Options on Futures: Worth It?

B

btowntrader54

Hi All

I've been trading equities and equity options off and on for a few years. I'm considering moving on to options-on-futures on the equity indices. Is it worth it to do the option route or should I just trade the futures themselves?

Does anyone here trade those?
 
well i've been sent scrambling after selling straddles for a few months. i'd try buying them if you want some fun but i'm hardly the expert. mostly fart around selling premium.
 
Quote from sumosam:

options on futures can be less liquid, but yes, they are definitely profitable, and you cap the risk.
More...


profitable for who (writers or buyers)? and why is that?
 
Quote from riskfreetrading:

profitable for who (writers or buyers)? and why is that?
More...

I buy spreads. Profitable due to the incredible leverage and limited risk.:p :p :D :D
 
Quote from sumosam:

I buy spreads. Profitable due to the incredible leverage and limited risk.:p :p :D :D
More...

What type of spreads do you buy... ratio spreads, credit spreads such as an Iron Condor, backspreads or some other? How fare OTM are you when you buy them? Hopefully you don't mind me asking these questions...

Walt
 
I've traded ES, ER2, NQ, and EMD options. ES and ER2 are really the only ones you won't get killed on the bid/ask spread (and even they are a bit wide).

Equity index futures aside, there is a whole world of other futures options out there which are very liquid. Eurodollars, Notes, and Bonds all have tons of volume and very tight spreads. EuroFX, Yen, British Pound all have both American and European style options with reasonable bid/ask spreads. Grains options are still traded almost exclusively on the floor, but you can get good fills, you just have to wait a while to get them.
 
Quote from jones247:

What type of spreads do you buy... ratio spreads, credit spreads such as an Iron Condor, backspreads or some other? How fare OTM are you when you buy them? Hopefully you don't mind me asking these questions...

Walt
More...

I buy debit spreads, just slightly OTM, and about 2-3 months out.
 
I've been looking into the Options on Futures but haven't found any solid explanation / literature on where they're traded, the margin reqs, volume and price fluctuations, etc.

I like the idea of capping one's risk but are these liquid enough to provide ample risk/reward opportunity? If I buy 6 month OTM Calls on the S&P 500, will the option price see swings along with the S&P movements or sit there slowly losing time value?
 
You must log in or register to reply here.
Back
Top