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Updated March 20, 2015
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December 11th, 2014, 12:35 PM
Cleveland, OH
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785
mdsvtr
I was reading through the newer revised " Selling Options on Futures " thread , and wanted to please ask you to explain the following sentence...
" Be careful about selling low
premium calls because one bad week could wipe out a couple of years profit doing them "
I am new to the whole premise of selling
OTM credits on the futures, and want to make sure that I avoid wiping out a chunk of my account by selling low premium Calls
I just purchased the Book " Selling Options on Futures "3rd edition
so hope to finish it by Christmas
Thanks so much Ron for your time and your help,
I always appreciate it - Michael
I said that because selling something as volatile as CL, for only 0.03, a bad trade could wipe out the little profit quickly. In some other commodities selling those might be OK if they aren't as volatile.
Can you help answer these questions from other members on NexusFi?
Best Threads (Most Thanked) in the last 7 days on NexusFi
December 11th, 2014, 12:42 PM
Cleveland, OH
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785
mdsvtr
from the CL example you just mentioned above....
" I have been selling at 90-120
DTE and then getting out when the
premium has dropped by at least 50% "
Does this mean that you will exit the trade and Buy-Back the position, when/if at any point during the trade, you can buy to close out the trade and still keep 50% as profit, of the initial credit received when you first put on the trade ?
Thanks as always Ron, I and others on here really appreciate you sharing and starting the thread - Michael
Yes buy back position after premium drops at least 50%. If fundamentals and futures trend are in my favor I will hold longer to capture more premium. Also the ROI has to be better than if I ride to expiration.
Late last week I had some ES puts I should have bought back but didn't. So when ES dropped this week I have to keep until futures rebound because IM increased and premium wasn't < 50% anymore and ROI was poor.
Now that ES is rebounding I don't have margin room to sell new options because I kept those I had on.
December 11th, 2014, 02:30 PM
Memphis,TN
Posts: 232 since Sep 2010
Ron for the quick response(s)
I very much appreciate it
December 29th, 2014, 11:54 AM
Salt Lake City, USA
Posts: 88 since Jul 2011
Thanks Given: 34
Thanks Received: 62
Morning Ron,
Thinking with 50 DTE ; selling /CL 85 call options; premium is roughly .9 per contract ; thinking of selling now then covering when i get to 50% - 75 % of premium
your thoughts ?
thanks
V
December 29th, 2014, 12:00 PM
Cleveland, OH
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785
vmaiya73
Morning Ron,
Thinking with 50
DTE ; selling /CL 85 call options;
premium is roughly .9 per
contract ; thinking of selling now then
covering when i get to 50% - 75 % of premium
your thoughts ?
thanks
V
Sounds good.
Selling and holding during holidays is good because you get an extra day of time erosion with no trading. (Jan 1st)
December 30th, 2014, 01:16 PM
Salt Lake City, USA
Posts: 88 since Jul 2011
Thanks Given: 34
Thanks Received: 62
Morning Ron,
I was just wondering what other commodities you were in currently ? My goal is to have about 5 that I can monitor, and consistently sell options on.
Currently in ES (weeklies), /CL, and Euro futures.
also do you find the commission structure at DeCarly trading better than Optionsxpress?
thanks
Vijay
December 30th, 2014, 02:39 PM
Cleveland, OH
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785
vmaiya73
Morning Ron,
I was just wondering what other commodities you were in currently ? My goal is to have about 5 that I can monitor, and consistently sell options on.
Currently in ES (weeklies), /CL, and Euro futures.
also do you find the commission structure at DeCarly trading better than Optionsxpress?
thanks
Vijay
Mainly March ES monthlies. KC calls. Some dairy futures. Nothing else.
Depends on what your commissions are at DeCarley. But DeCarley will get you exchange minimum margin. OX is sometimes higher.
January 6th, 2015, 09:21 AM
Cleveland, OH
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785
Schork sent out a free energy newsletter. It is interesting reading.
https://www.schorkreport.com/newsletters/schork-TSR-20150105.pdf
January 6th, 2015, 09:55 AM
Salt Lake City, USA
Posts: 88 since Jul 2011
Thanks Given: 34
Thanks Received: 62
Ron im looking at the following trades and just wondering your opinion:
/KC March 265 call options
and
Euro March 1.27 Calls
thanks
Vijay
January 6th, 2015, 04:47 PM
Cleveland, OH
Experience: Advanced
Platform: QST
Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
Posts: 3,081 since Jul 2011
Thanks Given: 980
Thanks Received: 5,785
vmaiya73
Ron im looking at the following trades and just wondering your opinion:
/KC March 265 call options
and
Euro March 1.27 Calls
thanks
Vijay
I have never traded the Euro.
The March KC calls? Maybe OK?
Last Updated on March 20, 2015