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One other point. When you sell a -3.00 delta ES put it is about 20% OTM. If there is a slow decline of ES futures of 20%, your short ES put could be going ITM while your longs are still OTM but close enough to expiration that they aren't gaining in value to offset the losses of the short puts.
Lots of useful information in this thread, have read through much of it but sorry if I missed what I'm about to ask already being covered. Any thoughts around different rolling strategies to use as things move against you, or is the focus here to size on entry to hold until profit target, or time stop, or make adjustments driven by margin requirements?
I mostly trade strangles on /ES, so do some delta balancing and may switch units between puts and calls to retain net extrinsic (roll for credit), or roll for duration on a one-sided basis. Sometimes ratio roll if originally sized small enough to increase size on the roll and stay within projected margin expansion.
Lately though been considering at what point it makes sense to close losers early and then when to re-establish. Wanted to backtest how often price exceeds 50%, 100%, 150%, etc. of original premium collected, and ends up coming back to profitable within the original cycle versus when it would have made more sense to use those thresholds as triggers for rolling far out, or reducing size, perhaps even closing for a loss. I typically sell on duration of 45-90 days to open, and only go longer duration if rolling as an adjustment.
Iīve been a long time learner on financial education.
First I discovered stock option selling and then I bought "The Complete Guide to Option Selling" (James Cordier) thinking it was stock option selling and to my surprise I discovered futures option selling (amazing concept!).
Iīve been selling stock options for about 2 years now and I want to explore the futures option selling following James Cordierīs method focused on a strong risk management approach (and not get greedy, of course).
Questions I have now in my mind:
1) What discount broker do you use? I live in Spain and want a discount broker specialized in commodities that does not auto-liquidate positions with an algorithm (as I read recently Interactive Brokers do).
2) Anyone from Spain selling futures options the James Cordierīs way to connect with?
I am from Austria, and I work for some years with Carley Garner. Her service is the best I ever received. My money is held at a European bank, which makes transfers cheaper and faster.
I trade in a similar way as James Cordier, and write about it in the thread "Diversified Option Selling Portfolio".
In my opinion it is in principle possible with this amount. You will be able to hold several positions, but of course the number of lots will be limited.
The main question is, if the profit in absolute figures will be high enough to enable you to pay for expenses and to allow for a salary acceptable for you.