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When I opened my account with OX, commissions were not at $3.50 but I was able to have it lowered by negotiating with them. I have since closed my account at OX and moved my commodities options selling to DeCarley. Like Ron said, it is not the cheapest but the service and lower margin requirements more than makes up the difference.
JTrade,
Often you will see CL break higher or lower, generally, this is when vol and margin will increase. It does not mean a short strike is threatened but it is often a time when I trade futures for hedging and extra profit if the market sees fit. I find the answer to your question is one of distance from strikes but generally If the market is $5 away from my short strikes and breaking low or higher I will trade 3 future contracts separately as the market moves in the theatening direction for 15 to 20 short strike contracts. So roughly I future contract for 10 option contracts when price is greater that $5 away from the short strike. But as you said this is rough and I am still learning to refine what I do.
Cheers,
BlueRoo
Thanks, BlueRoo. I realise that the best way to learn is to "Just Do It", so intend to start next week if I can find a suitable trade.
I had figured that if an option ever got as far as being ITM, say getting trapped in a "CL call war disaster scenario" then the delta must be 1, but looking at my Quikstrike trial (started yesterday), I see that November CL options ATM have deltas of around 0.5, ie. in such a worst case scenario, 1 long future covers 2 short options & far less long futures are needed as you describe in your more realistic scenario.
It's a long time since I last sold a futures option & clearly my understanding is seriously deficient, so reaching for the dreaded McMillan now....
Do you still use some tools from OX? I just opened one small acct $8k with them yesterday (I only used Scottrade for short time and IB for a few years before) to restart the option selling, since I once got margin call from IB before, I will use the small acct to test the strategy I learn from here so far, hope I can gain back some confidence.
I heard DeCarley is good, I plan to move my IRA with them later if I do good in my OX acct. I think OX may have more tools that is good for options, not sure though.
(I will close my acct at IB, they charge $10 monthly if you generate commission less than $10 a month, if your balance<2000, they will charge additional $10 a month for maintenance fee. I called OX, they won't charge all of this, so, I prefer to have an acct with them if they have some good tools.The margin is much better compared with IB even still not the best:-).