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Diversified Option Selling Portfolio


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Diversified Option Selling Portfolio

  #831 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785

On May 26 I sold NGu7p260c425 for 0.041. 94 DTE. IM is 289.

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  #832 (permalink)
keong
Singapore + Singapore
 
Posts: 13 since Nov 2015
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ron99 View Post
On 4/27/17 I sold NGq7p260c450 for 0.027. I finished exiting today at 0.014. ROI is 8.3%. Days held is 28.

This strangle was 90 DTE when entered. The same day I entered the same strikes but for Sep (123 DTE). Those are only 72% of opening price while the Aug I exited at 52%. Aug had a quicker drop and higher ROI.

Hi Ron,
Do you use the same trade entry/exit rules as your ES trades? i.e. enter 90-120 DTE, exit at 50%, 6x IM?

Thanks!

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  #833 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785



keong View Post
Hi Ron,
Do you use the same trade entry/exit rules as your ES trades? i.e. enter 90-120 DTE, exit at 50%, 6x IM?

Thanks!

Yes. But I will exit early if something fundamental changes.

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  #834 (permalink)
keong
Singapore + Singapore
 
Posts: 13 since Nov 2015
Thanks Given: 10
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ron99 View Post
Yes. But I will exit early if something fundamental changes.

Thanks. So after exit, so do you immediately re enter the same trade again but at a further DTE, similar to the ES trades?

Is 6x still the optimal margin to set aside? I recall you used to use 3x IM?

Thanks so much for your advice.

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  #835 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785


keong View Post
Thanks. So after exit, so do you immediately re enter the same trade again but at a further DTE, similar to the ES trades?

Is 6x still the optimal margin to set aside? I recall you used to use 3x IM?

Thanks so much for your advice.

Yes I reenter at 90-120 DTE if fundamentals are favorable.

I have never tested to see if 6x is optimal excess for commodities other than ES. I know it is better than 3x.

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  #836 (permalink)
TraderGriz
Minnesota
 
Posts: 89 since Feb 2017
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ron99 View Post
On May 26 I sold NGu7p260c425 for 0.041. 94 DTE. IM is 289.

I'm not sure on how it works. You sold a strangle, for .041.
I am going through a local broker, thier office is 20 miles or so from me. They charge for what they do also. However now that I am back to work a short work day is 14 1/2 hrs, I want someone to call me if something happens.
Guess what I'm asking is about it being one trade or two?
Reason for asking is I had a trade
NGN p295/c380
I got rid of the call at80% profit but still have the put. It is at 40% profit now.
With my broker its two trades not one but margin is lower on strangles.
Hope this makes any logic to you.

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  #837 (permalink)
TraderGriz
Minnesota
 
Posts: 89 since Feb 2017
Thanks Given: 178
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I prolly should've exited the other but I think the time factor in my favor.
Would like others thoughts.

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  #838 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785


TraderGriz View Post
I'm not sure on how it works. You sold a strangle, for .041.
I am going through a local broker, thier office is 20 miles or so from me. They charge for what they do also. However now that I am back to work a short work day is 14 1/2 hrs, I want someone to call me if something happens.
Guess what I'm asking is about it being one trade or two?
Reason for asking is I had a trade
NGN p295/c380
I got rid of the call at80% profit but still have the put. It is at 40% profit now.
With my broker its two trades not one but margin is lower on strangles.
Hope this makes any logic to you.

You have it correct. A strangle most times is legged into. That means you place two separate orders to enter and to exit. You will pay commissions and fees on two trades.

Margin is lower on strangles. Basically one side is free and doesn't require margin.

I sold the put for 0.020. I sold the call for 0.021.

I would be careful selling NG options that close to futures.

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  #839 (permalink)
TraderGriz
Minnesota
 
Posts: 89 since Feb 2017
Thanks Given: 178
Thanks Received: 38

I generally like to be further away myself.
Still learning much about selling options, so am trying to be careful. Yet trying a few things.
E.g. On 4-17-17 I sold NGX p260/c450 for .124
It's further out than usual but I felt comfortable about it. So far am at about 35% profit.

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  #840 (permalink)
TraderGriz
Minnesota
 
Posts: 89 since Feb 2017
Thanks Given: 178
Thanks Received: 38


Other positions I have are
ZWU c540
ZSU c1100
GFQ p120
LEQ p100
HOU p130
ESU p2165
They are all doing well, I prolly should exit as all but one are 50% profit.
Now that I'm working for the season I don't have time to research for anymore so am letting time erosion do it for now.
I still do much on paper for my learning an also I don't have time to do research. I just wouldn't feel comfortable without doing my research.

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Last Updated on May 26, 2022


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