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 1,934,752 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?

  #5191 (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


danjuma View Post
Thank you sir.

If you click the "Thanks" button in the lower right of my post then you wouldn't need to add a new post to thank me that adds length to the thread and prevents people form reading the whole thread.

Started this thread Reply With Quote
The following 3 users say Thank You to ron99 for this post:

Can you help answer these questions
from other members on NexusFi?
NexusFi Journal Challenge - April 2024
Feedback and Announcements
ZombieSqueeze
Platforms and Indicators
Request for MACD with option to use different MAs for fa …
NinjaTrader
My NT8 Volume Profile Split by Asian/Euro/Open
NinjaTrader
 
Best Threads (Most Thanked)
in the last 7 days on NexusFi
Retail Trading As An Industry
67 thanks
NexusFi site changelog and issues/problem reporting
47 thanks
Battlestations: Show us your trading desks!
43 thanks
GFIs1 1 DAX trade per day journal
32 thanks
What percentage per day is possible? [Poll]
31 thanks

  #5192 (permalink)
 chubbly2 
Springfield USA
 
Posts: 13 since Jan 2016


SMCJB View Post
Little surprised ES Vol hasn't spiked more.
5 mins before China opens with no circuit breakers and the F ATM Straddle is 25.5% which is high but not that high.

I think that is because the Chinese Government came in and did a lot of buying today. There is no way they were going to allow a 10-20% crash the day after they removed the circuit breaker. They would have looked even worse and they believe in keeping up their reputation at all costs

Reply With Quote
  #5193 (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: 5,033 since Dec 2013
Thanks Given: 4,359
Thanks Received: 10,172


Thinking about this weeks stock market action I kept coming back to August of this year, and specifically what happened when we had two large consecutive down days, especally when the second down day was a Friday.

You may remember my post here on August 22nd which basically said...

SMCJB View Post


but....


Post 1987 there have been 24 consecutive down days.
21 of these have occurred on Mon-Thur and the next day the market is up and average of 2.1%
Just 3 of these have occurred on a Friday. ALL All 3 OCCURENECES the market was DOWN the next day by an average of 2.2%. Even worse 2 of the 3 occurrences the market was down AGAIN on the following day.

Remember this is post 1987 and excludes Black Monday If you include 1987 these numbers will look much much worse.

So this got me thinking what happens when we have a truly terrible week, and we finish the week with a Friday sell off? Thankfully the statistics are no where near as bearish as they were in August. Unfortunately my normal program for doing this analysis is out of action so I had to do it in Excel. As you can see definitely a bearish inclination to Monday, but nothing that severe.



Apologies for cross posting this but I'm posting it in the ES options Selling Thread, ES Analysis Thread & the Homework Thread.

Reply With Quote
The following 2 users say Thank You to SMCJB for this post:
  #5194 (permalink)
 chubbly2 
Springfield USA
 
Posts: 13 since Jan 2016

I think there is nervousness at the close hence the big drop. I bought puts at a few levels early in the week after the first circuit breaker event

I guess we will see what happens. earning season is starting soon so if they are soft who knows

Reply With Quote
  #5195 (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


SMCJB View Post

So this got me thinking what happens when we have a truly terrible week, and we finish the week with a Friday sell off? Thankfully the statistics are no where near as bearish as they were in August. Unfortunately my normal program for doing this analysis is out of action so I had to do it in Excel. As you can see definitely a bearish inclination to Monday, but nothing that severe.



Apologies for cross posting this but I'm posting it in the ES options Selling Thread, ES Analysis Thread & the Homework Thread.

I'm more interested in seeing if this is the start of a larger trend down. So far the only thing I'm reading is gloom and doom in the market and the economy as a whole which seems to contradict what the Fed is thinking. There's nothing to do but watch and see how the market reacts to earnings. My gut says we go back to where things were in August but what do I know .

/rsm005/

Reply With Quote
  #5196 (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


rsm005 View Post
I'm more interested in seeing if this is the start of a larger trend down. So far the only thing I'm reading is gloom and doom in the market and the economy as a whole which seems to contradict what the Fed is thinking. There's nothing to do but watch and see how the market reacts to earnings. My gut says we go back to where things were in August but what do I know .

/rsm005/

But doesn't a rise in yields and strength in USD typically lead to a decline in stock values? This all seems completely normal to me as participants wean themselves off the stimulant that was QE and return to 'normalisation'.

Over the long term we will see a flush out of weak hands (zombie businesses surviving just due to low rates/ cheap money) and a strengthening of those businesses who have a solid base from which they can grow as their competitors fall. Once rates stabilise and weak businesses are flushed out, I predict we will see stocks once again perform well as these stronger businesses blossom.

What this has to do with Oil - well I think it is a similar story. With the USD likely to continue strengthening, I think we will see lower oil for longer. The market is flooded at the moment and from speaking to people in the physical market - refineries are cautious to take on new deliveries unless the prices are very competitive, as there is just so much supply and willing sellers. Once again - we need to see a flush out of the dead wood and strengthening of others before the industry revitalises. That said - I think even then $40-$60 p/bbl will be the new range.

NB: Just realised this is not the CL thread. Will leave comment though as I suppose it fits.

Visit my NexusFi Trade Journal Reply With Quote
  #5197 (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

Also part of the reason the stock market is down is because all of the energy companies's stock is down because of the low raw product prices. Oil down brings oil company stocks down.

Started this thread Reply With Quote
  #5198 (permalink)
rajab
westhills california US
 
Posts: 94 since May 2015
Thanks Given: 130
Thanks Received: 20

Any one selling puts on ES?
Just wondering if one should wait till ES tests the AUG lows?

Reply With Quote
  #5199 (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


rajab View Post
Any one selling puts on ES?
Just wondering if one should wait till ES tests the AUG lows?

I bought my ES put positions back. In my opinion there are more promising trades around.

Best regards, Myrrdin

Reply With Quote
  #5200 (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



rajab View Post
Any one selling puts on ES?
Just wondering if one should wait till ES tests the AUG lows?


My opinion, there's no point in selling puts until after earnings season. There's too many unknowns right now and the market hasn't had a very healthy start to the year. The general consensus seems to be that earnings will be very "meh" which in the broader context of things will keep the market down. As others have said the S&P is tied to the price of oil and right now there doesn't seem to be a floor in sight. I did run a few back tests over the past few days to see how Ron's spread method holds up given the latest market drop and it's been pretty interesting.

Here's what would have happened had you opened a position just before Christmas with the idea that a santa claus rally was coming. As you can see it got close to 50% before the big drop in the new year but even then the margin holds are not that terrible.



Here's what would have happened if you opened a position in the beginning of January with the idea that the new year would start with a bang.



Again you'd be down but could sleep at night knowing you won't get wiped out in a jarring move down. Either way, if you ABSOLUTELY HAVE to put a trade on, there's better places to do that right now. I just don't know any other markets that well and frankly will not try and pretend I do to make a buck, I've still got my day job . I paid my tuition to the market in August and am more than willing to wait and see how all this shakes out in Q1 before doing anything.

/rsm005/

Reply With Quote
The following 10 users say Thank You to rsm005 for this post:





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