Understanding futures options

masterm1ne

masterm1ne

I often want to take bets in both directions near the same time. I understand futures options allow you to do this and I know the basic terminology, but I'm having trouble understanding the way they work. Below is the options chain that comes up for my futures contract right now (there are lots of 0s that are numbers during the trading day).

How do I calculate how much much one option costs, how much risk I'm taking on, where is the time decay, and how do you select the strike price? Say this past Friday, I wanted to buy the futures index around 1257 and to offset that position if the market fell below that price, which puts would I buy? Obv we never know how far the index will go but you have to pick a strike price in exact 5 point intervals! Should I buy puts at several strikes???

I've found little to no helpful information on the internet, and most stock options data doesn't look very similar... There are also no greeks on this table, which is talked about in anything about stock options... srsly wtf...

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Sounds like you need to pick up an introductory book on options, yet you are using all these options terminology. I am confused by your questioning.

Are you trying to find the difference between Futures Options and Stock options? Then all you have to do is look up the contract speciifications at the exchanges and understand the the valuation of contract points and ticks.

As for seeing blank sections, you may be looking at an inactive product. Futures is not as liquid as stocks.

What platform are you using anyways? EOC? They probably have a "Futures Options basics" pdf.
 
I'm really not sure what RLM is.

But for JPY, it's .0000005/$6.25
@ 20.50 last trade, the option would be (20.50/.00000005)*6.25

So, price/tick size* tick value = cost
 
Ok so that's the price to buy the option.

So how do you select which strike price you want to buy at if you don't know how far the market will go? Do you usually buy at several strikes?
 
You can find all the contract info online, but you might consider spending $20 for for a publication that has it all in one place, plus some charts and fundamental factors to keep an eye on:

http://www.futures-research.com/order/order_tg.php?refcode=HTRBLOG

As for your screenshot from GAIN/OEC, you're right, they don't have any option data beyond price, volume and open interest. You'll have to get that elsewhere. For CME-traded contracts, QuikStrike has a good tool that is free and ad-free, along with paid subscriptions for advanced capabilities.

I don't know why there is no volume to speak of in the contract you posted. It's probably like the US-traded copper contract - reasonably active futures but squat for futures options. I'd look at the equity index ETF options, I think that's where the action is for the Russell 2000.
 
Brighton, it seems the free version of QuickStrike is a limited time trial only though they don't mention that.
 
xandman said:
Brighton, it seems the free version of QuickStrike is a limited time trial only though they don't mention that.
More...

Are you referring to the one you subscribe to through the CME site (they call it "Essentials")? That would be news because I thought it was supposed to be a permanent offering from the CME. FWIW, my log-in still works after nearly two years.
 
Yes. I remember going thru the CME. I'll try to resubscribe though I roughly remember having trouble with that, too.
 
Ok... well I realized main question: I'm trying to figure out essentially how I can have simultaneous bets [be direction neutral] at some point, and then exit whichever the losing position. It seems like I should just set up another account, and go long in one and short in the other.

With options it seems like you have to pick a specific price, which is not how trading futures contracts works! When you are long, you expect price up, short the reverse! You don't have to guess where price will be in the future like you have to with options...

And during the trading day, the bid/ask are populated with numbers... but there isn't much volume, as you noted.
 
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