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Selling Options on Futures?


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  #4031 (permalink)
 
croctrader's Avatar
 croctrader 
Perth, Australia
 
Experience: Intermediate
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tbs8877 View Post
Thanks for your quick reply

1. May I confirm that the round turn commission (including clearing NFA) for 1 ES contract is 3.95+0.56=4.51 ?
So commission to BTC the option is cheaper than to STO the option contract?

At TOS which I use, the commission is the same to open the option and to close the option. (No commission if you let the option expire)

At DeCarley Trading which I am not using, I believe the round turn commission is taken upfront. (I think about 8.30 including exchange and other fees)

Sounds like same as De Carley. Detail is as follows: STO=Clearing+NFA+CommUpfront=0. 55+0.01+3.38=3.94, BTC=Clearing+NFA=0.55+0.01=0.56,Total RT=4.50.

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  #4032 (permalink)
 tbs8877 
Singapore
 
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croctrader View Post
Sounds like same as De Carley. Detail is as follows: STO=Clearing+NFA+CommUpfront=0. 55+0.01+3.38=3.94, BTC=Clearing+NFA=0.55+0.01=0.56,Total RT=4.50.

SO Decarley RT Cost is about double Stage5trading RT cost. I guess she adds more value?

But for my style which is selling far OTM ES for small premium, stage5trading cost makes more sense to me.

I wonder whether stage5trading margin is the same as Decarley (which uses minimum span margin) or say OEC as they all use GAIN. I am not sure how GAIN is related to all of them. Anyone has any thoughts?

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  #4033 (permalink)
 datahogg 
Knoxville Tennessee USA
 
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Trading: ES, NQ, CL, /6E futures options.
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datahogg View Post
This morning your position on the TOS platform gave a margin requirement of $860 per one 25/80 May strangle.
Ratio of Margin/(Credit) = approximately 4. I don't see a problem with your position. It is quite possible to see
large UNREALIZED losses for a position. But always monitor your risk (aka the greeks).
The losses are UNREALIZED. Remember it is not over until the fat lady sings.



No more comments from me. I'm out.

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  #4034 (permalink)
psears
Richmond, VA/USA
 
Posts: 35 since Nov 2012
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Hello,

Can anyone familiar with nat gas trading answer this question for me: Last years' EIA storage figures for this time last year were around 1362 Bcf, which is 40% less than the 5 year average of 1968 Bcf (which is right about what we are at this year now). Since the seasonal tendency is for nat gas to begin rising around February into the Spring injection/storage season, why was last years' rise so muted?
You would think that with the storage supplies of Feb 2014 being so far under the average, that the price would have rallied more sharply off the Feb 2014 lows, right?
Even more curious is that in 2012, the EIA storage figures for February 2012 were around 2600 Bcf, a 5 year high. That year, Nat gas did rally sharply over a dollar heading into injection season. The exact opposite of what I would think would happen.

The reason I'm asking is that I'm thinking about selling May 2015 nat gas puts now, and what to get a feel for what type of move up I can expect this year going into injection season, being that current storage supplies are right at the 5 year average.

Thoughts?

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  #4035 (permalink)
 myrrdin 
Linz Austria
 
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psears View Post
Hello,

Can anyone familiar with nat gas trading answer this question for me: Last years' EIA storage figures for this time last year were around 1362 Bcf, which is 40% less than the 5 year average of 1968 Bcf (which is right about what we are at this year now). Since the seasonal tendency is for nat gas to begin rising around February into the Spring injection/storage season, why was last years' rise so muted?
You would think that with the storage supplies of Feb 2014 being so far under the average, that the price would have rallied more sharply off the Feb 2014 lows, right?
Even more curious is that in 2012, the EIA storage figures for February 2012 were around 2600 Bcf, a 5 year high. That year, Nat gas did rally sharply over a dollar heading into injection season. The exact opposite of what I would think would happen.

The reason I'm asking is that I'm thinking about selling May 2015 nat gas puts now, and what to get a feel for what type of move up I can expect this year going into injection season, being that current storage supplies are right at the 5 year average.

Thoughts?

In winter, storage figures for NG strongly depend on temperatures in the US. In 2014 there was a severe cold snap in February, thus storage figures declined. You find details on the option premiums during this period in this thread.

I intend to sell 2.0 NG puts for the June or July contract. I will wait for lower prices (eg. after a warmer weather forecast), and sell within the next 3 ot 4 weeks.

Best regards, Myrrdin

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  #4036 (permalink)
psears
Richmond, VA/USA
 
Posts: 35 since Nov 2012
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Thanks Myrrdin for the reply. I'm still wondering though how the current storage supplies end up affecting the upcoming injection season. Or do they? If the current storage supplies don't affect the ability of the commercial buyers to stockpile for the summer cooling season, then how do they compensate? With increased production?
Just how do you forecast how aggressively the commercials will be buying for summer (and therefore, driving the price heading into it)?

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  #4037 (permalink)
 ron99 
Cleveland, OH
 
Experience: Advanced
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Broker: QST, DeCarley Trading, Gain
Trading: Options on Futures
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psears View Post
Hello,

Can anyone familiar with nat gas trading answer this question for me: Last years' EIA storage figures for this time last year were around 1362 Bcf, which is 40% less than the 5 year average of 1968 Bcf (which is right about what we are at this year now). Since the seasonal tendency is for nat gas to begin rising around February into the Spring injection/storage season, why was last years' rise so muted?
You would think that with the storage supplies of Feb 2014 being so far under the average, that the price would have rallied more sharply off the Feb 2014 lows, right?
Even more curious is that in 2012, the EIA storage figures for February 2012 were around 2600 Bcf, a 5 year high. That year, Nat gas did rally sharply over a dollar heading into injection season. The exact opposite of what I would think would happen.

The reason I'm asking is that I'm thinking about selling May 2015 nat gas puts now, and what to get a feel for what type of move up I can expect this year going into injection season, being that current storage supplies are right at the 5 year average.

Thoughts?

The May 2012 NG contract dropped almost a dollar from Feb to expiration. I don't see the dollar rise. 2013 went up a dollar.

Increased production is the answer to your 2014 question. Mar 2014 production was up 5% YoY.

Also the seasonal tendency from 10-30 years ago does not work now. The tendency for NG for the years 2007-2014 (excluding abnormal 2008) is flat for Feb to expiration for the May contract.




I quit looking at seasonal data for more than 5 years out for most commodities.

With NG production extremely strong now, NG prices will probably drop more when the weather warms up. I bought Apr NG 2.75 puts last Wed for 0.078.

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  #4038 (permalink)
 
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 SMCJB 
Houston TX
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Re: NG Storage

ICE End of Withdrawal Season Storage Future is currently 1455/1500.
While this is above the 1420 low put in last week (before our much smaller than expected draw) this is still considerably below 1740s that traded almost exactly a month ago. The strong recent cold in the MW & NE have potentially averted what could have been a very large (& interesting) storage surplus.


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  #4039 (permalink)
psears
Richmond, VA/USA
 
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Ron,
I checked out the 2012 NG chart courtesy of my free trial of MRCI and you are correct - the price did drop a dollar going into May '12. I swear the first (not MRCI) chart I looked at didn't do that
:-)
I'm getting conflicting views; perhaps you can straighten them out for me. I just read a new article by James Cordier (finished his book, BTW - pretty good) and he discusses selling June 2.00 NG puts now since he believes that historically, NG has tended to rise from Feb into May due to cooling/injection season buying by the commercials.
However, you said you just put on the exact opposite trade ( buying ATM puts), so you must think the price will be heading TOWARDS $2.00 instead of away. You both can't be right. According to the last five years of charts I just printed out, they tend to favor your hypothesis (although, based on last years' wacky chart, I'm not sure I want to trade Nat gas at all now!)

What's the deal?

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  #4040 (permalink)
 ron99 
Cleveland, OH
 
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psears View Post
Ron,
I checked out the 2012 NG chart courtesy of my free trial of MRCI and you are correct - the price did drop a dollar going into May '12. I swear the first (not MRCI) chart I looked at didn't do that
:-)
I'm getting conflicting views; perhaps you can straighten them out for me. I just read a new article by James Cordier (finished his book, BTW - pretty good) and he discusses selling June 2.00 NG puts now since he believes that historically, NG has tended to rise from Feb into May due to cooling/injection season buying by the commercials.
However, you said you just put on the exact opposite trade ( buying ATM puts), so you must think the price will be heading TOWARDS $2.00 instead of away. You both can't be right. According to the last five years of charts I just printed out, they tend to favor your hypothesis (although, based on last years' wacky chart, I'm not sure I want to trade Nat gas at all now!)

What's the deal?

Cordier is looking at 15 and 30 year charts. He hasn't learned that things have changed. He should be looking at the MRCI 5 year chart.

IMO he writes a good book but he isn't a very good trader. My last year having an account with him, 2011, I lost 28%.

Re: last year in NG. These things happen. You need to learn from what happened and be ready next time something similar happens. Learn the lesson it taught you. But don't quit trading it.

One thing I have learned over the years is, don't do this year what you should have done last year (unless it is a strong seasonal).

For example, you should have been long NG last year. So you get long this year. And even though weather was cold this Feb, that didn't work out because NG production is so strong. US Heating Degree Days for Dec & Jan were less than normal. Nov above normal.

Last year HDD for Dec, Jan, Feb & Mar were all above normal. And especially above normal in areas that use more NG.

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Last Updated on July 28, 2023


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