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Selling Options on Futures?


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Selling Options on Futures?

  #671 (permalink)
Mark59
Toronto/Canada
 
Posts: 25 since Oct 2012
Thanks Given: 20
Thanks Received: 5

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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  #672 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
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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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  #673 (permalink)
Mark59
Toronto/Canada
 
Posts: 25 since Oct 2012
Thanks Given: 20
Thanks Received: 5


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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  #674 (permalink)
MJ888
Houston, Texas
 
Posts: 165 since Sep 2012
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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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  #675 (permalink)
Mark59
Toronto/Canada
 
Posts: 25 since Oct 2012
Thanks Given: 20
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MJ

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

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  #676 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
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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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  #677 (permalink)
 
opts's Avatar
 opts 
NW Florida
 
Experience: Intermediate
Platform: OX and TOS
Trading: Futures Options, Stocks
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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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  #678 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785


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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  #679 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785

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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  #680 (permalink)
 
opts's Avatar
 opts 
NW Florida
 
Experience: Intermediate
Platform: OX and TOS
Trading: Futures Options, Stocks
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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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