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Selling Options on Futures?
Started:July 19th, 2011 (06:16 PM) by ron99 Views / Replies:569,332 / 5,728
Last Reply:December 6th, 2016 (05:26 PM) Attachments:642

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Selling Options on Futures?

Old March 1st, 2013, 11:42 AM   #931 (permalink)
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Pretty quiet in here the past few days! Are we all being SEQUESTERED?

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Old March 1st, 2013, 11:48 AM   #932 (permalink)
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MJ888 View Post
Pretty quiet in here the past few days! Are we all being SEQUESTERED?

Just watching time decay do its thing. It is kind of neat seeing most of the options I sold now priced at .01 or .02.

I'm glad there are only 2 weeks left on my Crude Oil 75 and 65 puts. If Crude goes to mid 80s I'll get a little anxious I'm sure.

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Old March 1st, 2013, 11:53 AM   #933 (permalink)
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Time decay is an incredible thing indeed. I am short some May CL 75 puts so I have around six weeks to go until expiration. I sold at a premium of 0.19 when May CL was at $98.50. Despite the recent sell off, my position is still profitable with the premium trading at around 0.16, just shows that I can be wrong in the direction of CL but still be profitable and be able to remain in the trade.

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Old March 1st, 2013, 01:08 PM   #934 (permalink)
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Time decay is an incredible thing indeed. I am short some May CL 75 puts so I have around six weeks to go until expiration. I sold at a premium of 0.19 when May CL was at $98.50. Despite the recent sell off, my position is still profitable with the premium trading at around 0.16, just shows that I can be wrong in the direction of CL but still be profitable and be able to remain in the trade.

Fortunately (or unfortunately), o far the 5 markets are sold options in are all well in my favor. The true test of this method (and my ability) will be to manage the ones that go against me.

In the meantime, I have to stay super humble, and be super patient. It is very easy to do the opposite.

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Old March 1st, 2013, 01:20 PM   #935 (permalink)
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Futures Edge on FIO

Are you a NinjaTrader user?

 
Being patient is probably the hardest part of option selling. 98% of the time there is NOTHING to do. And for me in the past, I start to look into other ways to trade and that is where I get into trouble! I look at the sell-offs and rallies and think to myself, "hey, I need to get in on that!" And more often than not, I get burned.

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Old March 1st, 2013, 05:30 PM   #936 (permalink)
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I am right there with you MJ; I have 2 open positions right now and its just boring to watch them; but trying to keep the discipline otherwise Im going to do some stupid things like I did last year.

V

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Old March 2nd, 2013, 08:36 AM   #937 (permalink)
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MJ888 View Post
Being patient is probably the hardest part of option selling. 98% of the time there is NOTHING to do. And for me in the past, I start to look into other ways to trade and that is where I get into trouble! I look at the sell-offs and rallies and think to myself, "hey, I need to get in on that!" And more often than not, I get burned.

Exactly. One of the hurdles to get over in trading successfully is to think that you must be in a trade.

I'm only holding gold calls that are just about worthless. I just wanted the sequester week to be over with. You would "think" that oil would pull back a little. But the ever present middle east variable can turn oil in a second. If oil gets too low OPEC seems to always step in and limit production to decrease supply and prices move right back up.

Watching....

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Old March 2nd, 2013, 08:18 PM   #938 (permalink)
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Question for the forum,

I know the seasonal tendency for /CL is to go up during the summer time period but given the way our government is behaving as well as right now the trend is down for /CL is down; would anybody consider selling deep OTM CALLS? or would you still stick with PUTS ?

thanks

V

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Old March 3rd, 2013, 02:34 AM   #939 (permalink)
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vmaiya73 View Post
Question for the forum,

I know the seasonal tendency for /CL is to go up during the summer time period but given the way our government is behaving as well as right now the trend is down for /CL is down; would anybody consider selling deep OTM CALLS? or would you still stick with PUTS ?

thanks

V

vmaiya,

This is something that I have been thinking about too. Like opts said in an earlier post, CL is always one tiny mid-east crisis away from a nice rally. As for the US government, it is all about politics. Would it surprise anyone that a deal is reached very quickly to "kick the can down the road" on this sequester BS?

Would I sell CL calls now? No, I wouldn't. I would wait and see what happens the next few weeks. I would not want to be short calls when the politicians announce some sort of a short term deal and CL rallies just as the seasonal tendencies indicates it should.

Would I sell CL puts now if I was not already in a trade? Yes, I probably would take a look at the June 70 Puts, premium of 0.19 and a delta of 0.03.

I sold some May CL 75 puts for a premium of 0.19 back on February 7 when May CL was trading around $97. With May CL at $91 now, the premium on those puts is trading at 0.13 making my position profitable despite the sell-off. I will continue to watch closely but at this point I have no reason to exit the position. I am $16 out of the money. The position is profitable and I expect time decay to accelerate more in the next few weeks. So unless CL falls off a cliff suddenly, I am standing pat.

Just my thoughts.......

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Old March 3rd, 2013, 06:25 AM   #940 (permalink)
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Hi Everyone,

I am a relatively new trader with a year's experience trading forex and stocks but none in futures. Recently, I have been looking into trading options because of the flexibility they offer and I am glad I found this forum and specifically Ron's thread.

I would like to thank everyone who had contributed to this thread so far as it has provided a lot of good insight for someone new to trading, like me. I have learned quite a bit from reading your guy's post and feel fairly ready to demo trade selling options.

Here is a trade I am looking into at the moment and I was hoping to get some of insight. I am looking to sell a put on the the Emini. Currently it is trading a little bit above 1500 and I was looking to sell the 1250 puts that expire on May 17th which is offering a premium of $165 per option. I am not sure what the delta of this trade is as I am using Barcharts.com for the option info but it looks like a relatively safe trade.

My reasoning behind the trade is that the market is in a current uptrend and the 1250 figure is under a major support level with the market having to bypass three support levels to reach my strike. Also if it reaches my strike it will wipe out all of the gains it made this year and last year which seems very unlikely given the time frame of the trade. I was also looking to sell some call options above 1700 but I can't seem to find a decent premium so I decided to skip on that for now. Also I understand that the market has sold off in recent years during the upcoming months but I think that my strike is a good distance out of money.

I still need to do more research on the market fundamentals for the upcoming months but for now I was wondering what your thoughts were on this trade.

Thanks!

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