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Diversified Option Selling Portfolio
Started:September 6th, 2015 (11:22 AM) by myrrdin Views / Replies:26,231 / 581
Last Reply:December 2nd, 2016 (01:20 PM) Attachments:38

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Diversified Option Selling Portfolio

Old January 22nd, 2016, 01:49 PM   #121 (permalink)
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Linz Austria
 
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It is not easy to find promising option selling positions.

Currently I am short:

LH P60 (sold a couple of days ago at significantly lower price of the underlying)
LH C76 (sold today)

KCJ C140 (sold today)

CLK P22,5 (sold at a little bit above $1000 per spread)
CLK C45

I bought back today:

LCQ P100 (profit approx. 42 % - I intend to sell again at lower price of the underlying)
ESJ P1400 (profit approx. 35 %)

As you can see I am quick taking profits in times of high volatility.

I also want to comment that the size of my positions - especially for the ES puts - is significantly smaller than in stable times.

Best regards, Myrrdin

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Old January 29th, 2016, 01:11 PM   #122 (permalink)
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Begins looking more interesting for the option sellers. Currently I hold the following short options positions:

CLK C53
CLK P 25.5
(recommended by Carley)

LHJ C76
LHQ C84
waiting for lower prices to sell the LHJ P60, which I already held, and bought back profitably.

LCQ P110
also holding the LCZ-LCQ spread. Owned the LCQ P100 before, and bought is back profitably.

KCJ C140
KCK C150

NGJ C2.75
Currently legging into this trade, and holding 20 % of the maximum position.

Best regards, Myrrdin

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Old January 30th, 2016, 07:33 AM   #123 (permalink)
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Some clarification



myrrdin View Post
Begins looking more interesting for the option sellers. Currently I hold the following short options positions:

CLK C53
CLK P 25.5
(recommended by Carley)

LHJ C76
LHQ C84
waiting for lower prices to sell the LHJ P60, which I already held, and bought back profitably.

LCQ P110
also holding the LCZ-LCQ spread. Owned the LCQ P100 before, and bought is back profitably.

KCJ C140
KCK C150

NGJ C2.75
Currently legging into this trade, and holding 20 % of the maximum position.

Best regards, Myrrdin


Lean hogs selling calls due to high vol? Or seasonal pattern for correction in March or both??

Also some of these in Q like live cattle in August using that too far away?? When do u expect to get out of these??

Also when u enter are u looking for specific delta or premiums??

Pardon my ignorance

Thnx

LH lean. Hog's?? Is vol high?? Or u are selling due to seasonal?? Expecting a correction


LH lean hog


Last edited by jokertrader; January 30th, 2016 at 07:34 AM. Reason: Wrong spelling
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Old January 31st, 2016, 07:10 AM   #124 (permalink)
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jokertrader View Post
Lean hogs selling calls due to high vol? Or seasonal pattern for correction in March or both??

Also some of these in Q like live cattle in August using that too far away?? When do u expect to get out of these??

Also when u enter are u looking for specific delta or premiums??

Pardon my ignorance

Thnx

LH lean. Hog's?? Is vol high?? Or u are selling due to seasonal?? Expecting a correction


LH lean hog

Trading meats is a very different story than trading other commodities. Whereas grains and beans are sown once per year in the northern hemisphere, pige and cows are breeding at all times of the year. Whereas metals and softs can be stored for a long time at relatively low cost, meat usually is consumed rather quickly. Whereas for most of the commodities prices for the different contract months are closely related to each other, meat contracts trade almost as independent of each other.

If you look for a gold contract month to sell, you only look at DTE, delta, margin etc. When you look for a meats contract month to sell, you look at the fundamentals for this contract first.

Basic for my selling of meat options is a newsletter by Kevin Bost, who calculates the expected price at the expiry of each contract month. He uses at lot of fundamental data, including COT, seasonality, current and expected cash price for certain meat products, and many more. It does not work perfectly, but it is good enough to sell options.

Currently the LCQ contract and the LHQ contract seem to be overvalued, and this is why I sell the August calls. I intend to buy them back when they made about 50 % of the potential profit rather quickly.

I do not take much time to select a perfect delta. I usually buy options at a price between 200 and 1000 USD. The more DTE the higher the price I choose.

In case of further questions please ask.

Best regards, Myrrdin

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Old February 1st, 2016, 01:34 PM   #125 (permalink)
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Futures Edge on FIO

Are you a NinjaTrader user?

 
Sold the GCM C1300 / GCM P990 strangle today. In my opinion, Gold should move sideways in the next couple of months.

Best regards, Myrrdin

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Old February 1st, 2016, 03:21 PM   #126 (permalink)
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myrrdin View Post



NGJ C2.75
Currently legging into this trade, and holding 20 % of the maximum position.

Bought back the NGJ C2.75 with a profit of approx. 40 %. Not bad for one trading day.

I tend to buy back NG calls quickly at this time of the year. A cold blast, and losses can be severe ...

Best regards, Myrrdin

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Old February 2nd, 2016, 06:22 PM   #127 (permalink)
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Extra margin?

@myrrdin :

Do you follow a similar approach as far as the exit point and maintenance margin goes as is followed by Ron and many others on the option selling thread. Especially for futures other than ES, NQ, etc indices.

I think the main reason for the 3x IMR rule is due to sudden vol. spikes and less reliance on fundamentals and counter liquidity problems in case of massive trade moves. I wonder what's your take on Lean Hog, Grains, Gold etc futures options. I understand mantaining liquid cash percentage in the account at all times, but I wonder if there's a specific rule you follow based on your experience in typical trading behavior for various commodity futures.

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Old February 3rd, 2016, 03:49 AM   #128 (permalink)
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ys91 View Post
@myrrdin :

Do you follow a similar approach as far as the exit point and maintenance margin goes as is followed by Ron and many others on the option selling thread. Especially for futures other than ES, NQ, etc indices.

I think the main reason for the 3x IMR rule is due to sudden vol. spikes and less reliance on fundamentals and counter liquidity problems in case of massive trade moves. I wonder what's your take on Lean Hog, Grains, Gold etc futures options. I understand mantaining liquid cash percentage in the account at all times, but I wonder if there's a specific rule you follow based on your experience in typical trading behavior for various commodity futures.

I proceed in a different way than Ron regarding exiting and excess margin.

Exiting for short options in commodities:

If profitable, I exit at 10 – 50 % of the entry price. Otherwise, I exit at approx. double the entry price. Usually I choose a chart criteria for the underlying future which is close to this condition (or closer, eg. at 120 % or 150 %). I also exit if fundamentals have changed significantly. After exiting trades, I sometimes „roll“ the trade to a new option. But only after careful study of the fundamentals.

Summerizing: I close my losing short option trades earlier than Ron.

Excess margin:

I do not follow a specific rule, and my excess margin varies depending on the risk of the positions I hold.

I hope I could make my procedure clear. If not, please feel free to ask again.

Best regards, Myrrdin

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Old February 3rd, 2016, 04:00 AM   #129 (permalink)
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Marc Abell View Post
Hi,my name is Marc, may I ask you a question? I was just curious if you choose you positions based on trying to keep non-correlated positions? Just becouse I am still trying to determine what limits I should use to avoid being concentrated on one position. Could you help me please?

Yes, the reason why I trade so many different commodities is to keep non-correlated positions. Trades are selected to result in a portfolio of non-correlated positions.

For the same reason I like to sell strangles of one commodity (eg. my current GCM P990 / C1300) or puts and calls of different commodities, moving in the same direction (eg. S puts and C calls).

Sometimes the counter position of a short option is an outright or spread in the underlying future. I currently hold the LCQ P110 and the LCZ-LCQ future spread (seasonal trade), and the LHJ C76 and the LHJ-LHQ future spread.

Best regards, Myrrdin

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Old February 3rd, 2016, 01:20 PM   #130 (permalink)
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myrrdin View Post
I proceed in a different way than Ron regarding exiting and excess margin.

Exiting for short options in commodities:

If profitable, I exit at 10 – 50 % of the entry price. Otherwise, I exit at approx. double the entry price. Usually I choose a chart criteria for the underlying future which is close to this condition (or closer, eg. at 120 % or 150 %). I also exit if fundamentals have changed significantly. After exiting trades, I sometimes „roll“ the trade to a new option. But only after careful study of the fundamentals.

Summerizing: I close my losing short option trades earlier than Ron.

Excess margin:

I do not follow a specific rule, and my excess margin varies depending on the risk of the positions I hold.

I hope I could make my procedure clear. If not, please feel free to ask again.

Best regards, Myrrdin


Thank you sir! Appreciate the help understanding this. I am just starting to fund my account with DeCarley. While the ES/financials have been a bit weird lately, I do like their research/perspective emails sent out. I like the mix of fndamentals and technicals in these.

I was wondering if you prefer to conduct your own analysis using some of the USDA reports out there (for ags commodities) or do you prefer looking at research reports such as Hightower or others. I am quite new to commodities, so "preferred" resources would be very helpful. Once I start (probably small with 10-15K) I'd really like to run my trades by you for opinion. Hope you'll agree to be my sort-of mentor in this.

Cheers!

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