Writing futures options uncovered...

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Old Aug 14, 2012, 2:15am   #1
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Writing futures options uncovered...

Any uncovered futures options writers in the house?
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Old Aug 14, 2012, 4:02am   #2
 
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Re: Writing futures options uncovered...

yes
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Old Aug 14, 2012, 11:36am   #3
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Re: Writing futures options uncovered...

optsonly started this thread I've looked for a dedicated thread here but have yet to find one. I've been in the markets for about 15 years and would like to simply throw some ideas back and forth with a few folks....
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Old Aug 14, 2012, 1:37pm   #4
 
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Re: Writing futures options uncovered...

my focus is trading ES Futures.

But i originally used to trade Options exclusively.

Now I trade Options as an adjunct to my main trading.

the way I use them is by on Daily signals of Ichimoku Kinko Hyo

I use ichomokutrader dot com for screening stocks that trigger a signal

Whenever there is a Strong Bull signal, I will look to Write a Naked Put on it,
although sometimes I'll Buy a Call instead

Conversely, if there's a Strong Bear signal, I will usually look to Buy a Put
although I will sometimes Write a Naked Call instead.

I don't take every trade that comes along, and I usually stick to my stable of personal top 20 or so stocks that I'm familiar with for years such as HPQ, DAl, PETM, CAT, SLB etc
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Old Aug 14, 2012, 10:16pm   #5
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Re: Writing futures options uncovered...

optsonly started this thread This is my third year writing uncovered options and have been doing well. I started my trading endeavor a long time ago and learned the hard way trading futures. Got a better handle on things with FOREX but that took many hours out of my regular schedule which left me very little time to enjoy life. I loved that market but the time involved was too great. Writing options on futures give me that time back. I don't make as many trades per year but my returns have been good.

I'm currently short the 55 Dec Crude puts which should get bought back any day now. Watching Wheat, Coffee, and Sugar to sell options there as well....
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Old Aug 16, 2012, 8:09am   #6
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Re: Writing futures options uncovered...

Hi optsonly,

In my thread (Follow the Smart Money / COT Analysis) during one of my recent posts, I have mentioned that Wheat is an interesting market these days, since the stress level that can be measured by the Commitments of Traders report, is extremely high.

For this reason I am excited to see that you are going to be watching this market and possibly selling options on it.

As I have stated in the other thread, I believe that option writing combined with COT analysis may be a good combo.

What kind of options would you be considering selling in Wheat? (strike? month? and I guess we are talking about Puts here )I have checked the liquidity in DEC2012 Puts at CME, but found that it is too low in OTM options and thus it would be pretty difficult to sell there.

Please don’t misunderstand me, I would not want you to reveal your exact choice of options, rather I’m interested in the parameters that you are using to define the “best choice”. As I have mentioned in my thread, although I find this strategy very interesting and I believe that it could profitable too, I don’t see how it can work in practice, due to the liquidity issue.

All the best,
Dunstan
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Old Aug 17, 2012, 12:06am   #7
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Re: Writing futures options uncovered...

optsonly started this thread I look to make around $300 per individual option or option pair and $400 per each short strangle = selling a put and a call.

I'm currently watching December corn, wheat, and coffee.

From a seasonal point of view, wheat and corn usually put the highs in for the market around this time of year. Wheat had a big day today and corn was looking for something to do. When the price of grains reaches such a high price there comes a point when people will say, "that's too expensive for me so I just will not buy". Cattle farmers are doing this right now and bringing cows to slaughter so they will not need as much grain. Lack of buying will produce a surplus in the markets that will eventually push prices down I agree that the COT in wheat looks interesting but all the drought news has been focused on corn with very little talk of wheat. However, grains tend to follow each other so if corn falls wheat will most likely do the same.

Dec Wheat closed around 882 and the Dec 1100 calls are going for about $560 each with 99 days to expiration. Those look very good to me.

Dec Corn is around 800 and the Dec 1050 calls are about $250. Eyeing those.

Dec Coffee is still weak and approaching the 150 level which 'looks' like good support. The weather in Brazil has been very good for harvesting this time of yeat and Viet Nam had a very good crop for export. I'm looking to eventually sell puts at some point in this market when prices appear to settle but I do see more of a downside here.

My Dec 55 crude oil puts that I sold for $350 were bought back for $50 this week and I would like to reenter that market but will wait for prices to pull back some for the put premiums to increase.

Margin for selling options: "Usually" the margin required to write options is about 2X the premium collected. Contact your broker for specifics. Also, some brokers might not allow new traders to write options if they are new to trading. Brokers have to cover themselves as well against potential unlimited risk. I would too
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