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I am currently holding the following positions in the short option portfolio:
LCJ C124
LCJ P106
LCQ P90
I am looking for the following options to sell:
LHM calls: The seasonals show downwards after the end of February, COT data is slightly bearish and fundamentals suggest a cash price at expiry of $76 (instead of a current future price of just below 80).
CTN C90: Depending on how many years you look back seasonals show downwards after end of March / end of April. COT data is extremely bearish.
Hi Myrrdin, thanks for keep posting your trading journal.
I see that most options on softs like CT are having very thin op interest/ volume along with very wide bid ask spread. Not to mention very low IV right now across the commodities board. Don't you think it is a disadvantage to sell options on them at this moment?
You are correct, fills are not as good as for corn or beans, and IV is rather low. But I do not like buying options due to the permanent loss of time value, and cotton is very difficult for me to trade via outright futures. Thus, I stay with short options and smaller profits.
As an option seller, you have to take what you get. But it is still possible to make nice profits.
It is important to note that selling cotton calls is a directional trade, whereas Ron's ES System works even if you have no idea about the future price of the S&P index.
I understand what you meant. Lately IV hasn't been too friendly to us options sellers. We can only get what's in front of us, just a few opportunities here and there. LH, ZS may not be that bad right now, also some currencies futures like 6B, 6C but they are too risky for my taste.