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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:569,792 / 5,734
Last Reply:23 Hours Ago (01:01 AM) Attachments:642

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Selling Options on Futures?

Old February 6th, 2013, 12:23 PM   #671 (permalink)
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Hey,
FYI

CTH3 .79P going for .0008 (40.00) Delta .097
A little more risky, but they expire Friday at 2.30!

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Old February 6th, 2013, 01:55 PM   #672 (permalink)
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Mark59 View Post
Hey,
FYI

CTH3 .79P going for .0008 (40.00) Delta .097
A little more risky, but they expire Friday at 2.30!

You do realize that if CT drops the same amount it did on 1/25 that your option will be ITM.

Be careful with those. I don't know if $40 minus fees is worth the risk to do those.

I once held onto short NG 5.250 call options to expiration. It settled at 5.251. All of those calls turned into futures because of 0.002. The futures immediately went higher and I lost thousands.

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Old February 6th, 2013, 04:47 PM   #673 (permalink)
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Thanks Ron

Warning well taken...I understand they need to be looked at with caution.
Lots of risk there, just put on a small position & really keep an eye on them.

Cheers

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Old February 6th, 2013, 04:55 PM   #674 (permalink)
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Mark59 View Post
Hey,
FYI

CTH3 .79P going for .0008 (40.00) Delta .097
A little more risky, but they expire Friday at 2.30!

Thanks but no thanks! After commission, I would make $32.49 per and as Ron said, a sell off would send that strike ITM.

Not worth the risk IMO

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Old February 6th, 2013, 06:25 PM   #675 (permalink)
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Futures Edge on FIO

Are you a NinjaTrader user?

 
MJ

Thanks for your opinion , but I was not suggesting you put on the trade.

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Old February 6th, 2013, 10:16 PM   #676 (permalink)
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Interesting. The ROI for a CLj3 70 put is higher than the ROI for a CLj3 75 put for tomorrow.

Using 6.21 for fees (several posters said that is what they were paying), the ROI for the 75 is 5.4% monthly. For the 70 the ROI is 5.6% monthly.

And of course the 70 is less risk.

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Old February 7th, 2013, 09:07 AM   #677 (permalink)
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ron99 View Post
Interesting. The ROI for a CLj3 70 put is higher than the ROI for a CLj3 75 put for tomorrow.

Using 6.21 for fees (several posters said that is what they were paying), the ROI for the 75 is 5.4% monthly. For the 70 the ROI is 5.6% monthly.

And of course the 70 is less risk.


Ron:

I'm thinking your assuming that the options would not be bought back and would expire worthless (no comm. or fees) to figure in with the ROI correct?

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Old February 7th, 2013, 09:50 AM   #678 (permalink)
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opts View Post
Ron:

I'm thinking your assuming that the options would not be bought back and would expire worthless (no comm. or fees) to figure in with the ROI correct?

Correct.

And if futures don't take a dive then your margin will drop and your premium drops and thus your balance increases you will be able to take some of the initial margin and excess and reinvest it in other options. So if things go OK your actual ROI is higher than the numbers I quote.

The 5.6% ROI assumes that you keep the same margin and excess until the contract expires. Which normally you don't. But I don't know of a way to accurately calculate the ROI with decreasing margin and excess plus increasing profit until expiration.

Anybody got an idea on that?

So when we post a monthly ROI% of only 2-5%, which seems small, the actual profit% in your account is higher.

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Old February 7th, 2013, 10:04 AM   #679 (permalink)
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One other point. Keeping an option to expiration is worth the trouble. You may not think that it is worth it for the last $10. But in most cases it is. The margin probably has dropped a lot so it isn't tying up a lot of your money.

For example, I have on Mar CL 70 puts. They are down to 0.01 or $10. But the margin is only 65 at OX. Because it is only 8 days from expiring and far OTM, I only use 1X excess or 65. So the ROI for that option that is already in my account and I won't be paying fees on anymore is 7.7% actual for 8 days. $10 divided by 130.

And the margin will drop more if futures don't crash. The 65 put margin is only $36.

Where else can you get more than 7.7% ROI in only 8 days?

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Old February 7th, 2013, 03:05 PM   #680 (permalink)
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ron99 View Post
One other point. Keeping an option to expiration is worth the trouble. You may not think that it is worth it for the last $10. But in most cases it is. The margin probably has dropped a lot so it isn't tying up a lot of your money.

For example, I have on Mar CL 70 puts. They are down to 0.01 or $10. But the margin is only 65 at OX. Because it is only 8 days from expiring and far OTM, I only use 1X excess or 65. So the ROI for that option that is already in my account and I won't be paying fees on anymore is 7.7% actual for 8 days. $10 divided by 130.

And the margin will drop more if futures don't crash. The 65 put margin is only $36.

Where else can you get more than 7.7% ROI in only 8 days?


I'm seeing the movement with margin requirement with my March 900 W calls. Available margin has gone up considerably in the past few days. No need to buy them back.

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