Need advice on a futures option..please

W

winsomelosesome

Please...some honest advice..no insults

I dont trade options, but did this one time

I bought a ZBH9 138 put several weeks ago at 3 15/64

With the future currently at 128 12/32.......

The bid is 5 x 7 22/64 ask is 5 x 9 63/64

With the intrinsic value well over 9....am I pretty much

stuck with 7 22/64 if I want to get out now?

I thought there was supposed to be a semi-legitimate

spread offered ........

Any advice from someone with experience? ....Thanks.....
 
You own a 138 put; the underlying future is at 128'10 right now.

You paid about 3 handles for this put.

You could EXERCISE the put & become short US-H9 @ 138, then manage the position as you see fit.

if you want a quick exit, you could exercise the option then offset your short futures position.

PM me if you have any questions.

Nice trade!:)
 
Quote from winsomelosesome:

Please...some honest advice..no insults

I dont trade options, but did this one time

I bought a ZBH9 138 put several weeks ago at 3 15/64

With the future currently at 128 12/32.......

The bid is 5 x 7 22/64 ask is 5 x 9 63/64

With the intrinsic value well over 9....am I pretty much

stuck with 7 22/64 if I want to get out now?

I thought there was supposed to be a semi-legitimate

spread offered ........

Any advice from someone with experience? ....Thanks.....
More...

You never need to settle for less than the intrinsic value of an option on a futures contract. The clean easy way for you to lock in the intrinsic value is to simply buy a futures contract. Assuming the put is still ITM at expiration, your position will disappear when your short put is exercised. If the put is otm at expiration - then so much the better!

Think it through and you'll see why. Come back if you're still confused. No insults, I promise.
 
Quote from winsomelosesome:

Please...some honest advice..no insults

I dont trade options, but did this one time

I bought a ZBH9 138 put several weeks ago at 3 15/64

With the future currently at 128 12/32.......

The bid is 5 x 7 22/64 ask is 5 x 9 63/64

With the intrinsic value well over 9....am I pretty much

stuck with 7 22/64 if I want to get out now?

I thought there was supposed to be a semi-legitimate

spread offered ........

Any advice from someone with experience? ....Thanks.....
More...
In a market like this, I would buy a ZB future instead of trying to exit the long put in this "unfair" market. By buying the ZB, you lock in a profit. If the ZB continues to fall, you lock in your 10 points (minus the 3 15/64). If it rises and finishes ATM or slightly OTM, you get the same profit (10 points from the long future minus the 3 15/64). If it is rises, say 10 points above to 148, then you get 20 points from the long future minus the 3 15/64.
 
Thanks JW...got some similar advice offline from dmo.
You both have me rethinking my trading of futures only.
I may have to start looking at combining both the futures
and options...I was traveling most of the last 5 weeks
and although I was confident in the ZB dropping...it sure felt good to know my losses were limited....Thanks again everyone

ps...glad I asked for honest answers
 
I trade the ZB and ZN. Look up my previous journals.

Late last year and early this year I knew that a multi-day down move in the bonds was coming but I did not want to hold futures long-term, especially in today's environment.

I explored my options (pardon the pun) and found TBT. It has very liquid options. The spread you describe is outrageous and I haven't seen anything like that with TBT.

Take a look and see for yourself. I"ve added it to my list of swing trade / long-term hold instruments.
 
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