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I am interested in selling RBF calls. Reasons are the high volatility, high price of the underlying, and seasonality. Of course volatility is caused by the hurricane, but this problem should be solved end of December. I assume that as soon as the damage can be quantified RB prices will come down.
Unfortunately there are no bids / asks für these options. I am aware of the fact that during times of high volatility bid / ask spreads get wide or that there is no bid / ask at all. What surprizes me is that the volatile October and November options are traded, whereas the December and January options do not have a bid / ask. Is there an explanation ? Does anybody have an idea when market makers will offer bid / aks spreads again ?
Years ago when I traded those there were no bids or offers for many strikes. I did find that if you placed an order it may get filled if your price is reasonable.
But I also found that if you wanted out the cost was severe. I no longer even look at them.
This week I am planning to use the uptick in CL to sell Calls CLF8 C65 (99 DTE).
I will buy CLF8 C75 as protection.
To me the overall picture is still bearish since driving season is over and world supply is ample.
The spike in the last days seems to me mainly because Harvey is over and possibly because of tensions with North Korea (not sure about the latter).
Seasonality calls for a high sometimes now in September and then a decline towards the end of the year.
As an example I intend to enter a short position (sell calls). When looking at COT data I am interested in a large (record) long position of the funds. This means that the probability is high that they will not add too much to their position. A large long position of the small traders, who often are wrong, is a nice benefit.
It is important not to take COT data as an entry signal. COT data can be at extreme levels for a while until the direction of the price changes.
Hi Ron, in addition to the margin excess you set aside, do you also have a premium multiple you'll use as an upper limit signaling you to exit a position at a loss? Or do you exit strictly based on your margin excess parameter and pretty much disregard the premium?
