Thanks for your reply, MJ. Do you use the Liberty service, or do you find trades on your own? Also I know you like CL and ZC, what are your other favorite symbols to trade at IB. I've looked at some commodity option shorts, but the IB margin schedule sometimes makes the return much less than Cordier usually shows.
any option sellers
- Thread starter phil413
- Start date
Last year I was trading CL strangle's and the margin doubled!!.( at least at my brokerage overnite went to like 13K):eek: fortunately I did get out of my trades right around that time. This year have been in NG trades....but it does worry me that margins can and DO shift dramatically. Keeping 50% in cash makes a lot of sense. ty of course you can always offset by converting into a vertical or IC to control risks.
By the way, besides Cordier's book, another excellent one is Stuart Johnston's
http://www.amazon.com/Trading-Optio...6858/ref=sr_1_1?ie=UTF8&qid=1336588681&sr=8-1
It contains extensive statistical studies.
Stu is speaking remotely to the Raleigh Traders Meetup on May 22, 2012 if anyone is in the area.
http://www.amazon.com/Trading-Optio...6858/ref=sr_1_1?ie=UTF8&qid=1336588681&sr=8-1
It contains extensive statistical studies.
Stu is speaking remotely to the Raleigh Traders Meetup on May 22, 2012 if anyone is in the area.
I do not use Liberty Trading's service. However I do get their weekly newsletter. I am certain that any trade recommendations in the newsletter have already been placed for their paying clients earlier in the week. I find most of my trades on my own. The hardest part is deciding what strike to sell. Obviously going farther out would be safer but it would not be worth my time to go so far out that I would not be selling much premium. Note that when I place a new strangle position, I look at options that contain 60 to 90 and sometimes even more days until expiration. I usually select strikes with delta below 20 and the premium collected should be over $500.
I have traded GC and SI but never both at the same time because they move in tandem. Same goes for ZC, ZS, and ZW. I would trade only one of those but never all three or even two out of the three. I have traded ES and VIX options. I am looking into Coffee options but I have not traded it yet.
At various times just 1-3 but sometimes in near month and cash opposite as a hedge in the farther out month. I never felt comfortable though and decided I was just too small to trade CL. I do think I can do NG but it is more thinly traded and need to understand it better and watch it longer. I may be too small for it as well, but I checked tonight and my broker is showing $8000 per CL contract vs $2850 for NG.
I've kept to ES options and that works well for me but I stay in the near month and weekly options and just one or two contracts. If I get too positive delta or neg delta then I will day trade in the cash as a hedge.
As my account grew I thought I needed to branch out and trade something else, hopefully something that wouldn't track ES.
I've kept to ES options and that works well for me but I stay in the near month and weekly options and just one or two contracts. If I get too positive delta or neg delta then I will day trade in the cash as a hedge.
As my account grew I thought I needed to branch out and trade something else, hopefully something that wouldn't track ES.
I just took a quick look, the maintenance margin at IB to sell one CL futures contract is about $5,000. And to write one CL option is about $2,600.
What is your strategy when you sell weekly ES options? Vertical spreads? Based on 1-2 options what is your average gain each week? And how much are you willing to risk each week?
Yes, sometime during 2008 - early 2009, CL option margin spiked. With the increase in vol - that makes sense with SPAN. IB required as much or more margin to sell an OTM CL option than to trade the UL. This also can make sense given the differences in the way the margins are treated.
I was net short CL options and had enough capital to cover the higher margin, but with less free capital, it made trading more difficult. As I recall, I eventually cut size to increase reserves.
For people who do not know, Cordier trades based on seasonals, fundamental analysis of each market, and overall macro analysis.
He always has detailed opinions on all of the crop and other prospects etc.for W, C, S, SB, CT, KC, CL. NG etc. Also sentiment and implied volatility.
He will often be on only one side of the market. s fairly valued with prospects for a decay of volatility, he may be on both sides.
Some might think that he just blindly trades strangles or whatever, but that is not the case at all. Also he only trades particular commodities where he believes that prices are out of line - he is not in all markets all the time at all.
He rarely uses much technical analysis as such.
I suspect that, given his comprehensive approach, he could also trade futures and do well.
Anyone can follow him easily for free by reading his blog and looking at his video updates on Youtube. I have followed his every report and update for years, so I know very well how he approaches things. I make my own judgments at this point, and they sometimes differ from his. At times, I am happy when his update comes out and I have anticipated his moves and already taken a similar position in the market. At other times, we have different positions. But I have learned an enormous amount from him.
Stu Johnston's approach is similar overall, but is mainly based on high-probability seasonals, and also special situations.
Neither of them is 100% short only.
He always has detailed opinions on all of the crop and other prospects etc.for W, C, S, SB, CT, KC, CL. NG etc. Also sentiment and implied volatility.
He will often be on only one side of the market. s fairly valued with prospects for a decay of volatility, he may be on both sides.
Some might think that he just blindly trades strangles or whatever, but that is not the case at all. Also he only trades particular commodities where he believes that prices are out of line - he is not in all markets all the time at all.
He rarely uses much technical analysis as such.
I suspect that, given his comprehensive approach, he could also trade futures and do well.
Anyone can follow him easily for free by reading his blog and looking at his video updates on Youtube. I have followed his every report and update for years, so I know very well how he approaches things. I make my own judgments at this point, and they sometimes differ from his. At times, I am happy when his update comes out and I have anticipated his moves and already taken a similar position in the market. At other times, we have different positions. But I have learned an enormous amount from him.
Stu Johnston's approach is similar overall, but is mainly based on high-probability seasonals, and also special situations.
Neither of them is 100% short only.