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?

  #3721 (permalink)
 datahogg 
Knoxville Tennessee USA
 
Experience: Intermediate
Platform: TOS
Trading: ES, NQ, CL, /6E futures options.
Posts: 346 since Oct 2012
Thanks Given: 135
Thanks Received: 154


dbh21 View Post
I got smacked down pretty hard with my oil contracts today. Might be an a stop loss trigger. Anyone have any advice on what is happening? Dollar up, Saudi's competing, economy sucking... I think

What were your stikes and expiration dates??

Reply With Quote

Can you help answer these questions
from other members on NexusFi?
Online prop firm The Funded Trader (TFT) going under?
Traders Hideout
Futures True Range Report
The Elite Circle
NT7 Indicator Script Troubleshooting - Camarilla Pivots
NinjaTrader
Are there any eval firms that allow you to sink to your …
Traders Hideout
Deepmoney LLM
Elite Quantitative GenAI/LLM
 
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
37 thanks
NexusFi site changelog and issues/problem reporting
23 thanks
GFIs1 1 DAX trade per day journal
22 thanks
The Program
19 thanks
  #3722 (permalink)
dbh21
San Diego, CA
 
Posts: 23 since Nov 2012
Thanks Given: 14
Thanks Received: 1


datahogg View Post
What were your stikes and expiration dates??

I have the CLZ4 72 and 74s and CLF5 70s. The CLZ4's have hit my stops.

Reply With Quote
  #3723 (permalink)
 datahogg 
Knoxville Tennessee USA
 
Experience: Intermediate
Platform: TOS
Trading: ES, NQ, CL, /6E futures options.
Posts: 346 since Oct 2012
Thanks Given: 135
Thanks Received: 154



dbh21 View Post
I have the CLZ4 72 and 74s and CLF5 70s. The CLZ4's have hit my stops.

I have some Dec 65 P that are not far from my exit point.

Reply With Quote
  #3724 (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


dbh21 View Post
I got smacked down pretty hard with my oil contracts today. Might be an a stop loss trigger. Anyone have any advice on what is happening? Dollar up, Saudi's competing, economy sucking... I think

The fundamentals have been predicting this for months.

The US is producing 1 mil barrels/day more than a year ago.



Canada is producing more. There have been no major events shutting down oil production world wide. US gasoline consumption is staying at low levels.



Specs have been reducing their longs and adding shorts for months.


Started this thread Reply With Quote
  #3725 (permalink)
 kevinkdog   is a Vendor
 
Posts: 3,647 since Jul 2012
Thanks Given: 1,890
Thanks Received: 7,338


ron99 View Post
The fundamentals have been predicting this for months.

The US is producing 1 mil barrels/day more than a year ago.



Canada is producing more. There have been no major events shutting down oil production world wide. US gasoline consumption is staying at low levels.



Specs have been reducing their longs and adding shorts for months.



"The fundamentals have been predicting this for months."

Should people (like me) just have been avoiding selling crude puts for a while now? And if so, when should someone have stopped selling, based on these charts? Selling crude puts has been pretty favorable all year long, up until this week...


I am having trouble drawing what I think are meaningful conclusions from the charts you posted, Ron. Here's what I see, can you help me by telling me what you see from a timing point of view? By that I mean I see the general idea (higher supply, lower demand) but I have trouble turning this into "hey, don't sell crude puts starting in October for a while."

Chart 1: OK, it is easy to see that supply broke to a new high in say July 2012 and just kept going up from there. So, does that mean starting in JUly 2012 is way a bad idea to sell puts? Selling crude puts worked pretty well for a while, at least until this week. I guess I am having trouble seeing how this chart could be used for anything concrete timing wise...


Chart 2: Looks like we are near a multi year low in demand. But 2 years ago, we were in a similar situation (supply reaching new highs, demand reaching multi year lows). Yet, it still would have been OK to sell puts. Even earlier this year, we were low on demand, high on supply, but still price did not react.

Chart 3: I see times when a drop in spec interest precedes a drop in price, but I see other times where a drop in spec interest has no impact on price. What in your opinion makes this recent drop differently?


Sorry to anyone if these are dumb questions. But my issue with any fundamental data is that it may predict general future, but it is hard to use as a timing mechanism. And maybe, I have just been looking at this all wrong.


THANKS!

Follow me on Twitter Reply With Quote
  #3726 (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


kevinkdog View Post
"The fundamentals have been predicting this for months."

Should people (like me) just have been avoiding selling crude puts for a while now? And if so, when should someone have stopped selling, based on these charts? Selling crude puts has been pretty favorable all year long, up until this week...


I am having trouble drawing what I think are meaningful conclusions from the charts you posted, Ron. Here's what I see, can you help me by telling me what you see from a timing point of view? By that I mean I see the general idea (higher supply, lower demand) but I have trouble turning this into "hey, don't sell crude puts starting in October for a while."

Chart 1: OK, it is easy to see that supply broke to a new high in say July 2012 and just kept going up from there. So, does that mean starting in JUly 2012 is way a bad idea to sell puts? Selling crude puts worked pretty well for a while, at least until this week. I guess I am having trouble seeing how this chart could be used for anything concrete timing wise...


Chart 2: Looks like we are near a multi year low in demand. But 2 years ago, we were in a similar situation (supply reaching new highs, demand reaching multi year lows). Yet, it still would have been OK to sell puts. Even earlier this year, we were low on demand, high on supply, but still price did not react.

Chart 3: I see times when a drop in spec interest precedes a drop in price, but I see other times where a drop in spec interest has no impact on price. What in your opinion makes this recent drop differently?


Sorry to anyone if these are dumb questions. But my issue with any fundamental data is that it may predict general future, but it is hard to use as a timing mechanism. And maybe, I have just been looking at this all wrong.


THANKS!

You are correct that you will not get exact timing from fundamentals. But it should direct you which way the market may move when it does move.

The thing I didn't show there is world conflicts which would trump these fundamentals. Libya stopped exporting for a while.



And now they are ramping up production.



Plus other things that went on in other oil producing countries like Iran. Then you had Japan importing more oil because they shut down nuclear power after the earthquakes. You also had no hurricanes this year affecting the Gulf.

I look at fundamentals to give me the tendency for which way it probably will move from current prices. I then either don't sell on that side or I move further OTM on that side.

Like right now I would not sell KC or Cocoa calls. I would sell puts.

I wouldn't have sold grain puts this summer. But calls would have been OK.

I wouldn't have sold calls in LH and LC this year because of fundamentals. 13% of US hogs died from the PED virus. Cattle inventories were very low.

It's all about putting the odds in your favor.

Started this thread Reply With Quote
  #3727 (permalink)
 kevinkdog   is a Vendor
 
Posts: 3,647 since Jul 2012
Thanks Given: 1,890
Thanks Received: 7,338


ron99 View Post
You are correct that you will not get exact timing from fundamentals. But it should direct you which way the market may move when it does move.

The thing I didn't show there is world conflicts which would trump these fundamentals. Libya stopped exporting for a while.



And now they are ramping up production.



Plus other things that went on in other oil producing countries like Iran. Then you had Japan importing more oil because they shut down nuclear power after the earthquakes. You also had no hurricanes this year affecting the Gulf.

I look at fundamentals to give me the tendency for which way it probably will move from current prices. I then either don't sell on that side or I move further OTM on that side.

Like right now I would not sell KC or Cocoa calls. I would sell puts.

I wouldn't have sold grain puts this summer. But calls would have been OK.

I wouldn't have sold calls in LH and LC this year because of fundamentals. 13% of US hogs died from the PED virus. Cattle inventories were very low.

It's all about putting the odds in your favor.


Thanks. If you care to share, what were you doing the past year with Crude calls and puts?

Follow me on Twitter Reply With Quote
  #3728 (permalink)
 
SMCJB's Avatar
 SMCJB 
Houston TX
Legendary Market Wizard
 
Experience: Advanced
Platform: TT and Stellar
Broker: Advantage Futures
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,041 since Dec 2013
Thanks Given: 4,375
Thanks Received: 10,192

Slightly further off topic than you already are, but since you guys are talking about Crude have you seen whats happened to the back of the curve in the last year...


Until recently the curve moved up and down almost in parallel, then in the last 3 months Dec has collapsed versus the back as illustrated by the Z14-Z19 spread



Or drawn another way

Reply With Quote
Thanked by:
  #3729 (permalink)
CafeGrande
St Paul, MN, USA
 
Posts: 200 since Jan 2014
Thanks Given: 131
Thanks Received: 207

In addition to some of the information posted above, implied volatility was telling a story:

- a significant increase in ATM values

- a significant change in the shape of the curve. It went from being close to a typical smile to being sharply skewed "to the left" (more demand, higher price for the puts)

- Risk Reversals went from positive to negative. Risk Reversals can be a trading strategy, but they're also a good way to plot the IV curve/skew as a time series (it saves having to click through x number of days to watch the shape change).

You can calculate them using any delta, but a couple of common calcs are RR10 (IV of a 10-delta call minus the IV of 10-delta put) and RR25.

Reply With Quote
Thanked by:
  #3730 (permalink)
hummingbird
Yreka, CA United States
 
Posts: 11 since Sep 2014
Thanks Given: 0
Thanks Received: 2


Looks like some really knowledgeable option traders on this thread. I'm just starting out. Only looking to supplement my trading using simple option spreads but can find a good book on the basics. The books I have only discuss profit at expiry, but never give scenarios that explain what happens when option trades are closed prior to expiry. I especially would like to know what happens when an options spread is closed before expiry, or even if that is allowed.

Reply With Quote




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