First Post, help! Trading Options on Emini S&P ????

[Caltradingcompany]

Hi fellow traders!

I am a newbie on your site but I have been trading stocks and options off and on since 2007. Well recently I have been introduced to trading futures. Emini S & P futures. I borrowed a friends account and traded a couple of days and fell in love. I am turned on by the fact that you can concentrate on one product and it trades 24 hours a day with liquidity. I have a goal to become a professional trader so until I'm at that point I will call my self a novice trader. (You have to remain humble in this sport)

Well currently I have the time to be a day trader but not the resources. I want start a new margin account with 2k. (I currently have Etrade, TradeKing, Optionshouse none of which are good for futures) My friends platform was TD Ameritrade so I probably will go there, although I have considered GenericTrade. When I first thought about trading futures, I saw my friend make a lot of money off Silver minis and knowing I didn't have that kind of capital I thought I would just trade corn minis because of there initial low margin of $500. Just looking at the charts of Corn, it doesn't look liquid enough for a beginning trader.At the end of the day I would like to trade the ES and the margin is about $3800. I've seen the day trading margin ranging from $3500, $925 and $500. I hope to never have my account draw down that low. And either way you need about 4K to get in. My daytrading style is more of a scalping technique taking very small profits. Only quarter and half points sometimes. Although I am working on a new strategy to avoid over trading.

So I would like someone to give me some advice on trading options on the ES. I could buy 1 contract around 1K and trade like that. I see that the spread on the options is about (1/2 point or $25) which will make profit a little harder to come by on a low budget. I would like to avg $50-$100 profit a day until my account is over 15k. :clover:

I would like to know how liquid the options are? Is there enough movement to daytrade? I'm guessing not and assuming I could only trade the options during market hours. I have the impression that decay and premium are a lot more trader friendly than a stock option. When you share your advice with me you can assume I will be an active trader. I have no problem sitting in front of a screen for hours. I want to use this money to supplement my income, I have a part time job which will pay rent and keep the lights on for now so I wont have the account drain when I start. Decided to part ways with GF so I will have extra energy and focus to be a trading machine!

Any advice would be much appreciated....
Thanks
Sean

 

[wino59]

Hi fellow traders!

I am a newbie on your site but I have been trading stocks and options off and on since 2007.
Sean

I priced options on the E-mini and for at the money option you are correct about $750, but that has a delta of 50 so why would you trade that when you can get 1 to 1 move verse a $.50 move? Also what if volatility increases or decreases then what happens to the price of the option? The last two days the vix has been all over the place.

Options are not good instrument for day trading. I have traded options for the last 2 years, and never used them for day trading. Even when a big move has happened, premiums get inflated, so it requires an even bigger move to make up for the spread.

Save your money, paper trade on the TOS platform, then when you have enough to put up for margin then have at it.

I don't think you have a clear understanding of option pricing, which is purely three dimensional.

All and by the way if you want a delta of 1:00 then it will cost about $3750 in margin.