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Selling Options on Futures?


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Selling Options on Futures?

  #1 (permalink)
Cleveland, OH
 
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Selling Options on Futures?

I have been selling options on futures for years. But it is rare to find others doing it. I was wondering if there are others here doing it.

I have been doing it for 5 years. Learned it from James Cordier's book.

I have sold energy, grain, softs and metal options. Far out of the money. Usually less than 90 days from expiration.

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  #3 (permalink)
Cleveland, OH
 
Experience: Advanced
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Trading: Options on Futures
 
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I guess I am on a deserted island. Anybody know a place that discusses selling options on futures?

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  #4 (permalink)
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sam028's Avatar
 
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@ron99, I know there are stocks options traders here, but maybe not a lot of futures options traders. I tried myself, but found that a more scary and less liquid than stocks options.
But if you start to talk about how you trade them, you may find people interested in it .

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  #5 (permalink)
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I sometimes buy futures options....

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  #6 (permalink)
Chicago, IL
 
 
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ron99 View Post
I have been selling options on futures for years. But it is rare to find others doing it. I was wondering if there are others here doing it.

I have been doing it for 5 years. Learned it from James Cordier's book.

I have sold energy, grain, softs and metal options. Far out of the money. Usually less than 90 days from expiration.

I trade options very actively. How have you performed?

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  #7 (permalink)
desert CA
 
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I've been reading the book. There's a new edition out which sells heavily discounted on book resellers. Don't know
if that's a good sign or not. But the book is a nice read. I'd already been shorting puts on stocks for a while, so not much new to me except
it seems some fundamentals is involved in predicting commodities price range according to the book. Or should I just stick to TA.

Ron, I was trying to do some demo futures option trades, but ThinkOrSwim usually says "not traded". Are there only certain times one can buy or short options on futures?

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  #8 (permalink)
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
 
Posts: 3,043 since Jul 2011
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Arpeggi View Post
I trade options very actively. How have you performed?

I was up 48% in 2010. I am up 78% in 2011. Probably 60% of my gain is buying options and 40% is selling options.

Selling options is a safer and more consistent gain. Buying options for me is riskier, but there is potential for more gain.

None of my option trading is day trading. When I sell options I usually keep them to expiration.

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  #9 (permalink)
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
 
Posts: 3,043 since Jul 2011
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Cloudy View Post
I've been reading the book. There's a new edition out which sells heavily discounted on book resellers. Don't know
if that's a good sign or not. But the book is a nice read. I'd already been shorting puts on stocks for a while, so not much new to me except
it seems some fundamentals is involved in predicting commodities price range according to the book. Or should I just stick to TA.

Ron, I was trying to do some demo futures option trades, but ThinkOrSwim usually says "not traded". Are there only certain times one can buy or short options on futures?

The book is probably discounted because there aren't many option on futures sellers. But it did get a second edition printing.

TA is used very little for option selling. I never use it.

Options are traded certain times of the day. It varies by commodity. For example the Sugar pit closes at 1:30pm ET. Oil and Gold trade electronically until 5:15pm ET and reopen at 6pm ET. But there is very little trading volume during night time in the US. Most options have moved to electronic trading. But there is pit trading still for all options. Check to see whether TOS is sending the orders to the pit or electronically.

Admittedly, the volume on options is not that great. You just have to keep trying. Certain strike prices have more volume than others. Usually the round numbers. For example in Gold, the $50 increment like 1350 or 1400 trade more than the strikes in between like 1360 or 1365. Check the open interest of the strikes to see where the trading is happening.

Also certain commodities have more volume than others. Obviously corn, oil and gold have a lot of volume. While copper has zero option volume. Medium volume for options is Sugar, Coffee, Silver, Soybeans, Wheat, Nat Gas. Unleaded Gas (RBOB), Heating Oil, Cocoa, and Cotton are on the low side of volume.

Never, ever place a market order on options on commodities. Always limit orders.

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  #10 (permalink)
desert CA
 
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Thanks for the info about which commodities have more option volume Ron. Yes, I was talking about the 2nd edition book. I ordered a discounted copy of it too.

Very nice profit stats on your trading. I wish I could say similar on my trading options on equities for the last three years..(mostly selling puts)

I'll continue to read the book and check with TOS about times commodities options are available to sell or buy.

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