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The ES puts have different lot sizes, as I always enter a new lot, when the original value of all ES put options has been reduced by approx. 10 %.
For some time I published all of my trade entries and exits here. But the interest seems to be limited. No questions, comments or "thank yous". Thus I will only publish general discussions and a weekly update of the portfolio. In case someone is interested in trade entries and exits, please let me know.
Similar words I remember on the first pages of the thread regarding selling puts by Ron. There's a lot more public interest right now. Maybe selling options on futures, especially commodities is not that 'cushy' opposite to trading outright futures or stocks. I've read your posts on the one german thread regarding selling options, the ES-Thread and here with huge interest and people reading your posts should notice that you know what you are talking about, being very objective and profound. But I don't have much to add to the discussions as I've started out with options trading begin of this year, nethertheless investing a few hours every day to plan and structure my systems, quite successful and constant for now and most of the return comes from active management of the positions.
With cash secured puts / covered calls as a base I'd like to add options on futures (partly I did already). The book from Cordier and Gross is very useful for this. Started with ES, but different approuch than only focussing on delta and margin requ. as many do here. Coming from Fx and Futures I prefer to use my trading system for trading ES and CL for the right moment to sell the options. This is quite handy fortunataly, maybe the ROI is less due to waiting time and thus missed trades but the risk is way lower then and thats my main concern. Most might handle it different but Calls I never sell naked, either covered or via Calendar Spread, especially in case of futures no verticals, only calendar spread / reverse calendar spread.
AFAIK your focus is on the diversity and the knowledge of the underlying and very little the chart itself. That's something one can read in the Cordier-Book also. Even though they mention simple technical approuches for the better moment of selling they think that the major direction will follow the fundamentals in the long run. But the details when selling options on futures usually being 1-2 months in the trades then technicals can be so important to enter at the right momrnt in order to finish the trade with a decent premium and free the margin instead of waiting twice as much just to reach the targets.
Adding future options on ES / CL to my approuches many times I'm thinking about your trades and other futures in order to diversify. Some are to risky for me, to close to the current price. But thats just for me. At the moment I try to figure out whether its a good idea to play with much longer DTE, like 120-140. My investigations the last half year is that this is gonna payout quite well with a holding time between a few weeks to 1,5 or mostly 2 months.
So my idea is to diversify as you do it, not putting all on one horse and as Cordier/Gross are preaching it. Getting into the fundamentals as necessary seems to be the key and the 'problem' otherwise the huge volatility with its really huge moves are to scary to jump in. Are you using the information from MRCI for having covered the seasonal aspect with your decision? The Hightower-Report I still have to check how to get it and then how to interpret. After adding ES/CL for my writing what would you suggest? I remember that Wheat / Corn / Soybeans could be a good choice.
Last but not least thanks for doing this great thread!
In case you are interested in my entries and exits, please let me know. I am happy to share them.
Principally I think the grains and beans are a good choice for selling options, although currently option prices are relatively low. But this will change. Meat markets are difficult, and it takes a long time to understand them. And Softs markets have a limited open interest.
Yes, my focus is on the diversity and the knowledge of the underlying. I would be happy to have more knowledge on charts, but this is a large project for the future. I am sure knowledge about technicals would further improve my trading. But studying many underlyings is time consuming ...
The holding time of my trades usually is between 3 and 6 months. Of course it depends on the underlying - eg. in the meats different contracts can trade rather independent of each other.
Yes, I use MRCI data for the seasonals. But seasonals are only one among several criteria. I do not enter a trade solely based on seasonal data.
I want to second @PK 1 and encourage you to keep up posting. Unfortunately I can't contribute a lot to the option selling topic as I'm still learning the fundamentals (reading Cordier, through 500 pages of Ron's thread...). Short term I have to concentrate on a single future until feeling comfortable with it. But soaking up your post on background info about the commodities and different approaches to selling options.
Currently I practice the ES put selling program in the following way:
I buy back at 40 % (60 % profit).
I sell a new (small) position whenever the value of all ES puts has decreased by approx. 5 %. The reason behind is that in this way the size of the position is always 95 to 100 % of the target at least (of course it can get higher, if the ES moves against me). Furthermore, with time there will be a larger number of different strike prices and entry / exit dates in the portfolio. Entries and exits are averaged. Thus, I want to avoid being hit by a strong move lower of the ES future at a "good" or a "bad" time. Without hedging, I am always at the same risk.
I hedge the position from time to time at 50 or 100 % via short outright futures. This is not so much for raising profits, but for a good sleep at night. Currently I am hedged at 100 % since yesterday before the close. I will lift the hedge on a move above yesterdays high, or on a move down and a strong upwards reversal.
Exit point for buying back the options is the 200 dma (days moving average) of the S&P index. These events should be rare enough that losses are over-compensated significantly by profits.
Value of the ES puts currently is 9 % of the account value.
Questions or comments are - as always - highly welcome.
