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Selling Options on /ES
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Created: by blb014 Attachments:5

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Selling Options on /ES

  #41 (permalink)
Elite Member
Dallas, Texas
 
Futures Experience: Intermediate
Platform: TOS
Favorite Futures: AAPL, /ES, IWM, SPY Options
 
Posts: 208 since Oct 2012
Thanks: 440 given, 101 received


Big Mike View Post
Moderator Note


In order to avoid confusion and a split topic, I have moved this thread to the Journals section.

I understand there was some sort of disagreement between this thread starter and the existing thread starter, but it is in the best interest of the community that we avoid a split topic.

This thread starter should continue to post here if he wishes as his own journal, any any user is free to engage him with questions, but please keep in mind the main selling options thread is below.




The primary discussion thread for Selling Options on Futures is:
https://futures.io/options-cfd-trading/12309-selling-options-futures.html

Mike

No disagreement on my part, I had different way of selling options that didn't promote commissions so he put me on ignore

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp
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  #42 (permalink)
Elite Member
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Futures Experience: Intermediate
Platform: TOS
Favorite Futures: AAPL, /ES, IWM, SPY Options
 
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rajab View Post
Thanks Guys.
blb014
Second sentence on the first page where you describe your trading plan. Can you explain what you mean about the Vega risk?
Thanks

Vega - the change of implied volatility of the underlying that effects the option price. Longer dated options are exposed to possible more volatility and their Vega is greater. That's why I usually try to sell around 2 months out to take advantage of Theta decay and be less exposed to Vega risk.

Example: 10 1950 Oct Put Delta -.20 is ~ the same as 48 1650 Nov Put Delta -.03, in option value

With a 5% drop in /ES, the 48 1650 Nov puts vega is more than twice as much as the 10 1950 Oct puts (plus 4.8x more commissions)

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp

Last edited by blb014; August 20th, 2015 at 12:46 AM.
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  #43 (permalink)
World'sWorstTrader
Knoxville Tennessee USA
 
Futures Experience: Intermediate
Platform: TOS
Favorite Futures: ES, NQ, CL, /6E futures options.
 
Posts: 275 since Oct 2012
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rajab View Post
I am not talking about orders.
If I sell 10ES puts and maintain 3xIM in my account. As the decay occurs and IM drops I would have to sell more puts to maintain the 3xIM( good business sense). Do I do it 1, 2,... contract at a time or there are no rules.

When your IM decreases, probably you are showing a gain in your position and a period of time has passed.
The DTE has decreased to the point that you will not want to enter these same type positions. If you have extra margin,
you might want to look for a new/different position if conditions warrant it.

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  #44 (permalink)
Elite Member
Dallas, Texas
 
Futures Experience: Intermediate
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Favorite Futures: AAPL, /ES, IWM, SPY Options
 
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Sold to Open -10 1920 Puts, Already down -1,000 on those and -10,000 on the other two positions. We'll see how this plays out.....

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp
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  #45 (permalink)
World'sWorstTrader
Knoxville Tennessee USA
 
Futures Experience: Intermediate
Platform: TOS
Favorite Futures: ES, NQ, CL, /6E futures options.
 
Posts: 275 since Oct 2012
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blb014 View Post
Sold to Open -10 1920 Puts, Already down -1,000 on those and -10,000 on the other two positions. We'll see how this plays out.....

Tomorrow may be a relief bounce ??!

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  #46 (permalink)
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Futures Experience: Intermediate
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datahogg View Post
Tomorrow may be a relief bounce ??!

Yes possibly! and this could be the correction needed to make ATH. Doom and gloom because oil is at @41, I'm take my chances on the long side for now and see how this plays out. The one thing I have learned - in a bull economy is days like these are the best time to sell options. Even with a range day tomorrow, IV will more than likely go down.

I try to tune out the news headlines - yuan devaluations, slowing growth in china, fed uncertainty, oil @$41. And focus on the fundamentals, yes there were some lower than expected earnings but overall earnings are still strong, so is employment, housing, and overall growth.

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp

Last edited by blb014; August 20th, 2015 at 06:25 PM.
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  #47 (permalink)
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The ugly truth

Thinking about adding another 1900 position, here's an update:

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Truth about other positions mentioned:

Nov 1650 put $2.90 couple days ago:
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Nov 1700 put $4.15 :
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Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp
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  #48 (permalink)
Elite Member
Dallas, Texas
 
Futures Experience: Intermediate
Platform: TOS
Favorite Futures: AAPL, /ES, IWM, SPY Options
 
Posts: 208 since Oct 2012
Thanks: 440 given, 101 received

I going to hold off on the /ES puts, because I just bought some equities. IMO this is good buying opportunity to improve cost basis (AAPL down almost 6%).

My 1920 put has now doubled in price and the 1915 is more than double, going hold onto these for right now.

This is Nov 1650 put that was $2.90 a few days ago:

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Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp
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  #49 (permalink)
Elite Member
Dallas, Texas
 
Futures Experience: Intermediate
Platform: TOS
Favorite Futures: AAPL, /ES, IWM, SPY Options
 
Posts: 208 since Oct 2012
Thanks: 440 given, 101 received

Just looking at the VIX chart and just had this article pop up:

Dow 5,000? Yes, it could happen - MarketWatch


That's it I'm cashing out...............jk

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp
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  #50 (permalink)
Trading for Fun
Ottawa
 
Futures Experience: Advanced
Platform: Many
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Is anyone selling more options with the high VIX? I wanted to on Friday but was at work at my day job. I managed to do it a few weeks ago when CL was going crazy after the first big drop and made up enough to cover loses, but I am only trading very small so it is easy to have confidence and make moves like that.

I am regretting not buying VIX calls when they were super cheap. I had read an article somewhere that said to buy them when they hit lows which they were a week ago.


Last edited by Chubbly; August 22nd, 2015 at 05:38 PM.
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