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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:569,356 / 5,729
Last Reply:4 Minutes Ago (11:47 PM) Attachments:642

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Selling Options on Futures?

Old February 14th, 2013, 12:38 PM   #781 (permalink)
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MGBRoadster View Post
Hi there Brit, long time no speak.

Yep Iíve got an IB SIPP as well as a standard account with them. I mainly trade futures, but Iíve been branching out into options, mainly CL and ES. Iíve found short straddles are paying off pretty well recently, particularly on CL, but I donít have historical options data, so I canít backtest how much thatís due to current market conditions.

Iíve been selling a few options, but the problem with IB as you know, is the margin. I was just about to open an account with OX when they stopped supporting non-US clients, so Iím now looking into OEC. The research continuesÖ

Really like the thread.

Say hello to the concrete cows for me.


Chris

(hint for non-UK readers: Google ďConcrete cows Milton KeynesĒ)

Cows are fine currently residing in the shopping centre.
I tend to strangle to squeeze best value out of IB.
Check on my prior posts, where I mentioned Sucden Financial who may become an alternative to IB once they sort their options platform out.

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Old February 14th, 2013, 07:10 PM   #782 (permalink)
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sluhur View Post
Diversification. Hi all, I think it may have been discussed before on the previous thread. If it is, I apologize for that.

Fantastic webinar on risk and portfolio management from Ernest Chan:
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Old February 14th, 2013, 07:12 PM   #783 (permalink)
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sluhur View Post
Hi all, I think it may have been discussed before on the previous thread. If it is, I apologize for that.

I'm pretty new to the commodity options and I've been trading CL and GC for a while.
I would like some more recommendation about other commodities that can be used for diversification in addition to CL and GC.

I noticed that some of you are trading KC and CT. Are they liquid?
As I read the book, it mention that not all the commodities are liquid.
By looking at the seasonal, is it ok now to sell put on CT?

Thank you for all your advice

ES is another option with high volume. The ROI isn't the greatest. But if I have an account with excess available I will sell ES puts to fill it up. You can't get far enough OTM on ES calls to be low risk and have enough premium to be worth trading, so I don't trade those. EW (ES end of month options) are OK but low volume.

SB has decent volume.

NG, RB & HO are OK.

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Old February 14th, 2013, 07:26 PM   #784 (permalink)
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Got this today from OptionsXpress


Quoting 
Good news! We've removed the pricing tiers on our futures contracts to create an easy to understand pricing structure.

$3.50 per contract on Futures and Futures Options Trades.
Effective immediately, your commission rate on all futures and futures options contracts is reduced to $3.50/contract

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Old February 14th, 2013, 07:30 PM   #785 (permalink)
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Dudetooth,

I was going to type a long reply but others have made excellent, thoughtful responses to you.

I will say I understand why you had success with selling options and then moved to other strategies. I have done the same thing over and over too many times. It's usually a combination of boredom and/or greed. Especially for me since this is my full time "job".

But I always come back to selling options.

On the broker saying you are too risky. I have had that several times. Last time was at FC Stone. I had 88% cash and they told me my positions were too risky and that I HAD to close some of them. I closed my account immediately. Of course that was right after they had a person crash and he was on the hook for over $1 mil. They should have been managing him much closer. And of course he wasn't in options.

OX only calls me when things go severely wrong. Other than that they haven't said boo about selling options. OEC was a little more worried but after they saw my track record there they have been OK. But I haven't had to increase my options there since they were purchased.

I have one IRA account that has 64k in it. It currently has 233 options in it and is at 33.5% margin. 8 different commodities. 124 of those options expire in 12 days. It's up 7.8% this year. When those options expire it will be up 9.3%.

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Old February 15th, 2013, 06:44 AM   #786 (permalink)
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britkid99 View Post
I tend to strangle to squeeze best value out of IB.
Check on my prior posts, where I mentioned Sucden Financial who may become an alternative to IB once they sort their options platform out.

I saw your posts about Sucden, thanks. If they come through on their promises then everything would be honky dory.

Iíve only had a quick look at the effect of strangling on margin at IB but it didnít seem to boost the ROI enough to make it worth the effort. Iíll put it on the list to do some more research.

That list keeps getting longerÖ

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Old February 15th, 2013, 10:26 AM   #787 (permalink)
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According to the National Cotton Councilís annual survey, as of January 1, U.S. cotton producers planned to plant 9.01 million acres of cotton this spring, a 26.8 percent drop from 2012 acreage.

Cotton Producers to Slash Acreage

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Old February 15th, 2013, 11:21 AM   #788 (permalink)
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Ron99

Hey Ron. I will be starting next month trading options with sucden international I just have a few questions. Which commodities do you actively trade which ones should I avoid? James cordier states that he sells 500 dollar options and not the 200s. You stated that selling far otm options has an easier chance of doubling can you explain the difference I don't understand that and cordier says he looks for options that have double margin to premium. Am I to understand that selling far otm options have higher margins to premium, can you give me an example. Thanks

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Old February 15th, 2013, 12:58 PM   #789 (permalink)
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britkid99 View Post
Would you be willing to name your broker and give his commission charges as it will help to add knowledge to others seeking information of option unfriendly brokers.

Brit

One of my accounts is with OX. I also have one with OEC and one with RJO. Both the OEC and RJO have Daniels Trading as the IB. Commissions were $20 RT on the RJO (set up with them 6 years ago and never looked to get lower ... until now) and $3 RT for the OEC. I wouldn't say that they were unfriendly to options sellers, it just seemed odd that my broker had no issues with the way I was trading, no issues with me just selling options in either account. When I asked for lower commissions he wanted to put both accounts at $10 RT. It's when I mentioned I could get lower commissions at another IB that he told me that he had an issue with my risk.

Clearing through RJO has been fine for selling options. I've never had an issue. You might find it difficult to get discount commissions at Daniels, but there are other IBs that I ran across as low as $4 RT. Their webtrade and desktop software are pretty option-friendly ... actually pretty decent for free platforms. Looks like they have an RJO Canada and RJO UK as well.

Hope that helps.

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Old February 16th, 2013, 11:30 PM   #790 (permalink)
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Dudetooth View Post
One of my accounts is with OX. I also have one with OEC and one with RJO. Both the OEC and RJO have Daniels Trading as the IB. Commissions were $20 RT on the RJO (set up with them 6 years ago and never looked to get lower ... until now) and $3 RT for the OEC. I wouldn't say that they were unfriendly to options sellers, it just seemed odd that my broker had no issues with the way I was trading, no issues with me just selling options in either account. When I asked for lower commissions he wanted to put both accounts at $10 RT. It's when I mentioned I could get lower commissions at another IB that he told me that he had an issue with my risk.

Clearing through RJO has been fine for selling options. I've never had an issue. You might find it difficult to get discount commissions at Daniels, but there are other IBs that I ran across as low as $4 RT. Their webtrade and desktop software are pretty option-friendly ... actually pretty decent for free platforms. Looks like they have an RJO Canada and RJO UK as well.

Hope that helps.

I trade at OEC. Went direct to them. No IB.

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