NexusFi: Find Your Edge


Home Menu

 





Selling Options on Futures?


Discussion in Options

Updated
      Top Posters
    1. looks_one ron99 with 2,221 posts (4,489 thanks)
    2. looks_two SMCJB with 346 posts (733 thanks)
    3. looks_3 kevinkdog with 341 posts (400 thanks)
    4. looks_4 myrrdin with 288 posts (408 thanks)
      Best Posters
    1. looks_one SMCJB with 2.1 thanks per post
    2. looks_two ron99 with 2 thanks per post
    3. looks_3 myrrdin with 1.4 thanks per post
    4. looks_4 kevinkdog with 1.2 thanks per post
    1. trending_up 1,950,287 views
    2. thumb_up 9,259 thanks given
    3. group 458 followers
    1. forum 7,370 posts
    2. attach_file 794 attachments




 
Search this Thread

Selling Options on Futures?

  #711 (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


opts View Post
Ron: I live in Panama City Beach. Hit me up next time your around.

OX dropped their commission rate to $3.50 per side for options on futures as of 2/9. Very nice.

Have you ever gone to Dee's Hang Out? Great food and not the expensive tourist markup.

After digging around I see the OX announcement for new pricing for futures and options.

"The $3.50/contract pricing applies to U.S. customers only. The $3.50/contract rate is effective February 9, 2013"

Started this thread Reply With Quote

Can you help answer these questions
from other members on NexusFi?
Deepmoney LLM
Elite Quantitative GenAI/LLM
NT7 Indicator Script Troubleshooting - Camarilla Pivots
NinjaTrader
Better Renko Gaps
The Elite Circle
Online prop firm The Funded Trader (TFT) going under?
Traders Hideout
Exit Strategy
NinjaTrader
 
Best Threads (Most Thanked)
in the last 7 days on NexusFi
Get funded firms 2023/2024 - Any recommendations or word …
59 thanks
Funded Trader platforms
37 thanks
NexusFi site changelog and issues/problem reporting
23 thanks
GFIs1 1 DAX trade per day journal
22 thanks
The Program
19 thanks
  #712 (permalink)
 kevinkdog   is a Vendor
 
Posts: 3,647 since Jul 2012
Thanks Given: 1,890
Thanks Received: 7,338


ron99 View Post
Have you ever gone to Dee's Hang Out? Great food and not the expensive tourist markup.

After digging around I see the OX announcement for new pricing for futures and options.

"The $3.50/contract pricing applies to U.S. customers only. The $3.50/contract rate is effective February 9, 2013"

So, with exchange fees and their 75 cent "transaction fee" which I assume still applies, their overall rate per side will be $5.72 - $6.02 or thereabouts, depending on the instrument. Pretty reasonable, especially given their level of service.

Now if they would just allow IRA trading with futures options...

Follow me on Twitter Reply With Quote
  #713 (permalink)
 
opts's Avatar
 opts 
NW Florida
 
Experience: Intermediate
Platform: OX and TOS
Trading: Futures Options, Stocks
Posts: 234 since Aug 2012
Thanks Given: 29
Thanks Received: 115



ron99 View Post
Have you ever gone to Dee's Hang Out? Great food and not the expensive tourist markup.

After digging around I see the OX announcement for new pricing for futures and options.

"The $3.50/contract pricing applies to U.S. customers only. The $3.50/contract rate is effective February 9, 2013"


I've been to Dee's many times. It is about a 5 minute drive from my house. It is one of those places that isn't overrun with a 'tourist menu' that actually has good food. They've been there for a few years now and I hope they stay. Spring break (March - April) is the absolute worst time to be in this area. Gotta take the good with the bad I suppose....

Reply With Quote
  #714 (permalink)
 
opts's Avatar
 opts 
NW Florida
 
Experience: Intermediate
Platform: OX and TOS
Trading: Futures Options, Stocks
Posts: 234 since Aug 2012
Thanks Given: 29
Thanks Received: 115


kevinkdog View Post
So, with exchange fees and their 75 cent "transaction fee" which I assume still applies, their overall rate per side will be $5.72 - $6.02 or thereabouts, depending on the instrument. Pretty reasonable, especially given their level of service.

Now if they would just allow IRA trading with futures options...


That would be nice....

Reply With Quote
  #715 (permalink)
 kevinkdog   is a Vendor
 
Posts: 3,647 since Jul 2012
Thanks Given: 1,890
Thanks Received: 7,338

Here is a summary of my analysis on selling deep OTM options. Remember, I am a newbie at selling options, so feel free to pick apart what I have written here. I have thick skin.

I should mention I did this analysis Friday during the day. Since that point OX options commissions have dropped, margin values may have changed, and settlement prices may be below my open orders. So, my ROIs might be off.



Right now, I am currently in Crude Oil CJ375P, Coffee KCK32000C and Cotton CTK36700P. All looking good at this point.





Crude: I will add on to Crude, if I free enough margin up. My initial margin + excess was $981, and I don’t want to go above that.

Coffee: I will add to Coffee, if I find a good value. Right now, most ROIs are below 2% – not enough.

Cotton: For Cotton, I won’t add to it, mainly because I missed the seasonal downtrend that usually comes in March-May (I’ll consider myself lucky to escape that trade!).

Sugar: Sugar is in a downtrend, and seasonals suggest down, so I am trying to sell Sugar SBK323.5C at .03, which would be around 2.9% ROI.

Cocoa: Cocoa is in downtrend and seasonals suggest down, so I am trying to sell Cocoa CCK32700C at 3, which is around 2.2% ROI.

Beans: I also considered Bean puts (ROI too low, below 2%)

Wheat: Wheat calls (ROI around 1%),

Nat Gas: NG puts (ROI too low).

RBOB: RBOB puts look enticing, but with crude exposure already, I’d rather avoid it. I know the correlation between CL and RBOB is not constant, but I don;t want to be short RBOB and CL puts at the same time, until I get more experience with it.

ES: ES puts just scare me, in the event of a market crash.

Everything Else: Corn, Gold, Silver, Heating Oil, Hogs, Live Cattle and Feeder Cattle do not even make the cut of me looking at options - I basically don't have enough confidence in future price direction to sell options.



Any thoughts you have would be appreciated.

Follow me on Twitter Reply With Quote
Thanked by:
  #716 (permalink)
 
tigertrader's Avatar
 tigertrader 
Philly, Pa
Legendary Market Wizard
 
Experience: Master
Platform: NinjaTrader
Trading: ES, ZB
Posts: 6,482 since Jul 2010
Thanks Given: 6,662
Thanks Received: 36,257


kevinkdog View Post
Here is a summary of my analysis on selling deep OTM options. Remember, I am a newbie at selling options, so feel free to pick apart what I have written here. I have thick skin.

I should mention I did this analysis Friday during the day. Since that point OX options commissions have dropped, margin values may have changed, and settlement prices may be below my open orders. So, my ROIs might be off.



Right now, I am currently in Crude Oil CJ375P, Coffee KCK32000C and Cotton CTK36700P. All looking good at this point.





Crude: I will add on to Crude, if I free enough margin up. My initial margin + excess was $981, and I don’t want to go above that.

Coffee: I will add to Coffee, if I find a good value. Right now, most ROIs are below 2% – not enough.

Cotton: For Cotton, I won’t add to it, mainly because I missed the seasonal downtrend that usually comes in March-May (I’ll consider myself lucky to escape that trade!).

Sugar: Sugar is in a downtrend, and seasonals suggest down, so I am trying to sell Sugar SBK323.5C at .03, which would be around 2.9% ROI.

Cocoa: Cocoa is in downtrend and seasonals suggest down, so I am trying to sell Cocoa CCK32700C at 3, which is around 2.2% ROI.

Beans: I also considered Bean puts (ROI too low, below 2%)

Wheat: Wheat calls (ROI around 1%),

Nat Gas: NG puts (ROI too low).

RBOB: RBOB puts look enticing, but with crude exposure already, I’d rather avoid it. I know the correlation between CL and RBOB is not constant, but I don;t want to be short RBOB and CL puts at the same time, until I get more experience with it.

ES: ES puts just scare me, in the event of a market crash.

Everything Else: Corn, Gold, Silver, Heating Oil, Hogs, Live Cattle and Feeder Cattle do not even make the cut of me looking at options - I basically don't have enough confidence in future price direction to sell options.



Any thoughts you have would be appreciated.

If the 3 most important factors in real estate investing is location, location, location; then the 3 most important factors in trading options is volatility, volatility, volatility.

Personally, I think your whole approach to trading options needs to be reconsidered. You're overly concerned with predicting the direction of the market. Successful options traders know that market prediction falls into two categories: 1) the prediction of the short-term movement of prices, and 2) the prediction of volatility of the underlying. Almost all experienced options traders trade vol and not the underlying's direction.

Simply stated, its a much easier task to predict volatility than to predict prices, and therein lies the real advantage of trading options. The attraction of predicting volatility is that it almost always trades in a range – and a glance at the past history of volatility for any individual instrument shows just what that range has been.

If one is able to isolate volatility, the trader doesn’t care where the price goes – he is just concerned with buying volatility near the bottom of its range and selling it when it gets back to the middle or high of the range, or vice versa.

Practically speaking however, it is nearly impossible for an inexperienced options trader to be able to isolate volatility so specifically – he will have to pay some attention to the underlying's price, but he will still is able to establish positions in which the direction of the stock price is irrelevant to the outcome of the position.

Follow me on Twitter Reply With Quote
  #717 (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

kevinkdog,

SBK323.5C margin is now 81, using 6.02 fees I get 3.1% ROI. The 23.00 get you a 4.1% ROI. That’s where I am going.

I find I have to go to a higher delta on some commodities. SB is one.

The 15 yr seasonal on CT isn’t lower than it is now when the option expires. You’ll probably be fine.

For an IRA account I would stay lower than 75 for CL. CL is volatile and can move fast. A little too fast for an IRA. You need to keep an eye on the 75. If you add more add something lower than 75 unless you aren’t trading this like a IRA right now.

The CCK32700C settled at 2. You probably need to move to a lower strike. Selling calls in CC is OK.

On KCK3 calls 190-200 would be OK. The 190 get you to 3.0% ROI. 6.32 fees.

S puts would be good but you are correct that ROI too low. I tried several and couldn’t find anything above 2.5%. W calls 1.6% for a May 1000.

For NG I am selling calls. When you get this late in winter and inventory is this far above the 5 yr average, +15%, the trend is down. Only use the 5 yr seasonal for NG. Things have changed (fracking) and the 15 yr seasonal no longer works.

Last year May NG was at 2.75. In Apr it was down to 2.00.

I have on Apr 4.50 NG calls. But too late to put those on now. May 4.50 have a 2.8% ROI.

For one aggressive account, towards the end of the cold snap and the long range forecast was above normal, I sold Apr 4.00 calls and bought 4.25 calls for 0.015. Right now those are 4.2% ROI and settled at 0.007.

It’s weird because the May 4.00-4.25 call spread is a 3.0% ROI when the Apr is 4.2.

I have been selling a lot of RB puts. Seasonal trend is strong up in Feb and Mar. Just hard to find buyers.

I do find that a lot of the buyers <50 DTE are people taking profit. When I check OI the next day after selling options, mostly I find the OI is the same. I added new positions the buyer got out of his. Just like when Britkid and I traded KC.

The fees on ES options are lower than others. With a 3.50 commission, total cost for ES options is 4.82.

The problem with ES puts right now is low ROI. A Mar 1300 is 1.9%.

The problem with ES calls is there is no money when you are at a decent strike OTM. Mar 1650 calls, 138 OTM, settled at 0.10. A put 138 OTM, 1375 settled at 2.25.

EOM ES. Symbol EW. Sell them 30-45 DTE. Not a lot of volume there though.

GC puts are so-so ROI. Apr 1400 is 2.5%. SI margin is too high. HG very low option volume. But I do have a few 3.000 Mar puts on.

Normally I don’t do hogs or LC options.

I do have some milk options on, but I don't recommend them to someone without dairy experience.

Ron

Started this thread Reply With Quote
  #718 (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

tigertrader, your style of trading options is totally different than what we are discussing here. We don't buy options.

We also are not discussing stock options.

By selling far OTM options we are not trying to predict where the futures are going. We are just trying to predict where the market isn't going. Even if the market goes the wrong way as long as it doesn't make a drastic move we still make full profit.

Started this thread Reply With Quote
Thanked by:
  #719 (permalink)
 kevinkdog   is a Vendor
 
Posts: 3,647 since Jul 2012
Thanks Given: 1,890
Thanks Received: 7,338


tigertrader View Post
If the 3 most important factors in real estate investing is location, location, location; then the 3 most important factors in trading options is volatility, volatility, volatility.

Personally, I think your whole approach to trading options needs to be reconsidered. You're overly concerned with predicting the direction of the market. Successful options traders know that market prediction falls into two categories: 1) the prediction of the short-term movement of prices, and 2) the prediction of volatility of the underlying. Almost all experienced options traders trade vol and not the underlying's direction.

Simply stated, its a much easier task to predict volatility than to predict prices, and therein lies the real advantage of trading options. The attraction of predicting volatility is that it almost always trades in a range – and a glance at the past history of volatility for any individual instrument shows just what that range has been.

If one is able to isolate volatility, the trader doesn’t care where the price goes – he is just concerned with buying volatility near the bottom of its range and selling it when it gets back to the middle or high of the range, or vice versa.

Practically speaking however, it is nearly impossible for an inexperienced options trader to be able to isolate volatility so specifically – he will have to pay some attention to the underlying's price, but he will still is able to establish positions in which the direction of the stock price is irrelevant to the outcome of the position.



Thanks for your comments. I feel I am trying to pick where prices will not go, rather than predict where they will go. But I do understand your concern which prediction of prices.

For volatility, I will admit that with these deep out of the money options I have not really concerned myself with it. It seems, at first glance, that time decay is more important than vol for these types of options, but I know I have to look into it further.

Thanks again for your input.

Follow me on Twitter Reply With Quote
  #720 (permalink)
HeartMan
San Francisco, CA/USA
 
Posts: 4 since Jan 2013
Thanks Given: 1
Thanks Received: 3


Howdy!
I'm new to the forum. This was the first thread that caught my attention. I was out of the market for a few years, but with the interest rate environment being what it is, I'm back in for income trades, selling options has been a main focus.
After a few way OTM naked puts, I decided on a trade plan that emphasized a no blow out strategy; so no more naked puts, no matter how safe they might seem. Credit spreads have been working out well, using candlestick analysis and a few other technicals. I'm looking at expanding to options on futures, using optionsxpress. Call credit spreads on crude oil might be shaping up as high probability trade. I'd appreciate any pointers on the characteristics of futures, options on futures, using optionsxpress for these kinds of trades, or anything else that might help.
Thanks!

Reply With Quote




Last Updated on July 28, 2023


© 2024 NexusFi™, s.a., All Rights Reserved.
Av Ricardo J. Alfaro, Century Tower, Panama City, Panama, Ph: +507 833-9432 (Panama and Intl), +1 888-312-3001 (USA and Canada)
All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
About Us - Contact Us - Site Rules, Acceptable Use, and Terms and Conditions - Privacy Policy - Downloads - Top
no new posts