New to trading futures, how to hold positions longer without too much downside

[nooby_mcnoob]

If your entry trade has very strong positive expectancy then any type of exit, stops, timed exits will work.
Otherwise a simple stop will be useless, 2 random trades will net you random results minus comms and spreads.

I really hate simple stops in general anyway.

 

[murray t turtle]

That's fine in the sense that I'd have a much better break even price. In fact, if I do your sell call to buy put idea, I'd be profitable at my initial entry.



Indeed... In the end, I think it's probably too much complication.

%%
I use some simple moving aVerages;
but partial profits really help, as long as i dont have too many commissions /slippage.They dont raise margins on UPRO + such, but if they did, i would swing position trade smaller, but NOT get in a hurry about it..........................................................................................Time tend to be a friend, collecting dividends or selling insurance.I seldom see anything close to random in a bullmarket/this market; bear trends are not as orderely usually LOL.

 

[Handle123]

I'm trying to figure out how to hold positions longer. I'm getting better at directional trading, which is fine but I have the usual problem of closing the position too early.

I'm experimenting with the following:

1. Get an index position, set a price target expectation
2. When price reaches expectation, sell covered call/put
3. If price is on the right side of expectation, you get assigned at the target anyway

So I tried this today. I'm long some number of NQ contracts and when price reached the target I'd normally exit at, I sold an ATM call. This added about 30 points to the trade if I hold till expiry (tomorrow). Effectively, it reduces my cost basis if I'm wrong but also adds to my profit if I get assigned.

So tell me, index futures geniuses, all the number of ways this is wrong and stupid.

I'll start:

1. Just close the position and move on, dumbass. No need to eke every cent out of a trade.

Will Pm you

 

[traderjo]

the price goes the right way part of the equation is good...however what happens if price does not hit the target to sell the call and goes against you to begin with?

I had same question to OP. what happens if First step the price goes down ( assuming your starting point is LONG)

This prompts me to ask you (Cannon trading) a Cross Margin and execution question
1) Covered call" In equity space the OCC and Broker recognizes Covered call writing and treats the soled CALL as Covered
With Futures + Futures option do you or any broker treat it the same way as Equity CC?
2) Married PUT or Married CALL:
Same question as above since there is a Protective ATM PUT ( or CALL) covering underlying LONG futures position, THERE SHOULD NOT BE A MARGIN CALL AT ALL until expiry of the option
BOTH in case of Day trading or overnight
BUT many futures brokers ( sales staff) really don't answer the question they either don't understand it or don;t want to know or a throw a stock standard answer about SPAN margin
But What I am really asking is if Equity + Equity Options can handle this then why can;t Futures FCm hand le it

Execution:
Can such order be executed as Guaranteed Combo orders? with appropriate margin offset?
Appreciate if you can clear it for all

 

[easymon1]

adds to my profit if I get assigned

i like it.
will it work this time? http://www.ask8ball.net/
after ten cycles? my token is on yes, 1, more time 2 more money 3 less uncertanty.

 

[CannonTrading_Ilan]

I had same question to OP. what happens if First step the price goes down ( assuming your starting point is LONG)

This prompts me to ask you (Cannon trading) a Cross Margin and execution question
1) Covered call" In equity space the OCC and Broker recognizes Covered call writing and treats the soled CALL as Covered
With Futures + Futures option do you or any broker treat it the same way as Equity CC?
2) Married PUT or Married CALL:
Same question as above since there is a Protective ATM PUT ( or CALL) covering underlying LONG futures position, THERE SHOULD NOT BE A MARGIN CALL AT ALL until expiry of the option
BOTH in case of Day trading or overnight
BUT many futures brokers ( sales staff) really don't answer the question they either don't understand it or don;t want to know or a throw a stock standard answer about SPAN margin
But What I am really asking is if Equity + Equity Options can handle this then why can;t Futures FCm hand le it

Execution:
Can such order be executed as Guaranteed Combo orders? with appropriate margin offset?
Appreciate if you can clear it for all

There are quite a bit margin breaks as well as ability to execute these as spreads.
The breaks are normally for overnight trading as the day trading margins are already much lower ( example $500 for DT an ES futures)
I am happy to go over specific examples / questions you have and run the margin calculator, probably best via PM?

 

[FXtrader8911]

I'm presuming if most people don't do this then there is something missing

The theory sounds reasonable but you need to see how many times it works and how time-consuming it is. What you might be missing is the cost of your extra work & time v. the extra profit gained. Personally I prefer to stagger my t/p levels and use trailing stops, that way I needn't watch the position and use my time to seek opportunities elsewhere.