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Thanks a lot @ron99 I am open to swing trade or position trade as well. It's just applying the same concepts to a longer time frame. In your opinion what could be applicable strategy employing options ?
I am glad to have come across this link. I have been trading options for about 20 years. I have been doing naked futures options also. I am not as active as @ron99.
I am currently trade with TD and Tastyworks. I am looking for some other platform and data vendor better than the two I have mentioned. Tradeovate brokers have very little info regarding option selling. can you let me know how are they about data and commission? What is the margin for naked calls and puts?
Thanks in advance.
Broker for options selling is not easy to find specially here in Canada. I think if you are in US you can try DeCarley as they deal with FCMs that are options friendly. I have an IB which is charging higher than SPAN and have a TD Canada which doesn't support futures at all. I assumed Tasty is good for options but it seems you detected some issues ?
@ron99 your Twitter has comprehensive details for energy specially NG, LNG tanker info and also the weather charts. Do you trade NG and CL using options or only milk futures ?
I don't have experience in that either.
Options for me is about OTM options on commodities (maybe on forex, as the rest is not paying enough to my taste). I tried for approx. 9 months spread options on different commodities. End result: failure. Experience there is over. I stopped definitely doing that.
I tried naked options with ready to close the position with a loss or ready to protect with the underlying: it can works (and I'm still confident on that part) but one needs 1- to avoid the catastrophic events that happened from time to time (e.g. wti in March 20) and one has to be good in trading futures. At the end of the day if you are sufficiently good in trading futures, what is the point of trading naked options? In some specific situations? Close to the reversal of the trend? Or in some situations where prices are definitely too high or too low? Or in some situation where the price is in a range?
I would say yes to that
Otherwise it is better to stay with the futures
For commodities are we in one of these three situations I described? I don't think so.
Therefore I don't have plans for options for the time being.
In recent months, I made most money in naked option selling when I sold strangles at times of high volatility. I avoid well-known weather markets, eg. NG options from Z to H, and C as well as S during late spring.
A good example were NGJ, NGK, and NGM strangles which I entered some weeks ago in a phase of high volatility. I already bought back all of them with profits of beyond 50 %.
Other such trades were in KC and LC.
I use MRCI data, which not only shows implied and historical volatility, but also seasonal charts and long term charts for these volatilities.
Thanks a lot @myrrdin for the insights. It's good to know that selling options strategies still work as I got an impression that the main thread contributors refrained from it due to risk.
However, I would summarize your strategy as selling options in high volatility based on MRCI data.
Which delta levels ? Which OI threshold you consider to ensure exit liquidity specially at disaster? Why not using a credit spread to hedge the short naked option leg? Does it work or its theortical?
What is your excess money level to money used for margin ?
What is the min account size for this type of trading ?
When do you decide to exit for loss , when your strike breached or your breakeven or u have a formula for current premium, initial margin, credit, etc ?
What is the margin required to sell Naked option on average, just a figure from your broker.. I know each had their own relative to Span..
How would you compare this to long volatility strangles at low volatility times ? This has theortical endless profit and limited risk ?
I would summarize my strategy as selling strangles(!) in high volatility based on MRCI data. This is only one of my strategies.
I do not consider the absolute delta levels. On the one hand, I am looking to receive an acceptable price in relation to fees. On the other hand, I am looking to choose strikes above / below significant support / resistance levels.
As this is only one of several strategies, the question of excess money is a more complex one.
In case you only sell strangles, a rather small account should be good enough, eg. $50,000.
I exit a trade with a loss in case that the underlying moves beyond a pre-defined support / resistance level. This level is chosen in a way that the value of the options does approximately double.
The margin required depends on the commodity, DTE, delta.
I do not trade "long strangles", and, thus, do not have any experience.
