Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
Yes Cordier says a 0.2000 delta. But that doesn't match the 400-700 premium. Or how he traded.
For example, a Sep CL 82 put is $520 but the delta is 0.0610. A 0.2000 delta would be a Sep 95 put. I know that Liberty never put something like that on in my account when I had one there. He wasn't that crazy.
Yes I have lowered my delta and increased my cash excess over the years. After getting brokers calling you and telling you to immediately send money (I don't know why they don't suggest bailing on positions first) you don't want to go through that again.
And yes I have had sleepless nights because of my positions. And then you almost don't want to turn on the computer in the morning to see what happened.
After I lowered my delta and raised my cash excess I found that when you have 85-90% winners your account balance at the end of the year is higher than when you traded higher delta and only had 60% winners. And that is mainly because when you are trading higher delta, the losers are usually very big losers.
I use optionsXpress for options. IB charges too much margin. Far higher than anybody else when you sell them. But if you are only buying options then margin isn't a worry.
You definitely need to look at strikes further out of the money (OTM). A 19 is far too risky. I sold 16s.
If you feel you need to make ~$500 for each trade, then sell more put options at lower strike price. But you shouldn't limit yourself to a certain dollar amount per option. In many cases those will be too risky. Good returns can be made at lower strikes.
Thanks for your important suggestion Ron99. I was looking at premiums instead of volatility (but I had in mind how close or out of the money the option was).
Following your example.....Today, the Oct 16 puts have a premium of $123. If I sell 4 of these puts, would I need 4 times the margin required for one 19 put?
Another question, what is the best tool to determine the volatility of a commodity options?
Ron99: Going back to the Sugar Oct 16 puts you sold with a premium of $123 each, what commission are you paying here?
In my case, just the commission they charge is $40 for selling and buying it back for each contract. The commission is in this case very high percentage of the premium received.
I thought i would share my chart of Oct Sugar. I was wary of the downward movement but now it seems to be making a bottom and the Cummulative Volume Delta (lower pane) is showing bullish divergence. Today there was strong buying evident.
I can't believe I came across this thread. I've been unbeknownstly following in Ron's foot steps but I am a few years behind. I also read Cordier's book and have been selling options in two different optionXpress accounts. From reading this whole thread I can tell you I am currently learning some lessons that Ron learned a while back. I have a regular account that is doing really well but I have a self-directed IRA account in which I have made some mistakes mainly from being too impatient on entry and too stubborn before exiting. I currently have open positions in CL, LH, LC, NG, C, W, CC, SB and GC. I also plan for my wife and I to quit our jobs and get that house in the woods so we can watch the deer and turkeys while I trade.
Yep, the house in the woods is a good goal and then to enjoy when the trading day is over.
I too have self-directed IRAs (one for my wife and one for me through Millenium Trust) at OX. I trade those even more cautious than I do my regular account because if you blow that one up you just can't add unlimited money back into them. I usually do deltas of < 0.0100 on the options I sell in those accounts.
You have a nice diversity of commodities in your account.
Did you know that OX is switching from pit traded soft options to electronic traded options for the softs this summer? Sugar was switched last year but the rest are in the works.
