I rush in where angels fear to tread.

Overnight · Feb 13, 2017

Hi. As some here might know, options scare me and I hate them.

But I ask the following hypothetical.

If I have 1 open long position in GC futures (entry was at $1000.0) that is now sitting at $980.0, I am unrealized at $-2,000.

At this point, what kind of GC option could be implemented to keep that unrealized loss from going further, but make profit at the same time, if that makes sense?

The open futures position must be exited in 30 days. That is the LTD of the futures contract.

Can an option be placed upon it somehow to make money with no more risk? Selling a call? Selling a put? ITM, OTM etc?

Thanks.

tommcginnis · Feb 13, 2017

1) Prepare the trade to roll that FUT to the next expiry.
2) SELL 990 Mar17 call for ~$250.*

Rinse; repeat.

* "Who knows??" I got ~$250 for Mar17 and for Apr17, so something is a'funked with this data stream (to which I do not subscribe...)

Overnight · Feb 13, 2017

tommcginnis said:
1) Prepare the trade to roll that FUT to the next expiry.
2) SELL 990 Mar17 call for ~$250.*

Rinse; repeat.

* "Who knows??" I got ~$250 for Mar17 and for Apr17, so something is a'funked with this data stream (to which I do not subscribe...)

Yes, I have heard about the idea of rolling one future month to the next with an option.

So if I sell a 990 Mar17 call while my the underlying future is at $980, I make an instant $250? So now I have an option set to expire at end of march contract at or above $990 ITM?

I KNOW I am missing so much detail in this. I have always had trouble wrapping my head around options. But I can sense there is something there. Something very profitable.

tommcginnis · Feb 13, 2017

https://www.interactivebrokers.com/en/index.php?f=2227
[navigate to "Industry Sponsored" -- the top one is Short Option Strategies -- just what you want.]
There are very few people I would recommend over Russell Rhoads for basic info.
He *majorly* de man.
And he has a bunch others that that would be of help.

Handle123 · Feb 13, 2017

Overnight said:
If I have 1 open long position in GC futures (entry was at $1000.0) that is now sitting at $980.0, I am unrealized at $-2,000.

At this point, what kind of GC option could be implemented to keep that unrealized loss from going further, but make profit at the same time, if that makes sense?

"1) Prepare the trade to roll that FUT to the next expiry.
2) SELL 990 Mar17 call for ~$250.*"

LOL let's see, you going to roll contract to next Contract month as you already down 2 grand then you going to sell Mar17 to collect lousy $250? How much further Gold going to go down?

So if Gold does rally to $1,000 you flat on futures and down a grand on Call option minus the $250 or it rallies to 990 and you down a grand but collected $250, or Gold comes down to 970 or lower and you down 3 grand but you collected a huge $250.

You don't see the risk in this ?

Overnight · Feb 13, 2017

Handle123 said:
"1) Prepare the trade to roll that FUT to the next expiry.
2) SELL 990 Mar17 call for ~$250.*"

So if Gold does rally to $1,000 you flat on futures and down a grand on Call option minus the $250 or it rallies to 990 and you down a grand but collected $250, or Gold comes down to 970 or lower and you down 3 grand but you collected a huge $250.

You don't see the risk in this ?

This is the kind of information I needed, and now have enough info from the people I need, to start a thread to understand it with the proper people who gave the info to put it into perspective. Thanks guys. I'll start the private thread soon, probably at end of week after this week's cycle of trading.