Does anyone use future options on ES?

L

LCFXTRADER

Hello. Does anyone use options on ES? If so, please share your ideas.

I was thinking about going long in ES & short YM (hegde) and then sell out of the money options on ES to collect the premium. I don't know if it possible to replace the ES positions as soon as they are called away. Any thoughts?
 
could you go long ES at one broker and short ES at another to have exact hedge? I will interested in watching the discussion on this topic.

Good Trading
 
Thanks for sharing your idea. I called my futures broker yesterday just to ask what the margin requirement for a hedge position (1 YM - 1 ES) and he said $500 for overnight. My only concern with the option idea is if the ES contracts are called away (option) then one would have the time delay of being notified of the transaction and then would need to establish new positions in the ES underlying. This would cause exposure for the open YM contracts. If you are able to monitor the market full time then it would probably be workable. I work full time so I don't know of a work around. I guess I will give them a ring again and see if it is possible to place a pending order if the options are exercised. If I find a solution, then I will report back the findings.
 
Quote from Div_Arb:

Which broker do you use to trade futures options?
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I do not trade futures options at this time. I am trying to determine if I have a viable strategy. My account is with OEC.
 
Why not just buy back the short option and avoid this risk? If you wait til near the end of the last trading day you can probably pick it up for intrinsic plus a tick or two ($25). Small price to pay to be able to sleep until you get the assignment.
 
Quote from RickL:

Why not just buy back the short option and avoid this risk? If you wait til near the end of the last trading day you can probably pick it up for intrinsic plus a tick or two ($25). Small price to pay to be able to sleep until you get the assignment.
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Thanks Rick for your comment. I am in the beginning of a home option study course and do not fully understand what you are saying. Can you please post a math example?
 
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