area, per how I read the charts, around the 21EMA (See previous chart).

Reply With Quote
 
  #624 (permalink)
Market Wizard
Cleveland Ohio/United States
 
Futures Experience: Advanced
Platform: Tradestation
Broker/Data: various
Favorite Futures: futures
 
Posts: 2,371 since Jul 2012
Thanks: 1,127 given, 4,332 received
Forum Reputation: Legendary

My Plunge Into Options

Sorry in advance for the long post. Hopefully this will be useful to someone on the fence about starting to trade OTM options...

OK, last weekend I made the decision to try out the "sell deep OTM options" strategy. On Monday, I opened an account with OptionsXpress. By Friday (today), I was funded and made my first trades (below). Super quick process.

Some intial thoughts/musings:

I have never traded options before now. But, I already knew all the lingo, calculations and the basics of options. Also, I have been trading futures for over 20 years. So, I wouldn't recommend a newbie jump into this like I did.

OptionsXpress has by far the best customer service of any broker I deal with, and I currently have 3 other futures brokers and 1 forex broker. I dealt with them via e-mail and live chat, and always got quick, straightforward answers.

I found a deal where the first 50 trades (until June 30) are basically commission free. They still hit you with exchange fees, and some other 75 cent "transaction fee," but for a few months I'll be paying aorund $2.20-$2.50 per contract. After the promotion goes, assuming I am still trading this method, I'll ask for a discount like others have. When I do my initial ROI analysis, for now I still assume $15.51 commission per contract (worst case). ROI numbers below will use actual commission I am paying.

If you saw my Big Mike webinar in December, you might remember I was big on "incubation." In a nutshell, the idea is that once you find a trading strategy, you don't use real money for a couple of months, and instead you just watch it in real time. It is a great way to save trading capital when you create one of those "looks great in backtest, fails in real time" type systems.

Obviously, I violated my own rule here (cue foreboding music). I did that because 1) this is not a traditional backtested system and 2) I felt I could only evaluate it by actually using real money. So, in effect I am incubating this approach, but with a small amount of real money. Mid year, if the method (the way I implement it) seems to hold up, I plan of moving an IRA account there, and trading it more heavily.

OptionsXpress Trade Calculator is a pretty neat tool. Even though it has OE margin requirements, I am using it to evaluate spread positions I trade with another broker (who has no online margin calculator).

My initial "test" here will try to get the 3 x margin requirement around $1,000. Most times this will mean selling only 1 contract.

**********************************
So, here are the trades today (I will use the same reporting style as Ron has):

Sold 1 CLJ3 75 put for .07. Margin $327, cash excess $654. 42 DTE. $2.22 fees. ROI 5.0% per month (seems so good, I wonder if I did something wrong)

Sold 1 KCK3 200 call for .21. Margin $344, cash excess $688. 70 DTE. $2.52 fees. ROI 3.2% per month (seems so good, I wonder if I did something wrong)

I have one other open order. If it gets filled today, I will go back and edit this post.



Below is how I plan to "watch" these trades. Much slower pace with options than my normal futures, so my monitoring method may change.



Comments/questions/criticism will be VERY appreciated. Especially criticism - please feel free to challenge me on my trades and my calculations.

Attached Thumbnails
Selling Options on Futures?-capture.jpg  

Last edited by kevinkdog; February 1st, 2013 at 11:28 AM.
Reply With Quote
The following 3 users say Thank You to kevinkdog for this post:
 
  #625 (permalink)
Trading Apprentice
Jakarta
 
Futures Experience: Intermediate
Platform: IB
Favorite Futures: Option
 
Posts: 8 since Jan 2013
Thanks: 1 given, 2 received

That's really low margin requirement. I was looking at the same trade in IB and it's requiring me $1688

If you don't mind sharing, where did you find the deal?

Thanks

Reply With Quote
 
  #626 (permalink)
Market Wizard
Cleveland Ohio/United States
 
Futures Experience: Advanced
Platform: Tradestation
Broker/Data: various
Favorite Futures: futures
 
Posts: 2,371 since Jul 2012
Thanks: 1,127 given, 4,332 received
Forum Reputation: Legendary


sluhur View Post
That's really low margin requirement. I was looking at the same trade in IB and it's requiring me $1688

If you don't mind sharing, where did you find the deal?

Thanks

You can google "options xpress promotion" if this link doesn;t work.

Options trading, stocks & futures trading with an options specialist - optionsXpress

Reply With Quote
The following user says Thank You to kevinkdog for this post:
 
  #627 (permalink)
Elite Member
New York
 
Futures Experience: Beginner
Platform: Ninjatrader
Broker/Data: IB/AMP
Favorite Futures: ES
 
Posts: 36 since Dec 2011
Thanks: 568 given, 20 received


kevinkdog View Post
Mid year, if the method (the way I implement it) seems to hold up, I plan of moving an IRA account there, and trading it more heavily.

Hi Kevin,

Thanks for sharing your experience, but I doubt they would allow you to sell naked puts in your IRA account. Are you sure?

Reply With Quote
 
  #628 (permalink)
Market Wizard
Cleveland Ohio/United States
 
Futures Experience: Advanced
Platform: Tradestation
Broker/Data: various
Favorite Futures: futures
 
Posts: 2,371 since Jul 2012
Thanks: 1,127 given, 4,332 received
Forum Reputation: Legendary


walker View Post
Hi Kevin,

Thanks for sharing your experience, but I doubt they would allow you to sell naked puts in your IRA account. Are you sure?

Earlier in the thread, Ron explains that he does it, so I'm guessing it is finding the right trustee to administer it.

Reply With Quote
The following user says Thank You to kevinkdog for this post:
 
  #629 (permalink)
Elite Member
Milton Keynes UK
 
Futures Experience: Intermediate
Platform: Investor/RT, Sierra Chart
Favorite Futures: Futures Options, CL
 
Posts: 156 since Jun 2009
Thanks: 74 given, 115 received


kevinkdog View Post
Earlier in the thread, Ron explains that he does it, so I'm guessing it is finding the right trustee to administer it.

This is usually allowed because selling futures options is not considered to be "shorting stock" like selling a call in equities is.

In my UK IB pension account I can freely trade futures and options on futures but can not trade equity credit spreads let alone naked equity calls.


Last edited by britkid99; February 1st, 2013 at 02:42 PM.
Reply With Quote
The following user says Thank You to britkid99 for this post:
 
  #630 (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



kevinkdog View Post
I found a deal where the first 50 trades (until June 30) are basically commission free. They still hit you with exchange fees, and some other 75 cent "transaction fee," but for a few months I'll be paying aorund $2.20-$2.50 per contract. After the promotion goes, assuming I am still trading this method, I'll ask for a discount like others have. When I do my initial ROI analysis, for now I still assume $15.51 commission per contract (worst case). ROI numbers below will use actual commission I am paying.

Mid year, if the method (the way I implement it) seems to hold up, I plan of moving an IRA account there, and trading it more heavily.

OptionsXpress Trade Calculator is a pretty neat tool. Even though it has OE margin requirements, I am using it to evaluate spread positions I trade with another broker (who has no online margin calculator).

[/B]

Great that you have decided to give selling OTM options a try!

I am looking at the same KCK3 200 call strike too but I do not have a position yet, probably Monday I will put in an order.

I did ask OX about rolling over my 401K. The bad news is that they told me that I cannot sell options on futures in my 401K/IRA account at OX. I am not sure where Ron99 has his IRA account but I do not think it is with OX. I am sure he can answer that when he is back.

When I opened my account with OX, they were very willing to negotiate my commission structure. I am certain that it helped me to mention the extremely low commission I was getting at IB. I did not expect OX to match IB but I was pleasantly surprised that OX went from $12.99 to $3.99 (exchange fees are separate) without any quota requirements on how many trades I must make. So it does pay to negotiate with OX.

And yes, Trade Calculator is indeed a very neat tool. I have been using it a lot to get an idea about what my margin requirements would be. I like to use the Trade & Probability Calculator too although I don't think it is entirely accurate some times.

MJ888

Reply With Quote
The following 2 users say Thank You to MJ888 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)
 

RandBots: AutoTrading Bots to diversify your trading

Oct 24
 

TopstepTrader: Profiting Without Risking Your Own Money

Oct 26

Building Open Source Indicators for NT8 w/Fat Tails @ Lizard Indicators

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 11:00 AM
Recommend futures, options Broker? sam1197 Reviews of Brokers and Data Feeds 17 March 27th, 2013 12:42 AM
Trading Futures with options as protection Gooffy2010 Commodities Futures Trading 6 October 2nd, 2012 04:55 PM
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 07:35 AM.

Copyright © 2017 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 2017-10-24 in 0.15 seconds with 20 queries on phoenix via your IP 54.81.79.128