Do MES/MNQ futures options trade similar to SPY/QQQ options?

[E-MiniToGo]

I've been writing stock covered calls for many years now with great success. Over the years, I've narrowed my trades to basically TQQQ or UPRO. Even through the Covid hit last year all my accounts bounced back with a 38% yearly gain.

Question is,

I'd like to start trading MES/MNQ Micro's in a similar way with selling covered options on my open long positions. Do futures brokers handle the micro contracts similarly to regular ETF covered call trades.

EXAMPLE
Long = 1 Contract Micro MES at 4500
Sell Short = 1 Call option at 4510

If MES goes to 4520, how would this settle?
I know how it would settle if it expires worthless.

Anyone doing this with the MES or MNQ?

 

[BKR88]

https://www.cmegroup.com/education/...-s-p-500-and-nasdaq-100-futures.html#exercise

 

[E-MiniToGo]

Thanks for the reply.

Anyone have experience with specific futures brokers that allow short selling of options. I have a Tradovate account and they do not allow a covered call strategy, they only allow buying options long.

 

[Apologetik]

Thanks for the reply.

Anyone have experience with specific futures brokers that allow short selling of options. I have a Tradovate account and they do not allow a covered call strategy, they only allow buying options long.

I use IB to sell options on futures. When I called many of the smaller futures brokers compliance did not want to deal with a seller of my account size (I was going to bring in $100.000-250.000 for this account). It was recommended to use a FCM (ADM I believe), I never reached out and stayed with IB.

 

[cesfx]

I have traded mes future and mes options. Never had to settle though. I remember I was not able to create combo orders the same way you do with stocks/etf using IB, I purchase them separately, otherwise everything else looked the same.
As future options they should settle with the future contract so it should be fine with a covered call.

 

[Apologetik]

I have traded mes future and mes options. Never had to settle though. I remember I was not able to create combo orders the same way you do with stocks/etf using IB, I purchase them separately, otherwise everything else looked the same.
As future options they should settle with the future contract so it should be fine with a covered call.

I have settled, with IB, and the 'covered call' works fine. Check that contract specs always to make certain the option you are trading settles to the contract and not cash. Also, double check the option for what future contract it is on. That way you are settling Sept to Sept or Dec to Dec.

You can create many combos in futures, but not all methods are supported by the exchange or IB (for example stops and how they work).

 

[E-MiniToGo]

Awesome...
I have an IB account already, but have been using Schwab for my Stock stuff due to ease of use and free stock trades. Schwab is too expensive for futures from my observations though. I do like IB for the TWS desktop app.