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Selling Options on Futures?


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Selling Options on Futures?

  #6641 (permalink)
 myrrdin 
Linz Austria
 
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Calamari88 View Post
Based on how Wheat is moving up I'm thinking Cordier's analysis of that market is off.

Weather does not cooperate, and it is very hard to foresee weather.

I still hold the short WZ C6.5, but added some KWN futures to hold now some kind of KW-W spread.

I still think that WZ will end below 6.0 .

Best regards, Myrrdin

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  #6642 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
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sapiens View Post
Just curious, why would the spread not work well in a slow decline, compared to a sharp and fast drop? Is a slow drop worse for this strategy than a sharp/fast correction?

One other point. When you sell a -3.00 delta ES put it is about 20% OTM. If there is a slow decline of ES futures of 20%, your short ES put could be going ITM while your longs are still OTM but close enough to expiration that they aren't gaining in value to offset the losses of the short puts.

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  #6643 (permalink)
 rsm005 
vancouver BC/Canada
 
Experience: Beginner
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Margin excess dropped from 10.1 to 8.2 today. Man o-live.....interesting times..

/rsm005/

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  #6644 (permalink)
cch31
San Jose CA
 
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Lots of useful information in this thread, have read through much of it but sorry if I missed what I'm about to ask already being covered. Any thoughts around different rolling strategies to use as things move against you, or is the focus here to size on entry to hold until profit target, or time stop, or make adjustments driven by margin requirements?

I mostly trade strangles on /ES, so do some delta balancing and may switch units between puts and calls to retain net extrinsic (roll for credit), or roll for duration on a one-sided basis. Sometimes ratio roll if originally sized small enough to increase size on the roll and stay within projected margin expansion.

Lately though been considering at what point it makes sense to close losers early and then when to re-establish. Wanted to backtest how often price exceeds 50%, 100%, 150%, etc. of original premium collected, and ends up coming back to profitable within the original cycle versus when it would have made more sense to use those thresholds as triggers for rolling far out, or reducing size, perhaps even closing for a loss. I typically sell on duration of 45-90 days to open, and only go longer duration if rolling as an adjustment.

Any thoughts would be appreciated

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  #6645 (permalink)
 myrrdin 
Linz Austria
 
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cch31 View Post
Lots of useful information in this thread, have read through much of it but sorry if I missed what I'm about to ask already being covered. Any thoughts around different rolling strategies to use as things move against you, or is the focus here to size on entry to hold until profit target, or time stop, or make adjustments driven by margin requirements?

I mostly trade strangles on /ES, so do some delta balancing and may switch units between puts and calls to retain net extrinsic (roll for credit), or roll for duration on a one-sided basis. Sometimes ratio roll if originally sized small enough to increase size on the roll and stay within projected margin expansion.

Lately though been considering at what point it makes sense to close losers early and then when to re-establish. Wanted to backtest how often price exceeds 50%, 100%, 150%, etc. of original premium collected, and ends up coming back to profitable within the original cycle versus when it would have made more sense to use those thresholds as triggers for rolling far out, or reducing size, perhaps even closing for a loss. I typically sell on duration of 45-90 days to open, and only go longer duration if rolling as an adjustment.

Any thoughts would be appreciated

I liquidate short option trades much earlier than Ron does. It is a nice example that different strategies can both result in profits.

Have a look at the thread "Diversified Option Selling Portfolio". There I discuss possible exit strategies.

Best regards, Myrrdin

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  #6646 (permalink)
pablogarcialorent
Madrid/Spain
 
Posts: 1 since Apr 2017
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Hi guys,

Iīve been a long time learner on financial education.

First I discovered stock option selling and then I bought "The Complete Guide to Option Selling" (James Cordier) thinking it was stock option selling and to my surprise I discovered futures option selling (amazing concept!).

Iīve been selling stock options for about 2 years now and I want to explore the futures option selling following James Cordierīs method focused on a strong risk management approach (and not get greedy, of course).

Questions I have now in my mind:

1) What discount broker do you use? I live in Spain and want a discount broker specialized in commodities that does not auto-liquidate positions with an algorithm (as I read recently Interactive Brokers do).

2) Anyone from Spain selling futures options the James Cordierīs way to connect with?

Thanks in advance guys!
Pablo

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  #6647 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
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pablogarcialorent View Post
Hi guys,

Iīve been a long time learner on financial education.

First I discovered stock option selling and then I bought "The Complete Guide to Option Selling" (James Cordier) thinking it was stock option selling and to my surprise I discovered futures option selling (amazing concept!).

Iīve been selling stock options for about 2 years now and I want to explore the futures option selling following James Cordierīs method focused on a strong risk management approach (and not get greedy, of course).

Questions I have now in my mind:

1) What discount broker do you use? I live in Spain and want a discount broker specialized in commodities that does not auto-liquidate positions with an algorithm (as I read recently Interactive Brokers do).

2) Anyone from Spain selling futures options the James Cordierīs way to connect with?

Thanks in advance guys!
Pablo

Many here from outside the US use DeCarley trading. Check with Carley Garner.

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  #6648 (permalink)
 myrrdin 
Linz Austria
 
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pablogarcialorent View Post
Hi guys,

Iīve been a long time learner on financial education.

First I discovered stock option selling and then I bought "The Complete Guide to Option Selling" (James Cordier) thinking it was stock option selling and to my surprise I discovered futures option selling (amazing concept!).

Iīve been selling stock options for about 2 years now and I want to explore the futures option selling following James Cordierīs method focused on a strong risk management approach (and not get greedy, of course).

Questions I have now in my mind:

1) What discount broker do you use? I live in Spain and want a discount broker specialized in commodities that does not auto-liquidate positions with an algorithm (as I read recently Interactive Brokers do).

2) Anyone from Spain selling futures options the James Cordierīs way to connect with?

Thanks in advance guys!
Pablo

I am from Austria, and I work for some years with Carley Garner. Her service is the best I ever received. My money is held at a European bank, which makes transfers cheaper and faster.

I trade in a similar way as James Cordier, and write about it in the thread "Diversified Option Selling Portfolio".

Best regards, Myrrdin

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  #6649 (permalink)
 swisstrader321 
Zurich
 
Experience: Advanced
Platform: IB
Trading: Futures
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You guys think 30k is enough to start selling premium on futures?

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  #6650 (permalink)
 myrrdin 
Linz Austria
 
Experience: Advanced
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Trading: Commodities
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swisstrader321 View Post
You guys think 30k is enough to start selling premium on futures?

In my opinion it is in principle possible with this amount. You will be able to hold several positions, but of course the number of lots will be limited.

The main question is, if the profit in absolute figures will be high enough to enable you to pay for expenses and to allow for a salary acceptable for you.

Best regards, Myrrdin

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