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Selling Far OTM Options on Futures


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Selling Far OTM Options on Futures

  #61 (permalink)
 ron99 
Cleveland, OH
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Experience: Advanced
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Broker: QST, DeCarley Trading, Gain
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mdsvtr View Post
I was reading through the newer revised " Selling Options on Futures " thread , and wanted to please ask you to explain the following sentence...
" Be careful about selling low premium calls because one bad week could wipe out a couple of years profit doing them "

I am new to the whole premise of selling OTM credits on the futures, and want to make sure that I avoid wiping out a chunk of my account by selling low premium Calls

I just purchased the Book " Selling Options on Futures "3rd edition
so hope to finish it by Christmas

Thanks so much Ron for your time and your help,
I always appreciate it - Michael

I said that because selling something as volatile as CL, for only 0.03, a bad trade could wipe out the little profit quickly. In some other commodities selling those might be OK if they aren't as volatile.

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  #62 (permalink)
 ron99 
Cleveland, OH
Elite Member
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
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mdsvtr View Post
from the CL example you just mentioned above....
" I have been selling at 90-120 DTE and then getting out when the premium has dropped by at least 50% "

Does this mean that you will exit the trade and Buy-Back the position, when/if at any point during the trade, you can buy to close out the trade and still keep 50% as profit, of the initial credit received when you first put on the trade ?


Thanks as always Ron, I and others on here really appreciate you sharing and starting the thread - Michael

Yes buy back position after premium drops at least 50%. If fundamentals and futures trend are in my favor I will hold longer to capture more premium. Also the ROI has to be better than if I ride to expiration.

Late last week I had some ES puts I should have bought back but didn't. So when ES dropped this week I have to keep until futures rebound because IM increased and premium wasn't < 50% anymore and ROI was poor.

Now that ES is rebounding I don't have margin room to sell new options because I kept those I had on.

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  #63 (permalink)
 mdsvtr 
Memphis,TN
 
Posts: 232 since Sep 2010

Ron for the quick response(s)

I very much appreciate it

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  #64 (permalink)
vmaiya73
Salt Lake City, USA
 
Posts: 88 since Jul 2011
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Morning Ron,

Thinking with 50 DTE; selling /CL 85 call options; premium is roughly .9 per contract; thinking of selling now then covering when i get to 50% - 75 % of premium

your thoughts ?

thanks

V

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  #65 (permalink)
 ron99 
Cleveland, OH
Elite Member
 
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


vmaiya73 View Post
Morning Ron,

Thinking with 50 DTE; selling /CL 85 call options; premium is roughly .9 per contract; thinking of selling now then covering when i get to 50% - 75 % of premium

your thoughts ?

thanks

V

Sounds good.

Selling and holding during holidays is good because you get an extra day of time erosion with no trading. (Jan 1st)

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  #66 (permalink)
vmaiya73
Salt Lake City, USA
 
Posts: 88 since Jul 2011
Thanks Given: 34
Thanks Received: 62

Morning Ron,

I was just wondering what other commodities you were in currently ? My goal is to have about 5 that I can monitor, and consistently sell options on.

Currently in ES (weeklies), /CL, and Euro futures.

also do you find the commission structure at DeCarly trading better than Optionsxpress?

thanks

Vijay

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  #67 (permalink)
 ron99 
Cleveland, OH
Elite Member
 
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


vmaiya73 View Post
Morning Ron,

I was just wondering what other commodities you were in currently ? My goal is to have about 5 that I can monitor, and consistently sell options on.

Currently in ES (weeklies), /CL, and Euro futures.

also do you find the commission structure at DeCarly trading better than Optionsxpress?

thanks

Vijay

Mainly March ES monthlies. KC calls. Some dairy futures. Nothing else.

Depends on what your commissions are at DeCarley. But DeCarley will get you exchange minimum margin. OX is sometimes higher.

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  #68 (permalink)
 ron99 
Cleveland, OH
Elite Member
 
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

Schork sent out a free energy newsletter. It is interesting reading.

https://www.schorkreport.com/newsletters/schork-TSR-20150105.pdf

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  #69 (permalink)
vmaiya73
Salt Lake City, USA
 
Posts: 88 since Jul 2011
Thanks Given: 34
Thanks Received: 62

Ron im looking at the following trades and just wondering your opinion:

/KC March 265 call options

and

Euro March 1.27 Calls

thanks

Vijay

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  #70 (permalink)
 ron99 
Cleveland, OH
Elite Member
 
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



vmaiya73 View Post
Ron im looking at the following trades and just wondering your opinion:

/KC March 265 call options

and

Euro March 1.27 Calls

thanks

Vijay

I have never traded the Euro.

The March KC calls? Maybe OK?

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Last Updated on March 20, 2015


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