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Selling Options on Futures?


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Selling Options on Futures?

  #7111 (permalink)
Strasbourg, France
 
 
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yurahoang View Post
...

I have only been selling naked. But hear me out: Im also very picky about the trades, I dont trade often. So far my reasoning is: I want to get really good at analyzing about 15-20 specific trades of specific commodities during specific times of the year, get really good at it, and every year wait for my opportunity during that specific period of time. (For example NG puts in Feb, KC calls in Jan/Feb, Grain Call/Puts during summer-fall...). This is clearly based on seasonality/fundamentals, and even historical volatility. If done properly, there are higher chances to sell further out of money + at higher premium, not to mention with better liquidity. I understand that there are years where seasonality and fundamentals dont work well (like Trade War), but I only need about 12-15 "big" trades to work per year to average relatively safely about 20-25% annual ROI.

...

I am with you at 100% and this is also my strategy (after mixed results trying to get 4 spread contracts expiring each month and opening them 4 months in advance).

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  #7112 (permalink)
Legendary Market Wizard
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yurahoang View Post
I have found this thread since last November (after Optionseller.com got wiped out). I am currently going through the thread (Im on page 130), Im learning a lot already, and see that many people have different styles. Just thought Id post to say hi. I see that thread is now a lot less active than it used to be (at page 130), hope that nothing much has changed and everyone is still selling options.

Greetings and Welcome.

While this thread is about selling options on futures as you are probably aware it is heavily concentrated on selling ES options (primarily puts). With the recent volatility in equity markets (Dec18, May19 etc) there's been a lot more risk in selling ES puts, which probably explains the drop in activity in this thread. I believe even who is probably the biggest contributor to this thread is currently in pause mode.

You may also want to take a look at this thread [ Diversified Option Selling Portfolio ] which is more commodity related than ES related.

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  #7113 (permalink)
Hanoi, Vietnam
 
 
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Thank you! I am aware of the other thread, just thought Id finish this one and move on to the one you said, and after that will seek veterans with my questions. Im at page 250 and see that interest in ES is rising, Ill just skim through anything Im not mainly interested in but still try to finish the thread, there is still so much to learn from every aspect of trading.

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  #7114 (permalink)
Market Wizard
Linz Austria
 
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Sagal View Post
Good to see some fresh thinking on this topic.
My impression for commodities with regards to Cordier's recommendation is that a lot has changed since he wrote his books:
- of course he went bankrupt and his clients suffered big losses.
- except for high volatility commodities it is extremely hard and not so much deep in the money anymore to use bull put or bear call spread options (a 400 USD profit is difficult to make and quite risky with the current environment. You can just check soybeans to see an amplitude in a couple of months from 950 to 810 almost back and forth). Otherwise you have to chose an expiry date of more than 6 months.
- it leaves strangle and naked put /call options (or ratio call/put spread)...with their risks...

I agree. If you have a look at my thread "Diversified Option Selling Portfolio" you will see, that currently I prefer trading futures or future spreads.

Best regards, Myrrdin

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  #7115 (permalink)
Cleveland, OH
 
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yurahoang Welcome. And you're welcome.

With the current US President, things are extremely volatile and thus I am doing very little trading right now.

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  #7116 (permalink)
Legendary Market Wizard
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ron99 View Post
With the current US President, things are extremely volatile

Interesting statement. Obviously it is not fair to blame Obama for the 2008-2009 financial crisis which he inherited, and you can definitely argue that some/a lot/all (take your pick) of the recent stock market rally is due to policy's that have nothing to do with Trump. Hence while I don't personally disagree with your politics (I follow you on Twitter) the actual mathematics do not support your statement.
Average of SPX 30 day Historical Volatility 01Feb09-31Dec12 (Obama's First Term) 19%
Average of SPX 30 day Historical Volatility 01Jan13-31Dec16 (Obama's Second Term) 12.3%
Average of SPX 30 day Historical Volatility 01Feb17-19Jun19 (Trump's First Term) 11.4%

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  #7117 (permalink)
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yurahoang View Post
Hello everybody,

Everybody started hating on options selling and say that it doesnt work and eventually everybody will blow up. During that time I had my doubts so I started digging deeper but in the end, I still think selling options does work, if you know what you do. I see Ron and many people gave good reasons for that. I also realized lots of things Cordier says in the book are not actually true, or at least not true in recent years. I believe Cordier failed because he didnt follow his own rules in the book, the fundamentals were against him but he took the risk anyway, and didnt even exit when he got his chance. In the end, if public looks down on options selling, its better for options sellers because of less competition.

While Cordier's risk management could have been better, his insight into seasonal trades have been pretty good. He's newsletters easy to read and understand. I haven't been able to find anything as good since they went bust.

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  #7118 (permalink)
Market Wizard
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waltsg View Post
While Cordier's risk management could have been better, his insight into seasonal trades have been pretty good. He's newsletters easy to read and understand. I haven't been able to find anything as good since they went bust.

Have a look at the MRCI site. They offer a weekly newsletter describing entries and exits of seasonal trades. I had subscribed to it many years ago when I started seasonal trading.

They trade outright and future spreads, but of course you can use their ides for option trades.

Best regards, Myrrdin

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  #7119 (permalink)
Singapore
 
 
Posts: 9 since Sep 2018
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myrrdin View Post
Have a look at the MRCI site. They offer a weekly newsletter describing entries and exits of seasonal trades. I had subscribed to it many years ago when I started seasonal trading.

They trade outright and future spreads, but of course you can use their ides for option trades.

Best regards, Myrrdin

Hey Myrrdin,

I have visited and used the site for their seasonal charts. I thought about subscribing to their service as well. Like you mentioned, they provide tabled data on entry and exit dates and probability on making money on the trade. However, there doesn't seem to be a study on the current market conditions for this year.

Feeder cattle is such an example. Seasonally, they should rise in the summer months. However, it doesn't look very promising (yet) this year.

Agrimoney does seem to have an in depth study and reports on various commodities. However, I have no idea how much they charge for subscriptions.

Thanks for taking time to reply though

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  #7120 (permalink)
Market Wizard
Linz Austria
 
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Broker: DeCarley, IAB, RJO
Trading: Commodities
 
Posts: 1,635 since Nov 2014
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waltsg View Post
Hey Myrrdin,

I have visited and used the site for their seasonal charts. I thought about subscribing to their service as well. Like you mentioned, they provide tabled data on entry and exit dates and probability on making money on the trade. However, there doesn't seem to be a study on the current market conditions for this year.

Feeder cattle is such an example. Seasonally, they should rise in the summer months. However, it doesn't look very promising (yet) this year.

Agrimoney does seem to have an in depth study and reports on various commodities. However, I have no idea how much they charge for subscriptions.

Thanks for taking time to reply though

The service I am reffering to is "Jerry's Weekly Spread Commentary" by MRCI. According to the description of this service they also provide fundamental information. You can get a 14 day free trial. The service sosts 19 $ per month or 135 $ per year.

Best regards, Myrrdin

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