tradertool 

So please don't try to bring in you can make a million-dollar trading future's with as low as $1,000 attitude.

I said, to quote myself, that using too much leverage was "Not sensible" and to "use caution."

tradertool 

If you don't understand the strategy I mentioned above, please don't reply. I am a very serious trader and do not want to waste my time listening to some BS about how great day trading future is. ... Amazing, how people can't understand a basic question on strategy testing.

tradertool 

I am also, trying to figure out selling options (ATM straddle) 5 weekly options on SPY. Cover with 500 shares of SPY long and 1 contract of ES for short. That way I am perfectly covered for loss and pick up premiums on a weekly basis. Is this possible?

Are you trying to delta hedge your short straddle with both SPY and ES? I don't think you realize that you've taken a delta neutral position (assuming a -50 delta short call and a +50 delta short put), added delta with the long SPY (+1), and removed an identical amount of delta with the short ES (-1). In other words, you've accomplished nothing. You've added 1 to 0, and subtracted 1 from it. You are still left with 0. You are delta neutral.

As a scenario, imagine you've sold a weekly 417 straddle for $2 per call/put. A tail event occurs and SPY drops to 400 tomorrow. Well, you're going to have a very high position delta and well underwater, past your breakeven of 413. To reiterate, your hedge-that's-not-a-hedge will still be in place, with a profit on your ES (still a -1 delta) and an offsetting loss on your SPY (still a +1 delta). Reverse this for a move higher of course. In that case you'll be negative delta with a bit fat loss on your short calls, and your not-a-hedge still does nothing, with your SPY in profit and your ES with an offsetting loss.

Note that while you are delta neutral, you are short gamma. So, if you want to try to gamma hedge, you may consider buying a strangle, making this an iron butterfly. This should bring your gamma closer to zero and will protect against large moves. You can also delta hedge on the fly by buying the equivalent deltas as SPX goes up, and shorting as it goes down. For example, if SPY has increased and your delta is -20, you'll buy 20 SPY to bring yourself back to delta neutral. There are other ways to handle this (inversions, rolling, ...), none of which I'm an expert at, but I'm sure you are well aware of these, as a ... "very serious trader."

Another consideration here is that you're short vol. Even if SPX manages to stay within your profit zone, if implied vol spikes, you could have issues.

Another clue that your "strategy" (which isn't a strategy at all really) is doomed to fail (besides the fact that it just doesn't make sense) is that there's no such thing as a risk-free trade. You implied otherwise when you said that you would "pick up premiums" and be "perfectly covered." If you're perfectly covered, there is no premium to pick up. You can't buy insurance for less than what someone else will sell you the same insurance for. That's not how the game works. That's the nature of risk, and in your case, there's definitely tail risk, since your solution does nothing.

tradertool 

Do not psych yourself with a little knowledge on how day trading future contract is the best thing in the world. PLEASE. You are very welcome to comment on strategy but nothing else like how your shoes feel good, girlfriend is pretty, and future is GREAT.

Oof, touchy.

This is not a Delta-Neutral strategy. Like you said delta-neutral requires constant balancing. I normally wait until +20 or -20 to add or subtract delta. The problem with delta neutral is that you always end up chasing the move. With the current up one day and down next type of undecided market, you may end up losing a lot of money trying to balance the delta. If I want to do a delta neutral, I don't need to buy any protection at the beginning. I will just protect by controlling delta as time goes.

If you buy options to maintain delta neutral, your profit gets very narrow. If you sell more to manage delta, your risk is getting bigger and bigger.

My strategy is more like Theta scalping. I want to set up the safest way to make theta from the start. Scalp theta for 2-7 days. Let the option expire or roll every week. Rinse and repeat.

josh 

I said, to quote myself, that using too much leverage was "Not sensible" and to "use caution." Are you trying to delta hedge your short straddle with both SPY and ES? I don't think you realize that you've taken a delta neutral position (assuming a -50 delta short call and a +50 delta short put), added delta with the long SPY (+1), and removed an identical amount of delta with the short ES (-1). In other words, you've accomplished nothing. You've added 1 to 0, and subtracted 1 from it. You are still left with 0. You are delta neutral. As a scenario, imagine you've sold a weekly 417 straddle for $2 per call/put. A tail event occurs and SPY drops to 400 tomorrow. Well, you're going to have a very high position delta and well underwater, past your breakeven of 413. To reiterate, your hedge-that's-not-a-hedge will still be in place, with a profit on your ES (still a -1 delta) and an offsetting loss on your SPY (still a +1 delta). Reverse this for a move higher of course. In that case you'll be negative delta with a bit fat loss on your short calls, and your not-a-hedge still does nothing, with your SPY in profit and your ES with an offsetting loss. Note that while you are delta neutral, you are short gamma. So, if you want to try to gamma hedge, you may consider buying a strangle, making this an iron butterfly. This should bring your gamma closer to zero and will protect against large moves. You can also delta hedge on the fly by buying the equivalent deltas as SPX goes up, and shorting as it goes down. For example, if SPY has increased and your delta is -20, you'll buy 20 SPY to bring yourself back to delta neutral. There are other ways to handle this (inversions, rolling, ...), none of which I'm an expert at, but I'm sure you are well aware of these, as a ... "very serious trader." Another consideration here is that you're short vol. Even if SPX manages to stay within your profit zone, if implied vol spikes, you could have issues. Another clue that your "strategy" (which isn't a strategy at all really) is doomed to fail (besides the fact that it just doesn't make sense) is that there's no such thing as a risk-free trade. You implied otherwise when you said that you would "pick up premiums" and be "perfectly covered." If you're perfectly covered, there is no premium to pick up. You can't buy insurance for less than what someone else will sell you the same insurance for. That's not how the game works. That's the nature of risk, and in your case, there's definitely tail risk, since your solution does nothing. Oof, touchy.

By the way, Thank you Josh for a good explanation of your ideas.

I was rude earlier. I just hate people trying to write off a decent topic into something like Future trading is great vs. stock. Don't buy any course, just Google. There is no holy grail. So on and on and on. Of course, Googling can find the most answers but how time-consuming can that be? It is just like saying go around the world and meet everyone, you may find the answer. To me, I rather pay money to learn decent education.

Holy grail? Who said I am looking for a holy grail? I just want to improve 1% by implementing a software or trading system. I have been trading since 1998. 23 years. I tried many things. I am glad I purchased some courses and software. I feel extremely sorry for those who stuck in Googling looking for an edge. This is why I like here so experienced people can help each other. However, many of these poor souls get very defensive about the three things I mentioned above.

Futures vs. Stocks benefits are very twisted. As I said, If you have more than 100K (Most brokers (130-150K), you can have a portfolio margin. The portfolio margin is 6:1 leverage but the margin works very differently. Companies that understand options like Tsastyworks and TDAmeritrade, the margin works like a span margin when you trade options in hedge position. It is 6:1 when you buy stocks straight.

Also if you register your account as a company, your account becomes a professional account where you get the same if not better tax treatment for trading stocks vs. Futures. Literally, all the benefits you mentioned as the benefits of trading futures all go against future like lower commission. Stock market there is no such thing as commission anymore including options for some brokers.

Last but not least, millionaires and billionaires don't trade futures that much. Like Buffett said, if you want to become rich you should hang around rich and act like rich.

Don't try to promote trading futures. Don't tell people and encourage open $1000 futures account and you can start trade 50x leverage. What are the odds of these people making money. I rather tell them to buy BA and hold 5 years. It will make 10x. Place money in SPY every month and make a 15% compound return every year. No matter how small, people have a choice to make it rich if they persist.

free commissions in spy or any of the 2x and 3 x etf for stock indexes is the palce to cut your teeth on day trading and tade live with 5 or 10 shares. you can practice scaling etc. FUTURES are not any cheaper especially when you consider the extremely high price paid for MICRO FUTURES CONTRACTS! insane actually and the brokers who are greedy and the execution platforms who are greedy and most of all the CME and ICE who are all GREEDY!

TECHNOLOGY Advacnements actually causes DEFLATION but in trading the greedy mFers have decided to raise prices every february and brokers as i know you are aware of this
BROKERS get legal kick back from the CLEARING FEES you see on your statements from your FCMs especially if they hit certain volume thresholds.

the biggest benefit in futures is being able to short and get around the pdf rule in stock trading which is actually one of the most ridiculous rules laws ever put on the books

FREE STOCK trading should have pushed futures trading into at least cheaper rates but nope.. when the CME has a monopoly nd is 100% for profit why would they reduce anything.

If tradign trhe micros and if you have more than 30K to put into an account then you are much better off trading the 2 or 3x etfs for indexes because it will end up being much cheaper in stocks and
you wont be thinking about fees at all and if you add in slippage well that is also enormous in the micros usually 2 ticks and difficult to get filled at certain levels when you need it of course. ]

The futures industry fees etc are ridiculous because from a transaction stand point or raw data points and messaging it is a fraction of the stock and stock options markes.

3 million trades of volume in the ES in a day.. try 1 penny stock can do 100 x that in day then mulitply that by 3000 products then add in options etc.
the cme total volumes PALE and are miniscule compared to the stock markets on a per trade basis.

it is almost understandable that stocks bog down at times i mean there are fractions being traded on top of 1 share order coming in from cell phones and computers and servers all over teh world
at the same time to teh tuen of BILLIONS of messages a day in stocks and yet they still allow you to TRADE for FREE!!

The cme messaging is maybe what 100 million mesages on a busy day.. it is ridiculous that the cme blames fee increases on technology and volumes when 3 stocks do more total transaction volume than all of the
CME!!

anyway if you ahve the funds to trade spy or 3x etfs instead of micros i would do it. once you get to the mini es level you can save money trading futures yes i know about teh tax advantages.. of futures

there is also more GRANULARITY in SPY since it trades in 1 cent or penny increments instead of 1/4th ticks of a full point like in the ES.

this will give your analytics more data to chew on and your averages will have more data points and will be much cleaner!!!

there are a ton of positives from a money saving standpoint when trading small for spy and 3x etfs along with your charts will have more detail!! due to the 1 cent ticks versus 4 ticks to a point in the es.