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Yes I use DCOT data. It is not as high on the priority list as fundamentals or seasonals but I do use them.
Each week I download the DCOT futures only data for 23 commodities into a spreadsheet and chart the data. One spreadsheet page for each commodity plus several pages of summarized data. I have all the data back to 2006 when the CFTC came out with the DCOT report.
I mainly look at what the Managed Money or specs are doing because generally markets are moved by them. I am looking at trends by the specs. If they have been getting more net long/short then I will lean towards that bias in my thinking. But you can't look at the data and know when it will reverse.
I also look to see if the specs are adding longs/shorts or just covering longs/shorts when the net positions are getting longer. If they are covering longs/shorts then I believe the rally will be short.
That's what happened in SB the last 3 weeks. The shorts are covering far more than increasing longs.
The problem with the data is that it is old. The data you get on Friday afternoon is from Tuesday.
There have been some interesting things happening on the DCOT data the last few weeks. Later when I have time I will explain.
I've been with this thread since the start. Actually, it's been one of the biggest factors that got me started on this path. I finally decided to step out of the shadows!
I trade contracts on energy, metals, S&P, grains, livestock, and currencies. I use about as much fundamental analysis as Ron uses of technical analysis.
The strikes I trade are at .08 delta and I bail when they get to .2 delta. I look to sell about 90 days out and exit when I collect 80% of the premium. Looking at my trading stats this usually takes about 27 days. After these few months have past I'm about at break even, which I find very frustrating.
I think I may actually listen to the more experienced traders (and more successful!) and trade at lower delta. I thought I needed to go for the big premium to get solid returns, but as someone pointed out earlier it's all about ROI.
After reading all the posts and seeing crude up on early Friday, I decided to close both trades with a $600 profit less commission and will be watching on Monday and see if I can get back at a lower strike when crude dips again.
Don't think that you made an incorrect trade if crude decides to keep going up and your puts would have lost more value = more potential profit. Since you already exited with a profit then consider yourself 'done with that'. Selling options in crude about $10 away is a little close. Don't beat yourself up about this either. There are a multitude of ways to sell options for profit. Do I want to sell options with 30 days left that are worth $20 each or 70 days left that are $200 each? In most cases if you are writing the $20 opts then your thinking is that you are expecting them to expire worthless because after the commission and exchange fees to sell then buy back there might not be a lot left for the bank. Unless your are someone like uh, who can that be, hmm....think his name starts with an R or something, and you sell 100 of them and after fees and commissions you can still bank a few hundred bucks that is fantastic. The larger your account size the more flexibility you have as far as profit methods are concerned.
If you sell the $200 options then you have more room there to buy those back for $100 and make a decent profit. This is how I approach a trade...Do I want to sell with less time left and let them expire worthless or sell them farther out with the intention of buying them back at 40, 50, etc. less value then what I sold them for? Different ways to approach this endeavor....find your path. Annnnd stay with the thread
Well said opts. There are indeed many ways to sell options profitably. And yes, the more capital you have the more options (pun intended of course) you will have in terms of your approach.
You made money, don't look back! It is very easy to second guess yourself by saying "damn, if I stayed in I would've made an extra whatever." Well, what if you DID STAY and you ended up giving back profits or worse yet, taken a loss? But you didn't stay, you exited, you booked profits, good job, now MOVE ON!
Funny! I was absolutely thinking of you Ron99 when I set my order to buy back the CLK375 puts at 0.07. The next time I cover my shorts, I will post here first so be on the lookout.......Hmmmm, I wonder if that would be considered some sort of collusion trading by the CFTC?
You mentioned that you traded strangles. If you sold both a call and a put with the delta at 0.08 for each, you should have on a decent trade. You mentioned that you would bail when the delta reaches 0.20. Wouldn't the other end of the strangle be showing a nice profit with a very low delta? When you bail, do you just cover the side that is losing money or do you get out of the entire strangle? For me, I consider a strangle position as ONE POSITION, so if I were to exit for a loss on one end, I would also exit the opposite end for a profit, thus cushioning the overall loss. By doing this, I was able to be at break-even to slightly profitable even if I was wrong 3 out of every 4 strangle positions. This is assuming that your position sizes, premium collected and stop loss points were the same for every trade. I wrote about this in more details a few pages back.