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Selling Options on Futures?
Started: by ron99 Views / Replies:599,480 / 5,838
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Selling Options on Futures?

  #81 (permalink)
Market Wizard
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Just for an FYI. I did have an account at Liberty Trading. They did very well for me in 2009 (+99%)and 2010 (+25%). But in 2011 they didn't adjust to the changing market conditions. They lost 28% for me in 2011. I closed my account. They also change too much for having an account there. Over 30% of your profit. More when they are losing money in your account.

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  #82 (permalink)
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Advice

Hi Ron,
I am just starting out and would love to replicate what you have been able to achieve, in addition to James Cordier's book - what other books do you recommend that i should read before becoming active in the market of options on futures...
Any advice would be very welcome.
Regards
Scott

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  #83 (permalink)
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spj77 View Post
Hi Ron,
I am just starting out and would love to replicate what you have been able to achieve, in addition to James Cordier's book - what other books do you recommend that i should read before becoming active in the market of options on futures...
Any advice would be very welcome.
Regards
Scott

I'm neither Ron nor an active options trader, but the consensus, it seems, is that the following books are good reads for beginners:

Amazon.com: Option Volatility & Pricing: Advanced Trading Strategies and Techniques (9781557384867): Sheldon Natenberg: Books

Amazon.com: Options as a Strategic Investment (9780735201972): Lawrence G. McMillan: Books

Amazon.com: Options Trading: The Hidden Reality ("Options: Perception and Deception" & "Coulda Woulda Shoulda" revised & expanded, Printed in Color) ("Options: Perception and Deception" & "Coulda Woulda Shoulda" revised & expanded, Printed in Color)

You should also use the free resources made available by the exchanges:
CBOE - Options Learning Center

The Options Industry Council (OIC)

My feeling is that one should have good understanding of both futures and options before one should attempt to trade those, especially combined. However, I am not interested in a low return with high margin requirements, which, to me at least, seems too risky to be worth it. To each his own, I guess...

Attached Thumbnails
Selling Options on Futures?-options-futures-basics.pdf  

Last edited by Lornz; March 31st, 2012 at 10:43 AM.
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  #84 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
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Favorite Futures: Options on Futures
 
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ron99 View Post
Just for an FYI. I did have an account at Liberty Trading. They did very well for me in 2009 (+99%)and 2010 (+25%). But in 2011 they didn't adjust to the changing market conditions. They lost 28% for me in 2011. I closed my account. They also change too much for having an account there. Over 30% of your profit. More when they are losing money in your account.

When I typed "They also change too much for having an account there." I meant to type "They also charge too much for having an account there.

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  #85 (permalink)
Market Wizard
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Futures Experience: Advanced
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Futures Edge on FIO

spj77 View Post
Hi Ron,
I am just starting out and would love to replicate what you have been able to achieve, in addition to James Cordier's book - what other books do you recommend that i should read before becoming active in the market of options on futures...
Any advice would be very welcome.
Regards
Scott

Scott, that is the only book I have read on that subject. Elsewhere in this thread are other recommendations on books. I have not checked them out.
Ron

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  #86 (permalink)
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Thanks Ron
Well i hope i can emulate your success!!

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  #87 (permalink)
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Hi Lornz,
Thanks for taking the time to reply, it is much appreciated - i just ordered 5 books from traders press so it looks like i have a months worth of reading to do, and then the paper trading begins!!!
Wish me luck!!
Scott

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  #88 (permalink)
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Ron - Mentor??

Hi Ron,

I am starting out and would be very interested in some type of mentor relationship so i do not make silly mistakes and end up with the dreaded margin call. I am quite happy with a steady as she goes type approach you have had success with.

I have read and re-read this thread and have the following guidelines committed to memory:
- Sell based on where price is very unlikely to go, far OTM
- Less than 90days to expiration
- Delta less than .0400
- Always have 2/3 of account in cash for increased margin requirements / ride out positions if move towards strike over time
- Always always place limit order, never ever market
- Be mindful of seasonal tendencies
o Gold increase in fall, oil increase in spring, summer tops in grains
- Consider adding to positions as OTM options get closer to expiry and margin drops (subject to having 67% of account in cash)
- Avoid volatile commodities
Would you be interested in being a guiding figure as I start out in this venture? I am not thinking anything remotely intensive, but merely me just sending you a quick email before I commit to a trade for your second opinion to hopefully prevent me missing something that may lead to my (and my familyís) ruin??
Kind Regards
Scott

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  #89 (permalink)
Market Wizard
Cleveland, OH
 
Futures Experience: Advanced
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Favorite Futures: Options on Futures
 
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Hi Scott,

Yes I am willing to help.

Your list is very good. One thing I would change is to lower the Delta number to < .0200. Above that is risky unless you have a very flat market. And there aren't too many of those around lately.

I would be careful with grain calls this year because of the low inventory and carry over. Any little weather scare could send them spiraling.

Also watch out for the "sell in May and go away". ES and CL have been hit hard with them the last 2 years. I suspect this year won't be as bad, but who knows.

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  #90 (permalink)
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Posts: 28 since Mar 2012
Thanks: 6 given, 39 received

Thanks Ron!


Hi Ron,
Thank you so so much, it was a step big and swallowing of pride to put myself out there ask someone to be my mentor, especially when the world tells us that at 35 I should have it all together and not need any assistance.
But the way I look at it, is that it is surely wiser to swallow pride and seek guidance so that you are headed in the right direction than to make costly mistakes and blow an account out of ignorance, stubborness or pride.
I will send you a private message with my work email address and a little bit about myself and where I am at if you donít mind (as I donít really want to open my life to just anybody on an open forum site).
I am very happy and am looking forward to a mutually beneficial friendship.
Kind Regards
Scott

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