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Diversified Option Selling Portfolio
Started: by myrrdin Views / Replies:35,612 / 731
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Diversified Option Selling Portfolio

  #291 (permalink)
Market Wizard
Linz Austria
 
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ron99 View Post
I'm looking at front month charts for 13 commodities. CL, RB, HO, NG, ES, GC, KC, SB, ZC, ZS, LC, LH, DA.

11 of the 13 have made new highs for this year this month. And 1 of the 2 that didn't, RB, made its high in May. Only LC didn't peak May or June.

That's crazy. And so was that 1.00 drop in CL in 9 minutes today.

Markets are just unpredictable and crazy the last year.

The US$ had its two significant lows this year in May and in June, the S&P its high in June. To me it looks as if the individual commodities show less life of their own, but depend strongly on the US$ and the S&P index. Exception LC, which is less imported / exported than most of the other commodities.

Would be interesting to find out if the correlation between the US$ and these commodities is stronger in the first half of 2016 than in previous years.

Best regards, Myrrdin

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  #292 (permalink)
Market Wizard
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myrrdin View Post
The US$ had its two significant lows this year in May and in June, the S&P its high in June. To me it looks as if the individual commodities show less life of their own, but depend strongly on the US$ and the S&P index. Exception LC, which is less imported / exported than most of the other commodities.

Would be interesting to find out if the correlation between the US$ and these commodities is stronger in the first half of 2016 than in previous years.

Best regards, Myrrdin

Agree with most of what you said except NG & DA also are low import/export now compared to other commodities.

Who thought in Jan that this would be a bull year? Not me.
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  #293 (permalink)
Market Wizard
Linz Austria
 
Futures Experience: Advanced
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Broker/Data: DeCarley, RJO
Favorite Futures: Commodities
 
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Thanks: 1,178 given, 726 received



ron99 View Post
Agree with most of what you said except NG & DA also are low import/export now compared to other commodities.

Who thought in Jan that this would be a bull year? Not me.

Yes, NG currently is low import / export. I do not know about DA - here you are the expert.

I also did not expect a bull year for commodities in 2016. At the beginning of the year,I assumed that the US$ would be much stronger because of the anticipation and the realization of rising interest rates in the US, and constant or lower interest rates in European Union, Japan etc. But these interest rate hikes did not materialize until today, and might not materialize in the near future.

Best regards, Myrrdin

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  #294 (permalink)
Market Wizard
Linz Austria
 
Futures Experience: Advanced
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myrrdin View Post

I placed a further order for the NGV C3.7 at the same price ($ 400).

Best regards, Myrrdin

Was filled on the NGV C3.7 for $ 380.

Best regards, Myrrdin

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  #295 (permalink)
Market Wizard
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Futures Experience: Advanced
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myrrdin View Post
Bought back the LHV P100 with a profit of 35 %.

Quick profit, and the options have a long way to go until expiry.

Cash prices might move down after (or just before) the long holiday weekend. Recently future prices moved down sharply on a decline of the cash prices.

I intend to re-enter this trade at lower prices.

Best regards, Myrrdin

Bought back the LCV P100.

Best regards, Myrrdin

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  #296 (permalink)
Market Wizard
Linz Austria
 
Futures Experience: Advanced
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myrrdin View Post
Was filled on the NGV C3.7 for $ 380.

Best regards, Myrrdin

Bought back the NGV C3.7 with a profit of 50 %.

Quick trade ...

Best regards, Myrrdin

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  #297 (permalink)
Market Wizard
Linz Austria
 
Futures Experience: Advanced
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When do I exit profitable trades ?

Usually I enter an order to buy back options at a profit of 50 % immediately after the fill. In case the option moves quickly in my direction I take profits early. Especially for options which carry a large risk with them, eg. Natural Gas. A hot weather forecast, and the calls move up again. There is a lot of risk holding an option for several months - and there should be a significant profit expectation.

Sometimes the option moves slowly in my direction or moves the wrong way in the beginning. Before reaching 50 %, the option looks safe, as the fundamentals for the relatively short time until expiration are more or less known. In this case I consider to hold options longer, eg. until a profit of 80 - 90 %. Very rarely I hold options until expiry.

But the rules are not absolute. I am a discretionary trader, and I make individual decisions for each lot of options.

Best regards, Myrrdin

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  #298 (permalink)
Market Wizard
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myrrdin View Post
Sold the NGV C3.6 call, following in principal a suggestion of Carley. But I waited for a higher price level, and I prefer the October contract compared to the September.

Bought back the NGV C3.6 with a profit of 50 %.

Best regards, Myrrdin

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  #299 (permalink)
Market Wizard
Linz Austria
 
Futures Experience: Advanced
Platform: Zaner360, Vantage, Trade Navigator
Broker/Data: DeCarley, RJO
Favorite Futures: Commodities
 
Posts: 818 since Nov 2014
Thanks: 1,178 given, 726 received

When do I exit losing trades ?

Usually I set the exit criteria at approx. double the entry price. I choose a chart criteria for the underlying future which is close to this condition (or closer, eg. at 120 % or 150 %). I rarely go beyond 200 % (never beyond 300 %), as it would take many successful trades to make up one loser.

I also exit, if fundamentals have changed significantly. Examples are changes in supply & demand, seasonal charts, or COT data.

After exiting, I sometimes „roll“ the trade to a new option. But only after careful study of the fundamentals. And I consider the new trade a new trade. That means the new trade has the same size that the original trade had at its beginning (!). Some books suggest to "roll" a losing trade by opening a new trade with the size of the loser when you buy it back. This can result in too large trades - I do not like this concept.

I am a discretionary trader, and evaluate each trade on its own. Once in a while I go beyond my defined criteria.

Best regards, Myrrdin

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The following 6 users say Thank You to myrrdin for this post:
 
  #300 (permalink)
Market Wizard
Linz Austria
 
Futures Experience: Advanced
Platform: Zaner360, Vantage, Trade Navigator
Broker/Data: DeCarley, RJO
Favorite Futures: Commodities
 
Posts: 818 since Nov 2014
Thanks: 1,178 given, 726 received


Added to the coffee position by selling the KCU C180.

According to MRCI data coffee prices should move downwards until end of July.

Best regards, Myrrdin

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