any option sellers

As for sports teams, I have been a Yankee fan since 1976. I have been a NY Giants fan since 1978 and I fell in love with the NY Rangers in 1981 after going to my first ever hockey game at MSG. Needless to say I am thrilled that the Rangers will be playing the Devils in the Eastern Conference Finals starting tomorrow night. It brings back sweet memories of the Rangers 1994 run to the Stanley Cup.

I don't "hate" the other NY teams. I hope they do well and I would root for the Jets or Mets if they make the playoffs but when the Jets play the Giants or when the Yanks play the Mets, it is clear which team I am rooting for!

I have traded stocks, ES futures, corn futures, and tried buying options on just about everything. Had some winners but a lot of losers. I was not consistently profitable until I started to sell premium.

As to how much I keep in reserve, I only use about 50% of my account, the rest is in cash. The flash crash in May 2010 happened so fast that there was no time to react. It was a scary moment. But just as quickly as the markets sold off, they recovered. By the time I tried to enter orders to cover my positions, premiums started to go back to more normal levels. As it turned out, I did nothing that day.
 
I've been a fan of sports teams too. Although I personally never understood the fanaticism and always question my own.

It's an interesting psychological problem I think. I don't know any of the players and they definitely do not know me. I am awed by their physical skills so I choose to take sides with one of them but then other teams have just as good players and I choose to not side with them. Weird. I also choose to take sides with the city I've lived in as if it were a war... weird behaviour..

I have no personal and financial stake in any of the games and yet I'm dismayed by their loss to the point that I'll riot, fight and even kill. It gets weirder still...

What's with our irrational behaviour? An alien from outer space would definitely find this weird... But maybe they have their own weird sports.... I dunno.. like playing Frisbee Golf with their newborns?

Apologies for lengthening the tangent... we should allow the OP to focus on his question at hand...
 
Great group of guys here, Robert couldn't agree more on the lottery ticket mentality on buying those OTM options everyone looking for that next FOSL earnings gap down trying to hit the jackpot. I can't say I haven't done it myself used to buy strangles going into earnings trying to hit the homerun the premium's were so jacked up that even if you had a winner like you said at best you would end up breakeven. I Very seldom buy options outright myself either if I do it's part of a vertical
 
Quote from traderlux:

looking at bear call spreads, jun 18/20c, .43cr, (1.53max loss)
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I like that trade Lux, those solar stocks are just in death mode earnings aren't until 8-2 so theta should eat this thing up once it comes into the front month
 
Interesting take on being a sports fan.......Although I have never felt the urge to riot or be violent no matter my team's result. I believe the nasty behavior is directly caused by how much alcohol is consumed by certain sports fans.

Most people choose the teams they root for in early childhood. I no longer live in NYC but I still closely follow my favorite teams. I moved to Houston several years ago. Why Texas some may ask? Well, I have found that the standard of living is much better and cheaper OUT of NYC. Of course, this is just my opinion. Many New Yorkers swear by their city but to me it's a crowded dump. But that's a whole other post. The other reason I relocated to Houston is that Texas has no state income tax. The money that I save every year is enough for me to fly back and forth to NYC two to three times a month. And I did fly back to NYC to catch Yankees Opening Day and games 1 and 2 of the Rangers first round series vs the Senators. If the Rangers get to the Stanley Cup Finals, I will do my best to fly in for a game or two.
 
Back to the subject at hand.......

When it comes to margin requirements, I have found that I get the best bang for my money writing CL and ZC options. As someone mentioned earlier, the margin for gold and silver are crazy high. The high margin needed for ES also makes me think twice.
 
I wonder what most of you guys think about people who trade the weekly options on the OEX. I see a lot of posts/articles/blogs about entering a vertical spread on Wednesday or Thursday and then holding for a day to expiration. Is this method of trading profitable?

Here is an example: OEX trading at 610.

Someone would sell the 585 put for .85 and then buy the 580 put for .40 for a credit of .45 but is the risk justified? He is making so little compared to what his potential max loss could be. Am I missing something here? People and firms who do this claim that these trades are profitable over 80% of the time, which is great but how do they deal with the 20% that are losers?

Any thoughts? Anyone traded this way?
 
Quote from MJ888:

I wonder what most of you guys think about people who trade the weekly options on the OEX. I see a lot of posts/articles/blogs about entering a vertical spread on Wednesday or Thursday and then holding for a day to expiration. Is this method of trading profitable?

Here is an example: OEX trading at 610.

Someone would sell the 585 put for .85 and then buy the 580 put for .40 for a credit of .45 but is the risk justified? He is making so little compared to what his potential max loss could be. Am I missing something here? People and firms who do this claim that these trades are profitable over 80% of the time, which is great but how do they deal with the 20% that are losers?

Any thoughts? Anyone traded this way?
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Interesting trade strategy MJ can't say I've heard of it or would have the testosterone level's to try it. It seems you would have to have a real good sense of market direction when you placed the trade and some real low volitility levels through expiration
 
There is something else that people need to be aware of in trading futures options or spreads.

Many/most brokers do not have real-time SPAN margin calculations.

Instead, many use horribly rough approximations that may make your risk appear wildly higher or lower than it actually is. This may make it almost impossible to trade except if you can get them to set extremely low day-trading margins on your account. But if they do that, then margin will not be acting as the check it should be.

Interactive Brokers does have real time SPAN margining. (They have higher margins overall, sometimes much higher for far-out months, but at least they do have real-time SPAN margining.)

PFG Best does also, although they also have a conventional margining system in parallel. PFG Best is widely used by some professional futures option traders.
 
Very good point about SPAN margins. Since almost every one of my option trades are strangles or ratio credit spreads, having the correct calculation of SPAN margin is vitally important.

I use IB and the real time SPAN margin is great. And yes, margins may be higher than at other places but that is okay, it helps in keeping me from over-positioning.
 
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