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 1,949,176 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?

  #5131 (permalink)
 rsm005 
vancouver BC/Canada
 
Experience: Beginner
Platform: Zaner360, OX
Broker: DeCaley
Trading: options
Posts: 264 since Jan 2015
Thanks Given: 13
Thanks Received: 205


ron99 View Post
.... So what I think I will do is just get out around 30 days held because the profit after that will be slow in coming. Also the protection by the longs will be decreasing and might not cover a huge ES drop.

Ron,

I've been studying the last 15 pages or so of this thread over and over. Thanks again for everything you've done so far. In the post above you made a rather interesting point about exiting a trade after 30 days held to help maximize the protection of the 2 longs. What is your strategy if the trade moves against you during those 30 days and you're upside down or have a tiny profit? Do you roll, hold on, or simply eat the loss and move on to the next trade?

Thanks,
/rsm005/

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
NexusFi Journal Challenge - April 2024
Feedback and Announcements
NT7 Indicator Script Troubleshooting - Camarilla Pivots
NinjaTrader
Futures True Range Report
The Elite Circle
 

  #5132 (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


rsm005 View Post
I've been studying the last 15 pages or so of this thread over and over. Thanks again for everything you've done so far. In the post above you made a rather interesting point about exiting a trade after 30 days held to help maximize the protection of the 2 longs. What is your strategy if the trade moves against you during those 30 days and you're upside down or have a tiny profit? Do you roll, hold on, or simply eat the loss and move on to the next trade?

eat the loss and move on to the next trade

Other than the fees, moving to the next trade will probably do the same thing as if you held on to the original position. It will give you better protection because the longs won't be as close to expiration.

The ESg6p1650-ESg6p1400(2) spread I entered on 10/29/15 the 1650 delta has dropped from 5.23 to 3.06. 42% drop. The 1400 delta dropped from 1.42 to 0.74. 48% drop.

If you had entered a trade with a short at ~3.00 delta and 2 longs at ~0.75 delta and 60 DTE on 8/17/15 you would have had a 37% drawdown and margin would be 100% of your account on 8/25.

Started this thread Reply With Quote
Thanked by:
  #5133 (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


I don't like how similar this week is compared to the week before 8/24/15.

Be careful.

Started this thread Reply With Quote
  #5134 (permalink)
 rsm005 
vancouver BC/Canada
 
Experience: Beginner
Platform: Zaner360, OX
Broker: DeCaley
Trading: options
Posts: 264 since Jan 2015
Thanks Given: 13
Thanks Received: 205

I wanted to run a paper trade to see how Ron's modifications to selling worked during a what is a very volatile period. On 12/3 I ran the following

Sell 75 ESH6 P1650
Buy 150 ESH6 P1350

I forgot to capture the IM when the trade opened but since then the market has dropped steadily by 85pts and the position has held up very well. The current margin is $548.75 on the TOS paper trading platform, well below the reserve.

The purpose of this trade was to enter a position near a peak and after some decay see what happens when a jarring event takes place...in this case the potential rise in interest rates this week.

Ron mentioned that he would take a loss if the position was trading lower with 90 days to go so that's what I'm trying to see. How well a trade like this holds up after some time passes then a huge event happens. I'll keep everyone posted.

/rsm005/

Reply With Quote
  #5135 (permalink)
 rsm005 
vancouver BC/Canada
 
Experience: Beginner
Platform: Zaner360, OX
Broker: DeCaley
Trading: options
Posts: 264 since Jan 2015
Thanks Given: 13
Thanks Received: 205

So now that interest rates have officially gone up I'm curious as to the thoughts of the people on this thread. The consensus across the intertubes has been increased volatility with a potential sharp move down as the rate hike propagates its way through the market. Thoughts? Are most of you guys taking a wait and see approach for the remainder of the year or putting on tighter, smaller spreads?

/rsm005/

Reply With Quote
Thanked by:
  #5136 (permalink)
 
fminus's Avatar
 fminus 
Washington DC
 
Experience: Advanced
Platform: TT
Broker: Dorman
Trading: US Treasuries
Posts: 126 since Sep 2009
Thanks Given: 156
Thanks Received: 299


rsm005 View Post
So now that interest rates have officially gone up I'm curious as to the thoughts of the people on this thread. The consensus across the intertubes has been increased volatility with a potential sharp move down as the rate hike propagates its way through the market. Thoughts? Are most of you guys taking a wait and see approach for the remainder of the year or putting on tighter, smaller spreads?

/rsm005/

I think the .25 rate hike was already priced and was in line with market expectation. So since that is out of the way now the seasonal santa rally can occur. If we have a down day I will be selling puts.


Here's a recap of my most recent trade:

Sold 50% of my position ESG6 P1675 on 09 Nov for 6.75 with a hedge using the 2x ESG6 P1450 for 2.25.
Sold 20% of my position ESG6 P1675 on 16 Nov for 9.50 with a hedge using the 2x ESG6 P1450 for 2.95.
Sold 30% of my position ESG6 P1675 on 11 Dec for 10.0 with a hedge using the 2x ESG6 P1450 for 3.75.

The position closed today at 50% of the premium at 4.00 of the ESG6 P1675.

Lessons learned:

- Timing the put selling to down days makes a big difference on premium.
- Don't try and get smart with the hedge. For example the hedge for 11dec started running away from me and go them for a really expensive price of 3.75. There is no better price for a hedge than now.
- Scaling in the selling has helped with my dollar cost and I'm able to profit sooner. Which means I can get back out there and sell more sooner. After the first sells on 09nov my 50% profit target was at 3.50. After scaling in more my 50% profit target went to 4.00.
- The hedge are more out of the money and will decay faster than the sold puts. If you sold a put for 4 and your hedge you buy is 2; by the time your put hits 2 our hedge will be like .75ish. I'm wondering if selling a 5 delta and buying a 3delta hedge will provide slightly better profits than selling a 5 delta and buying 2x1.5 delta.

In trading, shortcuts lead to the longest path possible.
Reply With Quote
  #5137 (permalink)
 rsm005 
vancouver BC/Canada
 
Experience: Beginner
Platform: Zaner360, OX
Broker: DeCaley
Trading: options
Posts: 264 since Jan 2015
Thanks Given: 13
Thanks Received: 205


fminus View Post

- The hedge are more out of the money and will decay faster than the sold puts. If you sold a put for 4 and your hedge you buy is 2; by the time your put hits 2 our hedge will be like .75ish. I'm wondering if selling a 5 delta and buying a 3delta hedge will provide slightly better profits than selling a 5 delta and buying 2x1.5 delta.

I've been wondering about this myself but Ron mentioned that he would exit after approx. 30 days to stay protected by the longs and then re-open a new position to minimize the loss..

/rsm005/

Reply With Quote
  #5138 (permalink)
 myrrdin 
Linz Austria
 
Experience: Advanced
Platform: TWS
Broker: Interactive Brokers
Trading: Commodities
Posts: 1,938 since Nov 2014
Thanks Given: 3,686
Thanks Received: 2,651


rsm005 View Post
So now that interest rates have officially gone up I'm curious as to the thoughts of the people on this thread. The consensus across the intertubes has been increased volatility with a potential sharp move down as the rate hike propagates its way through the market. Thoughts? Are most of you guys taking a wait and see approach for the remainder of the year or putting on tighter, smaller spreads?

/rsm005/

I sold two lots of ESH P1650 and ESH P1675 after the pressconference. Maximum number of lots is four, thus, I am 50 % invested currently.

Best regards, Myrrdin

Reply With Quote
  #5139 (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


fminus View Post
- Don't try and get smart with the hedge. For example the hedge for 11dec started running away from me and go them for a really expensive price of 3.75. There is no better price for a hedge than now.

Why not execute them as a single Strategy, less bid/ask, less slippage, less risk. Pretty sure there was a post in this thread within the last few months on using CME Strategy's to execute multi-leg option trades.

Reply With Quote
  #5140 (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



rsm005 View Post
I wanted to run a paper trade to see how Ron's modifications to selling worked during a what is a very volatile period. On 12/3 I ran the following

Sell 75 ESH6 P1650
Buy 150 ESH6 P1350

I forgot to capture the IM when the trade opened but since then the market has dropped steadily by 85pts and the position has held up very well. The current margin is $548.75 on the TOS paper trading platform, well below the reserve.

The purpose of this trade was to enter a position near a peak and after some decay see what happens when a jarring event takes place...in this case the potential rise in interest rates this week.

Ron mentioned that he would take a loss if the position was trading lower with 90 days to go so that's what I'm trying to see. How well a trade like this holds up after some time passes then a huge event happens. I'll keep everyone posted.

/rsm005/

Here is how it has done so far.

If you added this position on 12/3 you would have been using the IM from 12/2. That is why I have 12/2 on the table.



It is exiting after holding 30-40 days not at 90 DTE.

Started this thread 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