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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:568,890 / 5,728
Last Reply:11 Hours Ago (05:26 PM) Attachments:642

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Selling Options on Futures?

Old February 12th, 2013, 07:06 PM   #761 (permalink)
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vmaiya73 View Post
Do you guys look for a minimum amount you would like to collect or concentrate more on ROI ?

Thanks

V

V:

For me it's the overall return on the account.

The minimum return per options traded depends a lot on what your commission and fees are. OX dropped their commission to $3.50 per side plus exchange fees ~ $1.50 = ~ $5.00 per side for a total of $10 in and out. This is a big difference from about $30 in and out just a few months ago. If your minimum option sale was always $50 (assuming that you let the option expire worthless and do not buy it back) leaves $45 premium to collect assuming the option expires worthless versus $35 a few months back. That only $10 more but it is about 26% more collected in premium.
That is a huge percentage increase if you are trading 1, 10, 20 , 30, etc. options.

How large is your account? What are your monthly or quarterly % goals? A lot of seasoned traders will tell you do not count the $ but look at the % return on your account. A trader that makes $100 per trade and another that makes $10,000 per trade may both return 3% on their account. The goal, at least for me it is, is to get to that account size where a 2, 3, or 5% return on a trade = another $5000, or $10,000 in my account. Building the account with manageable risk over time is how I look at things.

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Old February 12th, 2013, 07:53 PM   #762 (permalink)
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May Wheat:

Thanks for the weather link Ron. 'Sounds' like the seasonal pattern will settle in for wheat here and then it'll be up to the summer patterns to develop. Support was broken which can leave a lot of room to the downside. 660 is the 100% retracement level to last season (summer) low and per the charts it looks like that can happen. I quit chasing markets a long time ago so I'll wait for a few up days before I look at selling calls.

Side note: If anyone uses NinjaTrader is there any way to squeeze more daily bars on to the chart? In other words, I like to see as much data as I can on a chart to look for previous s/r levels and trendlines. My daily wheat chart has data back to March of last year but I have to scroll back to see it and I am zoomed out all the way. I want to see all the daily bars on the same screen without having to scroll. Any thoughts?

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Old February 13th, 2013, 05:23 AM   #763 (permalink)
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opts View Post
May Wheat:

Side note: If anyone uses NinjaTrader is there any way to squeeze more daily bars on to the chart? In other words, I like to see as much data as I can on a chart to look for previous s/r levels and trendlines. My daily wheat chart has data back to March of last year but I have to scroll back to see it and I am zoomed out all the way. I want to see all the daily bars on the same screen without having to scroll. Any thoughts?


Opts,

So whats wrong with going out to the weekly chart then you can get about 5 years of data.
Actually it is quite good for checking seasonal highs/lows over last 5 years.

Brit

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Old February 13th, 2013, 08:39 AM   #764 (permalink)
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Brit:

I do look at the weekly and monthly charts. The daily charts have the vertical grid line for each month and one of the things I look at is 'what is the farthest up or down has crude oil been able to move in a month'. The daily grid lines make it easier to see this movement for me.

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Old February 13th, 2013, 09:05 AM   #765 (permalink)
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opts View Post
Brit:

I do look at the weekly and monthly charts. The daily charts have the vertical grid line for each month and one of the things I look at is 'what is the farthest up or down has crude oil been able to move in a month'. The daily grid lines make it easier to see this movement for me.



Or stated another way:

If I want to sell a soybean option that has about 30 days until expiration and is 100 cents OTM, how many times in the past have soybeans moved 100 cents in one month? Itís easier to see this on a daily chart.

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Old February 13th, 2013, 09:56 AM   #766 (permalink)
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Found it if anyone else needs the info:


You can view more days in your chart by compressing the data.

To compress or decompress the horizontal axis, left mouse click in the x- axis margin and move the mouse cursor to the left or right. Alternatively, use the Hot Keys CTRL + Up and CTRL + Down.

Below I have provided a link to the How to change the horizontal scale and range of a chart section of our help guide. http://www.ninjatrader.com/support/h...ng_a_chart.htm

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Old February 13th, 2013, 12:09 PM   #767 (permalink)
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IV and HV charts

Hi, new here. so apologies if I'm posting this in the wrong place. Could someone point me to where I can find historical volatility and implied volatility charts for commodity futures? I use Thinkorswim. Thank you.

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Old February 13th, 2013, 04:15 PM   #768 (permalink)
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Gigi

You might want to check out

The Options Industry Council (OIC)

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Old February 13th, 2013, 05:31 PM   #769 (permalink)
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Thinking out loud that there might be a pullback in the crude market soon....2 cent advice there....

Here's the April Crude chart....with more daily bars to see on the same screen. I like to look back and see the extremes for the month; how much did price move. If I want to write options with about 30 days or so until expiration I like to see what happened in the past as far as how much price can move in a month. I have noted a few areas on this chart. For instance, From May to June last year price moved down $18 in one month, the next month another $10 down.

This is no way is the only thing I look at but it gives me that idea that the possibility exists that this, or whatever market you look at, does have the possibility to move about $20 (or 100 cents) in one month. And yes, there is no limit to what can happen in a month. But, if the current price of crude is $100 a barrel and I am looking at the the 75 puts or the 125 calls to sell then I look back at the chart and see if/when price did move $25 in one month and then dig deeper as the reason for the move.

Again....only 2 cents here.

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Old February 13th, 2013, 06:31 PM   #770 (permalink)
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Hello All,

Iíve been reading this thread for the past few months and really enjoying it. Iíve held off commenting because I didnít really have much to add, but now Iíve come across a situation where asking a question on this forum seems to be the only place I might be able to get some unbiased advice (I apologize for the length up front).

Iíve been selling options on futures for the past 7 years with mixed results. I started out just selling options and it worked great. Then I tried some new types of trading and had a blow-out my second year. I was fortunate enough to be able to continue trading after that bad year. I focused on selling options, but I also toyed with futures, spreads, option spreads, day-trading and elaborate ways to cover bad options. It seemed like the only thing that was consistently making money was simply selling options. So two years ago and went back to just selling options, preferably far out-of-the-money strangles and keeping my margin at 50% or lower, and things have been going well.

After reading this thread I liked the idea of selling even further out-of-the money/ low delta options so much I started to shift my trading and liking the results. Iíve been enjoying the fact that my trading has become more and more boring. But perhaps I am in an Ďignorance is blissí situation.

Recently, Iíve decided to hit up my broker for lower commissions and in his rebuttal he tells me that I am vastly overleveraged Ö a one standard deviation move in CL away from a blow account. He couldnít go lower on his commissions because there would be no incentive left for him to have my account with that much risk on the books. My first reaction was that his remarks were a scare tactic to get me to stay. I know Black Swan events can happen (made it through one, thankfully), but the probabilities seem so remote that CL can move so far so fast that I would not be able exit my positions before losing it all.

I contacted OEC to talk with them about possibly switching one of my accounts to them. I was starting to second-guess my trading so I asked him to look at my account and give me his evaluation. I was kind of shocked to hear him say the same thing Ö in his opinion I was vastly over-trading, over-leveraged and in need of mentoring Ö fast. So now Iím thinking either he is trying to scare me to run to him or I have a problem with my trading.

The account in question is $28k with the following short positions: 2x ECH3 P126; 2x JYH3 C120, 1x JYJ3 C117; 2x GCH3 C1850, 2x GCH3 P1465, 3x GCJ3 C1900, 1x GCJ3 C2000, 2x GCJ3 P1400, 2x GCJ3 P1450, 1x GCM3 C1950; 2x CLH3 C115, 1x CLH3 P65, 1x CLH3 P70, 5x CLJ3 C115, 4x CLJ3 C120, 3x CLJ3 P70, 6x CLJ3 P75. I believe that the one JY C117 has a delta of 4, but the rest have deltas of 2 or less as of yesterday's close. Initial Margin $11k.

I know Iím heavy in CL and GC in this account, but as I was adding positions they seemed to have the best probabilities of the markets that I trade. I Ďm really hoping that I can get some unbiased opinions from some fellow traders Ö am I being far too risky? If so, what would you recommend I do to mitigate.

Thank you for your time.

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