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Selling Options on Futures?
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Selling Options on Futures?

  #661 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
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opts View Post
Does anyone use or know of anyone that has used Trade Monster? I have been in contact with them recently:

$1.75 per side to write futures options + exchange fees

Use CQG trader

Margin and SPAN standard rates per OX...so they say.

Any thoughts?

I'm always looking for a good place to trade so I called them today.

He said $30,000 minimum account if you are selling options. No futures in IRA accounts.

I don't know anything about their FCM Knight Capital.

Neither Trade Monster or Knight have any NFA actions or fines against them but they haven't been in business very long.

I have used CQG in the past. It is good for placing trades. It is poor for most other things.

Those are low rates.

Anybody willing to be a guinea pig?

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  #662 (permalink)
Market Wizard
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ron99 View Post

The one cool thing is they have a Wish List where you can send them ideas. They have actually used a couple of my ideas.

I wish they would allow futures accounts with IRAs. They have, by FAR, the best Customer Service of any brokerage I have ever dealt with...

New trade for me:

Sold CTK3 67 put for .11. Margin $197 (which per Ron is probably incorrect), cash excess $394. 66 DTE. $2.52 fees (still getting free trades) ROI 4.1% per month


I thought I'd share some of my initial observations, as a long time futures trader trying options on futures for the first time. Keep in mind I am no expert in options by any stretch of the imagination. These are "options newbie" observations...


1. Selling deep out of the money options (OTM) is, as someone said, like watching paint dry. Boring, especially compared to pure futures trading.

2. The impulse to chase a trade is greater, since there is so little volume. For example, for the last 2-3 days I was trying to sell a CTK3 65 put. I couldn't get a decent price, and did not want to hit the bid, so instead of waiting, I went to a 67 put and got filled. Better ROI, but also less room for error. I chased it.

3. One tick can make a huge difference, but it is a very small amount of money per contract. It leads to a mental disconnect for me. With crude oil, for example, going from .07 to .06 is only $10. Many futures traders, looking for $1000-2000 wins, might say "$10 - big deal!" With deep OTM options, though, it matters a LOT.

4. This whole technique is all about ROI. Forget about dollars, they will take care of themselves. If you focus on ROI, you'll be better off.

5. Commissions matter a lot. OptionsXpress is too much, even with their aforementioned great service. This can really kill your ROI. It can really gobble up a lot of your very small premium.

6. As a futures trader, I am thrilled with any futures method that has 50% win rate. Really, I don't care at all - win rate isn't really important in futures if the positive expectancy is there - but with option selling, I do have to care about win rate. I figure I need 90% to do decently. Ron does close to 100%. Either number is HUGE as a futures trader.

Here is the math explaining why:

Win 90% of time, 3%monthly ROI = .9* 3 = 2.7
Win 10% of time, -10%monthly ROI = .1* (-10) = -1 (I'm assuming I got out of loser before it got too too bad)

2.7-1 = Net 1.7% monthly ROI, >> 20% annual return

If you get below 80% win rate, you basically are breakeven.

So, win % and ROI are both critical to know and understand - things I never really consider in futures.


Hope this info helps someone considering this method!


Last edited by kevinkdog; February 5th, 2013 at 03:09 PM.
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  #663 (permalink)
Trading Apprentice
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ron99 View Post

I don't know anything about their FCM Knight Capital.

You really never heard anout Knight Capital ? They suffered a 440million loss last august during a 90mns technical glitch, which made many day traders a lot of money. Knight came out nearly bankrupt and was the buzz of last summer.

Error by Knight Capital rips through stock market | Reuters

Lot of info on the net about this event


Last edited by marcl; February 5th, 2013 at 04:55 PM.
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  #664 (permalink)
Market Wizard
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marcl View Post
You really never heard anout Knight Capital ? They suffered a 440million loss last august following a technical glitch, which made many traders a lot of money (not me though). Knight came out nearly bankrupt and was the buzz of last summer.

Error by Knight Capital rips through stock market | Reuters

Lot of info on the net about this event

OK I had a brain fart about that one. You are correct.

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  #665 (permalink)
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ron99 View Post
I'm always looking for a good place to trade so I called them today.

He said $30,000 minimum account if you are selling options. No futures in IRA accounts.

I don't know anything about their FCM Knight Capital.

Neither Trade Monster or Knight have any NFA actions or fines against them but they haven't been in business very long.

I have used CQG in the past. It is good for placing trades. It is poor for most other things.

Those are low rates.

Anybody willing to be a guinea pig?

I'd be willing to be the guinea pig. However, 'Dominic" told me that there minimum was 10K. They advertise tradeMonster Mobile as a mobile trading platform but then I was told they do not have a mobile trading platform. I contacted them again and asked if their mobile platform was for stock and stock options only. I do 95% of my trades from my Droid and do my analysis at home on the 'big screen'. Hmmmm, Knight Capital.....Already leary.

I'm at $8.99 per side at OX. I'd hate to leave them but since I added writing an increased # of options further OTM the $8.99 eats into things pretty good. They mention that if you make 35 options trades per quarter the option trades for the next quarter would be $1.75 per side. But, that's for stock options.....blah.

I'll respond when I hear back from them about the mobile ap...

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  #666 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
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opts View Post
I'd be willing to be the guinea pig. However, 'Dominic" told me that there minimum was 10K. They advertise tradeMonster Mobile as a mobile trading platform but then I was told they do not have a mobile trading platform. I contacted them again and asked if their mobile platform was for stock and stock options only. I do 95% of my trades from my Droid and do my analysis at home on the 'big screen'. Hmmmm, Knight Capital.....Already leary.

I'm at $8.99 per side at OX. I'd hate to leave them but since I added writing an increased # of options further OTM the $8.99 eats into things pretty good. They mention that if you make 35 options trades per quarter the option trades for the next quarter would be $1.75 per side. But, that's for stock options.....blah.

I'll respond when I hear back from them about the mobile ap...

They told me 10k until I said I wanted to sell options on futures. Then he said that required 30k.

FWIW the guy I talked to didn't have the best of knowledge of the system and wasn't a good sales person.

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  #667 (permalink)
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Wheaties...

I made a few comments a few posts back about April wheat and how it looks weak. Looks like 740 (the 23.6 Fib area) might be doable if this previous support not becomes resistance. If that breaks then there is a lot of potential for more weakness down to the 670. This would almost be a 100% retracement. The seasonal trend is down around this time and I think the crop report comes out on the 11th????? My March calls will go to zero dineros soon. Will be watching the calls to sell.

Sold the April CL 75 puts for .06 a few days back.

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  #668 (permalink)
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ron99 View Post
They told me 10k until I said I wanted to sell options on futures. Then he said that required 30k.

FWIW the guy I talked to didn't have the best of knowledge of the system and wasn't a good sales person.


....and there ya go. No mobile capability for futures...this pig is tapping out!

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  #669 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
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USDA Report Calendar

NASS - Publications

Crop report is the 8th.

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  #670 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
Platform: QST
Broker/Data: QST, DeCarley Trading, Gain
Favorite Futures: Options on Futures
 
Posts: 2,616 since Jul 2011
Thanks: 756 given, 4,492 received
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For OX traders.

Today they lowered their extra margin over exchange minimum on a few commodities.

CL went from 20% to 10%. GC from 10% to 0. SI from 20% to 10%.

The Apr CL 75 put margin tomorrow at OX will be 317 (288 SPAN) with 2X excess that makes the ROI with 5.21 fees turn out to be 5.4% monthly. That is an excellent return for something only 38 DTE with a 0.0155 Delta.

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