Hi,
quite a long time ago I started FGBL option journal. But for months Ive been strugling with it. That push me to constantly look for another trading methods. From few months I trade NAT GAS with monthly options.
It is very simple indeed and looks like this :
1. Im looking at monthly and weekly chart and Im trying determine next month range. Im estimating support and resistance zones.
2. Im taking position immidiately after expiery of previous setup (possibly ittle earlier if margin allows.
setups are little modified collar:
-1 Call
+1 outright
+1 put
plus credit spread from upside
3. as market is moving Im adding additional setups (the same ) to cover the bigger range
4. So basically instead of trying be a sniper Im using shotgun here to target big profit zones (200-300ticks)
Can you help answer these questions from other members on futures io?
Broker: Primary Advantage Futures. Also ED&F and Tradestation
Trading: Primarily Energy but also a little ES, GE, GC, SI & Bitcoin
Posts: 3,590 since Dec 2013
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I'm not sure what you mean by "plus credit spread from upside" but a traditional collar is +1 Put, -1 Call and is inherently bearish.
Adding an outright to this turns it into a call spread (since +Put+Outright=+Call) which is inherently bullish.
Thats +5 Puts, -6 Calls, +6 Outrights, so it looks like your missing a put.
Here's you PnL chart, plus what it would look like if you add a put, and how that compares to some call spreads.
I give you an example from this month.
outright 2676
2.65P 90
2.7 C 92
2.75 C 71
2.8C 53
1. You buying collar 2.7C-2.65P for a ~25tick upside, then you selling 2.75C and buying 2.8C for a 18 tick credit.
2. Worst case <2.65 you losing 8tick, max upside 2.7-2.75 24+18 tick
3 This way you creating profit zone with big profit and minimal downside.
4. Idea is to stack this setup across maximum range ie this month profit zone is 3000-3350.
5. You can use 2x2.75C for a bigger profit, thats what I usually do.
Ive finished october setup with max loss (outright <2.9). It could have been easly avoided, but unfornately i didnt foreseen move of this magnitude 3.3->2.7 in just one week.
November brings few improvements in my trading. Most important is a change from futures/options to pure option trading. The reason is severe drawdowns after/before us session.
Another change is the way im calculating position, now Im using layers in excel. Every position is unique and has unique PL. Now even complicated portfolio is easy to understand and can be easly modified.
Basic trading idea remains the same, Im stacking setups with limited loss, but instead of collars Im using put spreads and bear spreads. Theres also a place for few naked shorts, but only from side with bigger potential profit.
Current setup. Obviously Im looking for a rebound to 3+ area. Then Im going to hedge downside. If market didnt move there Im going to close written calls 3+ and open them again lower to reduce loss.
