Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
You do realize that if CT drops the same amount it did on 1/25 that your option will be ITM.
Be careful with those. I don't know if $40 minus fees is worth the risk to do those.
I once held onto short NG 5.250 call options to expiration. It settled at 5.251. All of those calls turned into futures because of 0.002. The futures immediately went higher and I lost thousands.
Warning well taken...I understand they need to be looked at with caution. Lots of risk there, just put on a small position & really keep an eye on them.
And if futures don't take a dive then your margin will drop and your premium drops and thus your balance increases you will be able to take some of the initial margin and excess and reinvest it in other options. So if things go OK your actual ROI is higher than the numbers I quote.
The 5.6% ROI assumes that you keep the same margin and excess until the contract expires. Which normally you don't. But I don't know of a way to accurately calculate the ROI with decreasing margin and excess plus increasing profit until expiration.
Anybody got an idea on that?
So when we post a monthly ROI% of only 2-5%, which seems small, the actual profit% in your account is higher.
One other point. Keeping an option to expiration is worth the trouble. You may not think that it is worth it for the last $10. But in most cases it is. The margin probably has dropped a lot so it isn't tying up a lot of your money.
For example, I have on Mar CL 70 puts. They are down to 0.01 or $10. But the margin is only 65 at OX. Because it is only 8 days from expiring and far OTM, I only use 1X excess or 65. So the ROI for that option that is already in my account and I won't be paying fees on anymore is 7.7% actual for 8 days. $10 divided by 130.
And the margin will drop more if futures don't crash. The 65 put margin is only $36.
Where else can you get more than 7.7% ROI in only 8 days?
I'm seeing the movement with margin requirement with my March 900 W calls. Available margin has gone up considerably in the past few days. No need to buy them back.