Selling Options on Futures?

November 20th, 2018, 06:30 AM

ron99

What makes no sense is selling March 19 calls for about 0.055 to 0.060 and not exiting July 2018 when premiums were < 0.020. Or exiting Sep 2018 when premiums were < 0.015.

I though the same thing, why were the decayed options not cleaned out to make way for fresh sales.

I can say I have been guilty of this myself at times, usually when things have not gone well and the virtually worthless options around the account are seen as adding up to something meaningful towards trying to make good a loss. Just wondering if that's the case here, where performance hasn't been good, and they were trying to see everything go to 0 to get the most back they could.

kevinkdog · November 20th, 2018, 08:26 AM

ron99

Why? The positions and quantity he had on were huge losers.

"true root cause of this blowup" was a bad choice of words on my part.

A few traders I have talked to think there is more to the story than just the Nat Gas blowup. No proof offered though, so take it for what it is worth.

November 20th, 2018, 11:09 AM

kevinkdog

"true root cause of this blowup" was a bad choice of words on my part.

A few traders I have talked to think there is more to the story than just the Nat Gas blowup. No proof offered though, so take it for what it is worth.

It was more NG. It was also short CL puts. Plus the adding on of more NG short calls the 2 weeks before the big crash.

November 20th, 2018, 11:19 AM

Harvard16

Here is a link to the spreadsheet of positions in NG, this was for a +/- 600k account, with entry exits, for the size of account the position size is insane at over 250 short calls, true they looked very slow to address getting out of this. A lot of questions to be answered.

https://docs.google.com/spreadsheets/d/1-oj5UkqU0tMHrMnIEiuIYmTlxVWoU-VJqumykJ3IMUA/edit

This implies far less rolling up of options than I expected hearing the stories.

November 20th, 2018, 12:48 PM

Quoting

An FCStone spokesman declined to comment on whether Optionsellers.com customers faced calls to repay any debit balances, but said their accounts were well collateralised.

�Liquidation of these accounts was in accordance with our customer agreements and our obligations under market regulation and standards,� the New York-based broker said.

https://www.ft.com/content/b7c525f6-ec44-11e8-89c8-d36339d835c0

kevinkdog · November 20th, 2018, 01:18 PM

Harvard16

Here is a link to the spreadsheet of positions in NG, this was for a +/- 600k account, with entry exits, for the size of account the position size is insane at over 250 short calls, true they looked very slow to address getting out of this. A lot of questions to be answered.

https://docs.google.com/spreadsheets/d/1-oj5UkqU0tMHrMnIEiuIYmTlxVWoU-VJqumykJ3IMUA/edit

I am curious what the thread experts @ron99 and @myrrdin think about having $2.5K equity per 1 short Call option?

@SMCJB - you are a professional energy trader, I'd like to hear your thoughts too.

November 20th, 2018, 02:00 PM

kevinkdog

I am curious what the thread experts @ron99 and @myrrdin think about having $2.5K equity per 1 short Call option?

@SMCJB - you are a professional energy trader, I'd like to hear your thoughts too.

Are you sure that number is correct? I doubt the only positions in the account were NG.

Cordier liked to use 50% of account for margin. That is never enough. Currently when I do NG iron condors in the summer I use 10xIM.

kevinkdog · November 20th, 2018, 02:37 PM

ron99

Are you sure that number is correct? I doubt the only positions in the account were NG.

Cordier liked to use 50% of account for margin. That is never enough. Currently when I do NG iron condors in the summer I use 10xIM.

I am just looking at NG options, per that earlier post with the Google doc sheet.

November 20th, 2018, 03:01 PM

kevinkdog

I am curious what the thread experts @ron99 and @myrrdin think about having $2.5K equity per 1 short Call option?

@SMCJB - you are a professional energy trader, I'd like to hear your thoughts too.

It depends on the option. But for a NGZ, NGF, NGG or NGH call from November until February $2.5 K is far away from being enough.

Best regards, Myrrdin

November 20th, 2018, 03:47 PM

I took the NG calls that were listed on that spreadsheet supplied above and used my platform to see the volume of trades made on those days for that contract.

It's pretty obvious he was only one making trades when he was entering. Some of the options the first trade for that option was made by Cordier.

Obviously some of the volume, especially in Nov, was not all Cordier.

I'm getting around 22,000 Feb calls added in Oct and Nov. About 15,000 Mar calls.

Now I'm going to make some big assumptions here. Let's say Cordier had on 35,000 calls at an average price of $600. That is $21 million.

If he exited them at an average price of $6,000 ($210 million) (mar 19 c500 trading range on Nov 14 was 0.420 to 0.833), then his loss would have been $189 million.

EDIT: Even if you assume 30,000 calls and he exited at $5,000 each the loss is $132 million.
And this isn't accounting for losses on CL puts.

Selling Options on Futures?

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Selling Options on Futures?