NexusFi: Find Your Edge


Home Menu

 





Selling Options on Futures?


Discussion in Options

Updated
      Top Posters
    1. looks_one ron99 with 2,221 posts (4,489 thanks)
    2. looks_two SMCJB with 346 posts (733 thanks)
    3. looks_3 kevinkdog with 341 posts (400 thanks)
    4. looks_4 myrrdin with 288 posts (408 thanks)
      Best Posters
    1. looks_one SMCJB with 2.1 thanks per post
    2. looks_two ron99 with 2 thanks per post
    3. looks_3 myrrdin with 1.4 thanks per post
    4. looks_4 kevinkdog with 1.2 thanks per post
    1. trending_up 1,950,287 views
    2. thumb_up 9,259 thanks given
    3. group 458 followers
    1. forum 7,370 posts
    2. attach_file 794 attachments




 
Search this Thread

Selling Options on Futures?

  #1951 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785


BlueRoo View Post
Appreciate your willingness to share your experience Ron. I trade CL as a monthly staple and want to look at diversification. I was interested to note KC (Red Wheat) is a major part of your current results. Is KC worth considering as a staple regular trade?

I also note that the group seems to sell DEEP OTM contracts. This is new to me. I learnt from someone who taught me to me much closer to the money. For CL my strangles are normally a spread of $25 to $30 between my short calls and puts. I would say the average profit on the trades I do is around $200 / contract but I rarely trade outside of the 30 DTE. I know it is a subjective comment/question. I generally aim for 3% return on capital per trade/month. This equates to 50% annual return on capital. Am I crazy doing it this way? Is there a better approach to have a return goal and trade allocation?

KC is ICE Coffee.

Yes I would sell a much wider strangle. The last CL strangle I did was $60 apart. 70-130. I myself wouldn't do one less than 50 apart. Much lower chance of losing money.

Started this thread Reply With Quote

Can you help answer these questions
from other members on NexusFi?
ZombieSqueeze
Platforms and Indicators
Are there any eval firms that allow you to sink to your …
Traders Hideout
NT7 Indicator Script Troubleshooting - Camarilla Pivots
NinjaTrader
Futures True Range Report
The Elite Circle
Exit Strategy
NinjaTrader
 
Best Threads (Most Thanked)
in the last 7 days on NexusFi
Get funded firms 2023/2024 - Any recommendations or word …
59 thanks
Funded Trader platforms
36 thanks
NexusFi site changelog and issues/problem reporting
25 thanks
GFIs1 1 DAX trade per day journal
19 thanks
The Program
18 thanks
  #1952 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785


kevins View Post
Man oh Man! this thread is fantastic - or possibly I am just the right trader, at the right time, with the right mindset for absorbing this stuff up like a sponge. I have very well defined strategies for trading options on the spx and rut, but am learning that options on futures is going to be a much more efficient use of margin. Looking into MRCI, and have an account now opened at OX. Learning the new platform makes me feel like a beginner all over again, but in tandem with how well I know the tos platform, I'm hoping it wont take too long to get up to speed. Incredible thanks to all the generosity shared here. GREAT stuff no doubt!!!

For a beginner I would recommend you use the seasonal charts in opts post. That is probably good enough to start.

Later you would need to look at each year because a 5 year average can be thrown off by one rogue year. Like 2008 for a lot of commodities.

Started this thread Reply With Quote
Thanked by:
  #1953 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785



BlueRoo View Post
Is there an answer to charting seasonality other than those expensive charting applications?

What I do is have the data from my data provider linked to an Excel spreadsheet. Each day I copy and paste the settlement values. Takes about 2 minutes per day. Then I make my own charts that have each individual year as a line on the chart.

On the chart below for CL Oct you can see that it normally rises in July but the huge drop in 2008 affects the 5 year average of other charts. So I get a better feel if I look at each recent year rather than averages. I feel that 15 and 30 year averages are useless because trading has changed so much from back then.

Of course you need a data provider that has excel linking. Not all do that.

Started this thread Reply With Quote
Thanked by:
  #1954 (permalink)
 rosho01 
London/UK
 
Experience: Intermediate
Platform: IBs ladder / Market Delta charts
Broker: IB / IQfeed
Trading: Bund
Posts: 438 since Sep 2012
Thanks Given: 260
Thanks Received: 96


ron99 View Post
Could the wide spreads be due to the time you are trading? Between 9am to 4pm EDT the spreads are very close. That would be 4pm to 11pm your time.

I'm looking at ES Oct 1400p bid is 2.00 offer is 2.10 at 10:45 EST. Most strikes there is a 0.10 spread.

hmm sorry, i shld have been more specific:

ES Z3 +1740 (long) -1730 (short) Bear Call Spread Bid: 2.95 Ask 2.65.

So thats only 6 ticks wide (0.05 denomination), perhaps it is time of day & i was getting confused - easily done. Ignore!

Visit my NexusFi Trade Journal Reply With Quote
  #1955 (permalink)
 Barrington 
Portland OR
 
Experience: Intermediate
Platform: None
Trading: Stocks
Posts: 56 since Dec 2012
Thanks Given: 87
Thanks Received: 31


ron99 View Post
What I do is have the data from my data provider linked to an Excel spreadsheet. Each day I copy and paste the settlement values. Takes about 2 minutes per day. Then I make my own charts that have each individual year as a line on the chart.

On the chart below for CL Oct you can see that it normally rises in July but the huge drop in 2008 affects the 5 year average of other charts. So I get a better feel if I look at each recent year rather than averages. I feel that 15 and 30 year averages are useless because trading has changed so much from back then.

Of course you need a data provider that has excel linking. Not all do that.


Ron, I was trying to build the graph as you have – distinct lines for individual years from a single spreadsheet which contains price data from several years. But I was not able to replicate your graph using the Graph Wizard in Excel 07. Would you be able to tell the steps you are using to built the graph?

Reply With Quote
  #1956 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785


rosho01 View Post
hmm sorry, i shld have been more specific:

ES Z3 +1740 (long) -1730 (short) Bear Call Spread Bid: 2.95 Ask 2.65.

So thats only 6 ticks wide (0.05 denomination), perhaps it is time of day & i was getting confused - easily done. Ignore!

Oh.

It looks like you are trying to trade something that does have low volume. My 2 data providers don't even have that quote for me.

I was going to suggest legging into it but then the ticks are 0.25 instead of 0.05.

Started this thread Reply With Quote
  #1957 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785


Barrington View Post
Ron, I was trying to build the graph as you have – distinct lines for individual years from a single spreadsheet which contains price data from several years. But I was not able to replicate your graph using the Graph Wizard in Excel 07. Would you be able to tell the steps you are using to built the graph?

Right click on chart. Click on Select Data. Click on Add. Enter Series Name. Then click on the chart like icon at the end of Series Values and then highlight the daily prices for that year on your spreadsheet. Click enter. Do that for each year.

Attached is my page for CL V. To account for weekends so that each year is graphed the same the tables on the right include everyday not just trading days. The price on Friday is used for Sat & Sun by using Lookup.

Attached Files
Elite Membership required to download: CL V.xlsx
Started this thread Reply With Quote
Thanked by:
  #1958 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785

Interesting article on CL backwardation. It opens in a pdf. The article is on pdf page 3.
https://content.emails.thomsonreuters.biz/emessageIRS/servlet/IRSL?v=5&a=10111&r=21957&m=3770&l=2&e=2&x=2456617.0


Quoting 
Heavy speculative buying and panicked selling by players on
the short side of the trade propelled WTI higher. Among the
biggest casualties of the move were commercial players who
are normally short the forward time structure of WTI.

This early close-out of shorts in the market left WTI's prompt
pricing built on a foundation of sand. As the futures contract
nears expiry commercial shorts closing hedging positions usually
help to offset speculative longs doing the same thing. But
after the July blowout this support mechanism was dangerously
impaired.


Started this thread Reply With Quote
Thanked by:
  #1959 (permalink)
 
Big Mike's Avatar
 Big Mike 
Manta, Ecuador
Site Administrator
Developer
Swing Trader
 
Experience: Advanced
Platform: Custom solution
Broker: IBKR
Trading: Stocks & Futures
Frequency: Every few days
Duration: Weeks
Posts: 50,398 since Jun 2009
Thanks Given: 33,173
Thanks Received: 101,537



Mike

We're here to help: just ask the community or contact our Help Desk

Quick Links: Change your Username or Register as a Vendor
Searching for trading reviews? Review this list
Lifetime Elite Membership: Sign-up for only $149 USD
Exclusive money saving offers from our Site Sponsors: Browse Offers
Report problems with the site: Using the NexusFi changelog thread
Follow me on Twitter Visit my NexusFi Trade Journal Reply With Quote
  #1960 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785


CT margins increasing 25% Friday.

Started this thread Reply With Quote
Thanked by:




Last Updated on July 28, 2023


© 2024 NexusFi™, s.a., All Rights Reserved.
Av Ricardo J. Alfaro, Century Tower, Panama City, Panama, Ph: +507 833-9432 (Panama and Intl), +1 888-312-3001 (USA and Canada)
All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
About Us - Contact Us - Site Rules, Acceptable Use, and Terms and Conditions - Privacy Policy - Downloads - Top
no new posts