Options on Futures

S

SellingNaked

Hi,

Do any of you guys trade options on futures? If so which broker(s) do you use?

I am an options seller and would love to hear from other sellers (or buyers) about their experience with other brokers that allow selling options on futures.

Thank you.

(P.S. I use optionsxpress at the moment.)
 
You will get a better response if you post your own experiences first.

Also selling naked options is generally inadvisable anyway and is roundly denounced here by many every time anyone mentions it.

Even part from risk, it is an inefficient use of margin and capital compared to selling limited risk spreads.

By the way, all futures brokers allow it as far as I know if you have the margin.
 
I prefer to trade future options esp on ES vs SPX
I disagree a little about the unbounded margin risk. If you are selling naked straddles and strangles you can keep your risk hedged. Margin calculation is different and makes it better IMO as long as you keep your trades small...very small...you can always buy the OTM call or put whenever you want to limit your risk.

Now that there is more liquidity in the options you can also trade just about 24/7 so can quickly buy or sell the cash to limit damage. No funny stuff with options expiration either.

OX is pretty expensive however and I won't recommend my broker either since they are also expensive...prob best with IB.
 
Thanks for the responses so far.

What is IBKR?

I have no issues with Optionsxpress, I was just curious about other brokers that provide the ability to trade options on futures.

Maybe this is a me being paranoid, but to protect from brokerage fraud/bankruptcy or what have you...I was thinking about splitting the funds into 2-3 brokerages.

My favorite feature of OX is their 'trade calculator', I can use that to see the potential profit/loss, commissions, margin requirement all on one screen and play around with the position till the numbers are just right and then place the trade.
 
I am also trying to trade commodity options, mostly agricultural, and I would like to know if some of you are successful on these instruments while removing liquidity... The spreads are so wide that it is hard to believe some people are making money without passive methods...I understand there are some verifiable edges available but the wide B/A spread tend to annihilate them...
 
Quote from SellingNaked:
So, is it risky to have more funds with a broker than the SIPC insured limit (I think it is $500,000 at the moment)?
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SIPC insurance covers a maximum of $500k, including up to $250k claims against cash. It does not cover futures or options on futures. Some brokers sweep unused cash into a securities (i.e SIPC-insured) account regularly. It's unclear how well that would protect a futures trader in the case of a major brokerage failure.

I suspect some prop traders are unaware that their cash contribution (i.e. deposit) is not SIPC-insured.
 
Quote from rwk:

SIPC insurance covers a maximum of $500k, including up to $250k claims against cash. It does not cover futures or options on futures. Some brokers sweep unused cash into a securities (i.e SIPC-insured) account regularly. It's unclear how well that would protect a futures trader in the case of a major brokerage failure.

I suspect some prop traders are unaware that their cash contribution (i.e. deposit) is not SIPC-insured.
More...

Good summary.

It has been said many times before, for the benefit of the newbies I'll say it again. Deposit the minimum amount you need to cover your trading in the brokers account. If that happens to be a large amount, split it between 2 or 3 different brokers.

Hope for the best, prepare for the worst.
 
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