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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:568,268 / 5,727
Last Reply:December 2nd, 2016 (12:40 PM) Attachments:642

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Selling Options on Futures?

Old August 9th, 2011, 09:44 AM   #71 (permalink)
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Trading options ...

Ron99,

Those results are certainly impressive, even with yesterday's hiccough.

How has the transition to electronic trading of options on futures affected how you trade? From what I understand, there is still a pretty good market in the open outcry pits, depending on the market - do you use a broker in the pit to work your options trades or do you do it yourself from the screens?

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Old August 9th, 2011, 09:53 AM   #72 (permalink)
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ron99 View Post
I had to dump my Sep 65 crude puts, my Sep 2.20 RB puts and my 1800 gold calls yesterday. Lost some money but still up 62% for the year. I was up 76%.

I don't know for crude and RB, but for gold that was the right thing to do.
I assume that was paintful, but no doubts, good decision.

Usually in trading, those who know don't talk, and those who talk don't know. (Al Brooks)
success requires no deodorant! (Sun Tzu)
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Old August 9th, 2011, 09:55 AM   #73 (permalink)
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furytrader View Post
Ron99,

Those results are certainly impressive, even with yesterday's hiccough.

How has the transition to electronic trading of options on futures affected how you trade? From what I understand, there is still a pretty good market in the open outcry pits, depending on the market - do you use a broker in the pit to work your options trades or do you do it yourself from the screens?

-- Fury

The vast majority of my options trades are electronic. Only ICE Softs still have a decent amount of pit trading. But even those are getting more and more electronic. I always use electronic for Sugar and sometimes for Coffee. Grains, ES, metals and energies are always electronic.

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Old August 9th, 2011, 10:03 AM   #74 (permalink)
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sam028 View Post
I don't know for crude and RB, but for gold that was the right thing to do.
I assume that was paintful, but no doubts, good decision.

The margin on the 65 CL went from ~$100 to $2,234 each. The 220 RB went to $3,319 each. I had to dump them. I had 81 of the 65 CLs. Plus I thought that there would be more longs bailing today. We'll see.

Lost $9,200 on the gold. I didn't get out early enough. My bad.

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Old August 10th, 2011, 10:33 AM   #75 (permalink)
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ron99 View Post
The margin on the 65 CL went from ~$100 to $2,234 each. The 220 RB went to $3,319 each. I had to dump them. I had 81 of the 65 CLs. Plus I thought that there would be more longs bailing today. We'll see.

Lost $9,200 on the gold. I didn't get out early enough. My bad.


What is your money management method when you trade options?

Over these many years of trading options has the options behavior changed in anyway?

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Old August 11th, 2011, 10:54 AM   #76 (permalink)
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What is your money management method when you trade options?

Over these many years of trading options has the options behavior changed in anyway?

I keep 67% of the money in my account in cash. I never put on new positions if my account is under that.

I used to have only 50%. But I found out that that wasn't enough.

Just about every position I put on never ends up ITM. So I just need enough cash to ride out the times when the market goes against me. That is even tougher now with the wild swings common lately.

I also look at why the market is moving against me and where I think it is going. I combine that with days to expiration to decide whether to try to ride out a position or not. Also changes in margin required (like gold margins going up 22% tonight) have affected me more lately than in the past.

It took about 5 years of options trading to get a decent handle on those variables.

In reply to your 2nd question. Markets are much more volatile now than 5 years ago. Margins on options are higher. But there is also a lot more volume in options now.

Electronic options have been a huge benefit. That has also greatly reduced my commission costs.

But overall I would say it is harder to trade options now than in the past because of the larger market swings. I have moved my strikes farther out of the money than I had them 3-5 years ago.

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Old March 21st, 2012, 09:19 AM   #77 (permalink)
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can you use ninja for trading futures options?

I'm looking into a possible scenario:

- use OptionVue on PFG
- use the PFG data feed into ninja
- write a strategy for ninja to sell the options

I haven't started to test this yet, but wondered if you had gone down this road already.

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Old March 21st, 2012, 01:02 PM   #78 (permalink)
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I haven't used any of those products.

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Old March 23rd, 2012, 08:17 AM   #79 (permalink)
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options software tools

I did a lot of research today - talked to Liberty Trading Group, OptionVue and PFGBest. The sales gal at OptionVue was pretty clueless. I got a 30 day demo.

For straight futures, the predominant configuration is ninja and zen-fire (mirus or amp broker). They each require $2500 or so to open an account. This account will get you the data feed with enough margin to trade. If you want a demo data feed, no such luck. You need a real account to get the live data.

For futures options, it is similar but different. PFG has the option data feed. If you hook ninja to PFG, you only get futures data, no options. They have their own platform, Best Direct 8 which is a free tool to monitor your account, look at option chains and trade. There is no option analysis.

If you want option analysis, either OptionVue or Trade Navigator is reqd. They are both about $80/mo. The deal with OptionVue is the software is $1,000 outright. If you buy it, you will then end up paying $80/mo for 5 different exchanges (CME, CBOT, NYMEX, ICE, COMEX) so $400/mo just in exchange fees (so the sales gal told me). They also have their own data feed and they charge that.

If you license the software from OptionVue for $80/mo, you get all updates for free and the exchange fees are waived. I don't remember why we don't get hit with big exchange fees with Mirus. On TradeStation you have to pay the fees too. The exchanges are getting tougher about charging. That is why we lost the ability to get demo accounts through zen-fire.

I got a 30 day trial data feed from PFG. This will give me live futures and futures options data feed. The OptionVue trial only gives you Quote View equity and equity options data. The sales gal didn't even know that I could get a trial of PFG data. She was telling me to open an account to get the data, which then would have triggered me to pay $79/mo right away to lease the software.

One interesting thing about PFG is that they don't have any minimum requirements. They told me I need to follow what my broker is telling me. Which broker? They must be one step up the food chain, as a clearing house. OptionVue is an Introducing Broker, so the sales gal told me I could use $100 to open a PFG account to get the data feed. If this is the case, I could open an account directly with PFG for $20 and then use Best Direct to look at all the option info. I could also use the data feed to power ninja and get a futures feed for basically free. This sounds like a good way to setup a demo-type account until I'm ready to go live. Then just put enough money into the PFG account to handle the margin requirement. I think requires a different license for ninja. But if I'm running demo anyway, the sim license allows you to run any connection into ninja.

None of the tools for viewing options has any kind of programming language. So my idea of writing strategies to handle option buy/sell is dead. You could still use ninja to do analysis on the base future, helping to determine direction, etc. But the buy/sell of the option itself is probably best handled through Best Direct.

OptionVue can talk to the order desk at PFG, but it doesn't talk to the account itself. You have to manually enter your account balance into OptionVue and it keeps track of it standalone. There is a feature for placing orders, but I think it is stronger for the analysis. This is unlike ninja, where you can programmatically get your account info. This is needed for strategies so you can tell how much daily profit/loss you are at and stop trading.

Given that the style of Liberty is to short deep out of the money puts/calls, I don't see a whole lot of analysis behind that. It is mostly determining market direction and staying far away from price. I don't think the fancy analysis of OptionVue is going to add a lot to it. I'm not doing any iron condors or other option combinations. It would probably help in the education department.

Liberty looks like it has 2 types of account management control - a block account, where it pulls from everybodys account at once, and individual control where they are accessing just your account. Ron99 maybe you could comment on that.

PFG recommended having 2 accounts - one for Liberty and then a personal one I can trade on my own so that I don't mess up the margin for the Liberty one. This makes sense. You can use Best Direct to monitor the trades that Liberty makes and see account balance info.

As an aside, PFG futures data feed powers a lot of platforms. The list is long and includes all the industry heavyweights, like esignal, ninja, TT, Multicharts and Sierra Charts.

I had considered standardizing around esignal at one point because it was powering esignal Adv GET, MetaStock, 4x Made Easy and MT Predictor. I also had QCollector to download the data and build a database of price history for any other use, mostly for MT Predictor standalone.

Since then it seemed like zen-fire took over. I stopped using MetaStock and MT Predictor can also read IQFeed. Kinetic is powered by IQFeed and is cheaper, so that looked like a good alternative.

Now it looks like PFG is yet another mulipurpose solution. I don't know about the quality or speed of their feed, but for futures option data, there isn't much other choice. So it could power ninja and I can keep on writing strategies, it powers MultiChart so I could keep writing EasyLanguage, and it can power OptionVue if I wanted to get into more option analysis.

I just looked at Welcome to IQFeed! - Fast, Reliable, Affordable. Datafeeds and API. and they have a list of the platforms and brokers that allow for the CME Group fee waiver. So ninja and multichart qualify and mirus/amp/global/openecry/pfgbest all qualify. So that means using ninja/pfgbest combo will waive a majority of the $80/mo fee for exchange fees. If you want a symbol on an exchange not in the waiver, then you have to pay.

This is a lot of stuff. I didn't know how much I had figured out until I wrote it down. Hopefully this will help you if you are trying to put together different configurations.

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Old March 23rd, 2012, 09:01 AM   #80 (permalink)
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A couple of points. The CME waiver only applies to the CME products like grains and livestock. It does not apply to NYMEX or COMEX.

The clearinghouse for PFG is Jefferies. They did and may still have a lot of sovereign debt. Do some research on them before you send PFG any money. You don't want to get caught up in a MF Global situation.

Exchange fee prices vary. Check around. eSignal charges $78.

Liberty just got their CTA license, I believe, last year. So that would be the block account. I was in the individual account because that was all they had when I started.

Are they still charging $69 per contract? That is too much. It comes to about 30% of your profit when they are doing well. It is a higher % of your profit when they aren't doing well.

For the 3 years I was there, my account made $100,000 gross profit. Their fees totaled $49,800! Almost half.

I don't do any technical analysis. Mainly fundamental and some seasonal.

If you want just free data, including free exchanges, and low commission rates check out Open E Cry. Futures Trading Platform, Futures Trading Demo, Electronic Trading System - OEC They don't do any option charting.

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