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 1,951,546 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?

  #4691 (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


leinster View Post
That's a very high quality post @ron99 based on the study would u consider selling higher delta options?

Depends on your taste for risk. See prior post.

Also @ron99 u probably mentioned his already but where do u get the data?

Sent from my A0001 using Tapatalk

I get the data from the excellent SPAN spreadsheet from @Dudetooth.

See this thread.


Started this thread Reply With Quote
Thanked by:

Can you help answer these questions
from other members on NexusFi?
Deepmoney LLM
Elite Quantitative GenAI/LLM
Futures True Range Report
The Elite Circle
ZombieSqueeze
Platforms and Indicators
NT7 Indicator Script Troubleshooting - Camarilla Pivots
NinjaTrader
Ninja Mobile Trader VPS (ninjamobiletrader.com)
Trading Reviews and Vendors
 
Best Threads (Most Thanked)
in the last 7 days on NexusFi
Get funded firms 2023/2024 - Any recommendations or word …
60 thanks
Funded Trader platforms
43 thanks
NexusFi site changelog and issues/problem reporting
24 thanks
GFIs1 1 DAX trade per day journal
22 thanks
The Program
19 thanks
  #4692 (permalink)
 jokertrader 
NYC, NY
 
Experience: Intermediate
Platform: Sierra, TT
Broker: N/A
Trading: Spread Researcher and crypto degen
Posts: 654 since May 2013
Thanks Given: 545
Thanks Received: 360

Ron: I am still reading through this thread diligently and cover every page. Could you please upload the spreadsheet with the spread analysis.. I think that will be a very useful study for me
thanks again.. excellent work

Visit my NexusFi Trade Journal Reply With Quote
Thanked by:
  #4693 (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



jokertrader View Post
Ron: I am still reading through this thread diligently and cover every page. Could you please upload the spreadsheet with the spread analysis.. I think that will be a very useful study for me
thanks again.. excellent work

The data is here in this post.



and here


Started this thread Reply With Quote
Thanked by:
  #4694 (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

IV---> Implied Volatility
DOMP ------> Deep out of the money puts.

Using the ES as an example, consider a position where DOMP have been sold.
If ES moves down, delta and vega (assuming IV increases) will hurt the position
resulting in an unrealized loss. This is not necessarily bad if it is not near the
exit point, but this will result in more time needed to reach the profit target (say
50%). This can increase the time in the position.

If ES moves up delta and vega (assuming IV decreases) will help the position
with an unrealized gain. This will shorten the time required in the position to
reach the profit goal (50%) .

There are always exceptions, but you would expect that DOMP ES sellers would
do better in a market trending up than a market trending down.

Reply With Quote
  #4695 (permalink)
 montanajtt 
Como, Italy
 
Experience: Advanced
Platform: Tradestation, IB
Broker: Tradestation, IB
Trading: ES
Frequency: Daily
Duration: Minutes
Posts: 184 since Aug 2014
Thanks Given: 299
Thanks Received: 312

Hi Ron, I've read your thread, a lot but honestly not entirely, your performances are impressive. I joined the option sellers club only few months ago and I mainly do short strangle with future in defense. What I haven't found very clear in your strategy, and I think it's my fault because I haven't read all your thread, is how you manage a position that goes in the money(so in loss).
Thanks in advance!

Reply With Quote
Thanked by:
  #4696 (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


montanajtt View Post
Hi Ron, I've read your thread, a lot but honestly not entirely, your performances are impressive. I joined the option sellers club only few months ago and I mainly do short strangle with future in defense. What I haven't found very clear in your strategy, and I think it's my fault because I haven't read all your thread, is how you manage a position that goes in the money(so in loss).
Thanks in advance!

The ES selling put strategy starts on page 411. The summary in post#2 has good info.

First of all with my strategy you will never hold your position till it goes ITM. The point where futures are below your short put strike or above your short call strike. You will be forced out sooner than that.

When I hit the exit point I get out of the position. I evaluate why the market has moved as far as it has and decide if I think it will continue moving that way or not. Sometimes I may go a several days before I can figure that out.

I then reenter using the same parameters I always use. So it is rolling to new positions. But make sure you still use the original parameters and don't try to "revenge" trade and get back all of what you lost in one trade.

Started this thread Reply With Quote
  #4697 (permalink)
 montanajtt 
Como, Italy
 
Experience: Advanced
Platform: Tradestation, IB
Broker: Tradestation, IB
Trading: ES
Frequency: Daily
Duration: Minutes
Posts: 184 since Aug 2014
Thanks Given: 299
Thanks Received: 312

Thank you! So you have an exit point where you start evaluating if keeping the position or rolling. I don't ask you where this exit point is because I think it is different according to the instrument and market volatility anyway I will follow your thread more actively from now on. Thank you

Reply With Quote
  #4698 (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


montanajtt View Post
Thank you! So you have an exit point where you start evaluating if keeping the position or rolling. I don't ask you where this exit point is because I think it is different according to the instrument and market volatility anyway I will follow your thread more actively from now on. Thank you

Exit point is the same all of the time. See post#2.

When your (CURRENT IM + (CURRENT PREMIUM$ - OPENING PREMIUM$)) > (3 * OPENING IM), you exit your trade.

For example, if I sell an option for $100 and the margin required is $500, I will have $1000 excess. IMx3 is $1500.

If the margin increases to $1200 and the premium is higher than $400 then the cash excess is gone and it is time to exit.

(CURRENT IM =1200 + (CURRENT PREMIUM$=410 - OPENING PREMIUM$=100)) > (3 * OPENING IM=500)

(1200 + (410 - 100)) > (3 * 500)

1510 > 1500 so exit point hit.

Started this thread Reply With Quote
  #4699 (permalink)
 
CobblersAwls's Avatar
 CobblersAwls 
London, United Kingdom
 
Experience: Intermediate
Platform: N/A
Broker: Bloomberg
Trading: Energies
Posts: 310 since Jul 2014
Thanks Given: 1,089
Thanks Received: 386

Dear @ron99 and others with experience,

I was wondering, do you ever take a 'directional bias' when writing options? I have been toying with TOS and took the following trades in order to test out things and get a feel of how option trades play out. I took the below with the bias that Shell would outperform Exxon in the near term by selling RDS Puts and XOM Calls. I sold ATM then used the high premium to buy OTM options that were fairly close to the current strike.

Now this is a demo account so I will let them run to expiry, but i was wondering if anyone that uses these techniques could give some pointers on stops. Could the same IMx3 apply here? Also, what are the most obvious dangers with a trade like this?




Regards,

Awls.

Visit my NexusFi Trade Journal Reply With Quote
  #4700 (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



CobblersAwls View Post
Dear @ron99 and others with experience,

I was wondering, do you ever take a 'directional bias' when writing options? I have been toying with TOS and took the following trades in order to test out things and get a feel of how option trades play out. I took the below with the bias that Shell would outperform Exxon in the near term by selling RDS Puts and XOM Calls. I sold ATM then used the high premium to buy OTM options that were fairly close to the current strike.

Now this is a demo account so I will let them run to expiry, but i was wondering if anyone that uses these techniques could give some pointers on stops. Could the same IMx3 apply here? Also, what are the most obvious dangers with a trade like this?




Regards,

Awls.

I have never sold stock options so I can't help, I have no clue if IMx3 works for stocks.

Anybody else?

Have you researched the ROI of stock options vs futures options? Backtested strategies? Have you researched the risk on stock options vs futures options? Those things need to be done before you work on strategy of stock options.

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