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To help bring this thread back on the rails let me ask a rather simple question which will certainly apply to ES but may apply to other commodities. Is there any particular time of year or interval where you don't want to hold short puts? For example, next year is a major election or during the end of the calendar year or right before tax season.
I did some research on ES on Fed announcement day. 2013-2015. 19 events.
This chart compares ES settlement on announcement day with prior day's ES settlement.
Most recent on left.
The average of all of these 19 times is +0.42. Range -38.50 …
ES dipped in May for 3 years in a row. 2010-2012. But the last 3 no dip.
The only consistent one is don't sell puts on morning of the day of futures expiration. For example, next Friday 6/19. Three-fourths of the time the price at 8:30 am ET will be higher than the settlement at 4 pm. But that one didn't work the last two expirations.
I would say for this year be especially careful around September/October. Market is historically weak around that time, plus the Fed may hike interest rate for 1st time at the September meeting. Market almost always corrects when first rate increase comes. I would reserve more than 2/3 in cash and put on some hedges (short futures or buy a small number of ES put options closer to the money). The hedges may or may not be effective, but wth as long as I can sleep well at night.
I agree with Ron for ES puts. For other commodities there are situations when I do not want to be short options.
Example Grains: There are monthly reports from the USDA / WASDE on Supply and Demand. Some of these reports are well known for bringing out very large moves (limit moves). Beginners should not be short options on these days.
The monthly WAOB/WASDE report is usually about the 10th of the month. With boring markets and heavy supplies, it hasn't hurt to hold short options through these reports recently, but...
I wouldn't recommend doing that during the Quarterly Stocks Report, the Planting Intentions Reports, or the mid-summer through harvest monthly WASDE reports.
Limit moves are rare, but accompanied by a big jump in volatility, they can be very painful.
Hello just found this forum. Very interested in selling options in futures.
Still reading the thread and Cordier's book.
If one of you full timers can outline your typical day trading I would appreciate it.
Just trying to get started in this business. THANKS