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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:567,835 / 5,727
Last Reply:9 Hours Ago (12:40 PM) Attachments:642

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Selling Options on Futures?

Old February 10th, 2013, 08:25 AM   #721 (permalink)
Market Wizard
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Hi HeartMan,

All of your questions have been answered previously in this thread. Get your favorite beverage and read through it.

If after reading the thread you have questions, we will be glad to answer them.

I would not recommend oil calls right now. The seasonal trend is strongly up.

Ron

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Old February 10th, 2013, 11:00 AM   #722 (permalink)
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Options with Stock

I only trade Options with Stocks. Thinking to trade Options with Gold, 6E and TF.

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Old February 10th, 2013, 06:44 PM   #723 (permalink)
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tigertrader View Post
If the 3 most important factors in real estate investing is location, location, location; then the 3 most important factors in trading options is volatility, volatility, volatility.

Personally, I think your whole approach to trading options needs to be reconsidered. You're overly concerned with predicting the direction of the market. Successful options traders know that market prediction falls into two categories: 1) the prediction of the short-term movement of prices, and 2) the prediction of volatility of the underlying. Almost all experienced options traders trade vol and not the underlying's direction.

Simply stated, its a much easier task to predict volatility than to predict prices, and therein lies the real advantage of trading options. The attraction of predicting volatility is that it almost always trades in a range – and a glance at the past history of volatility for any individual instrument shows just what that range has been.

If one is able to isolate volatility, the trader doesn’t care where the price goes – he is just concerned with buying volatility near the bottom of its range and selling it when it gets back to the middle or high of the range, or vice versa.

Practically speaking however, it is nearly impossible for an inexperienced options trader to be able to isolate volatility so specifically – he will have to pay some attention to the underlying's price, but he will still is able to establish positions in which the direction of the stock price is irrelevant to the outcome of the position.


And your approach as well:

An increase in volatility can inflate option premiums along with no clear evidence of market direction. If I'm not mistaken, predicting market direction is critical when buying and selling options. If your trading methodology is based on seeking out market volatility extremes to trade options then I hope it is working well for you. The majority of contributors to this thread do not center there trading methodologies around the volatility of a given market. Volatility is important for any instrument traded but it is not the golden egg variable discussed here.


Last edited by opts; February 10th, 2013 at 07:35 PM.
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Old February 10th, 2013, 06:50 PM   #724 (permalink)
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Watching silver. It's coiled up like a snake and seasonal tendencies have a bias towards the upside. That coupled with and improving economy and electronics manufacturers getting read for the new 'summertime models' production run tells me that the demand will increase for this metal.

This the the weekly chart. Good support around the 26.00 level but will look for a breakout to the upside first before selling puts below that level.

Side note: I predict that the market volatility will go UP with the breakout.

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Last edited by opts; February 10th, 2013 at 07:33 PM.
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Old February 10th, 2013, 06:54 PM   #725 (permalink)
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Futures Edge on FIO

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opts View Post
Watching silver. It's coiled up like a snake and seasonal tendencies have a bias towards the upside. That coupled with and improving economy and electronics manufacturers getting read for the new 'summertime models' production run tells me that the demand will increase for this metal.

This the the weekly chart. Good support around the 26.00 level but will look for a breakout to the upside first before selling calls below that level.

Side note: I predict that the market volatility will go UP with the breakout.


I assume you mean sell "puts?"

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Old February 10th, 2013, 07:33 PM   #726 (permalink)
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kevinkdog View Post
I assume you mean sell "puts?"


oopsy...yup

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Old February 11th, 2013, 06:13 AM   #727 (permalink)
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Currency options

Does anyone here trade currency options?

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Old February 11th, 2013, 09:20 AM   #728 (permalink)
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Hi Ron, do you normally just sell one side only or do you also sometimes sell strangle?




ron99 View Post
tigertrader, your style of trading options is totally different than what we are discussing here. We don't buy options.

We also are not discussing stock options.

By selling far OTM options we are not trying to predict where the futures are going. We are just trying to predict where the market isn't going. Even if the market goes the wrong way as long as it doesn't make a drastic move we still make full profit.


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Old February 11th, 2013, 10:24 AM   #729 (permalink)
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sluhur View Post
Hi Ron, do you normally just sell one side only or do you also sometimes sell strangle?

I will strangle if the opportunity and the option buyers are there. But it takes a somewhat flat market for that to work.

The one thing good about strangling is that the ROI usually increases.


Selim, I have never traded a currency option. Just keeping up with the 18 commodity markets I watch is plenty for me to do.

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Old February 11th, 2013, 12:25 PM   #730 (permalink)
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Hey
Any thoughts on using Tradestation for Selling Options? I understand they deal in Canada. I phoned them and the chap said they use Span Margin. He said they clear through R J O'Brien

Thanks.

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