What's the deal with gold weekly options?

[kbcool]

First time poster, been perusing the forums for years.

I have been looking at weekly options on gold and came across the GLD ETF weekly options but commissions are a killer with any broker (even IB) with trading spreads. The strikes are very wide as well which means on a weekly when the short strike is close to the money the long can still have such a low delta you almost may as well not have a long position.

According to the CME there are weekly options on gold futures but on their website there is very little if any volume listed but I find the data on the monthlies almost as confusing.

In the TWS platform from Interactive Brokers I can only see monthlies.

So what is the deal with weekly FOPs on GOLD? Do they exist? Are they liquid enough and how can I find them in TWS?

 

[just21]

On ZB (bonds) there is a field for class to select the weeklies but it does not appear on GC.

 

[CBC]

So what is the deal with weekly FOPs on GOLD? Do they exist? Are they liquid enough and how can I find them in TWS?

The Gold FOPs have a massive OI. Problem is this doesn't really exist on the weeklies. You could trade ES, ZN perhaps CL. This are the major contracts, good for weeklies, especially ZN.

ES does have a WED expiry as well.

http://www.cmegroup.com/trading/options.html#top10

24 mill OI for Eurodollar........ shish that is a lot.

 

[Steven Leeds]

First time poster, been perusing the forums for years.

...GLD ETF weekly options but commissions are a killer with any broker (even IB) with trading spreads.

...The strikes are very wide as well which means on a weekly when the short strike is close to the money the long can still have such a low delta you almost may as well not have a long position.

...According to the CME there are weekly options on gold futures

...how can I find them in TWS?

I pay <1.00 per contract to trade GLD (and other ETFs) at ThinkorSwim. Shop around and/or negotiate commissions if you're paying >1.00 a contract

Strikes for the nearby GLD contacts are 50 cents apart. A dollar father out. That's per exchange rules.

CME lists Weekly gold (/CG/OG) options and yes they are very thinly traded. Less than 100-200 contracts a day in some cases. GLD generally has 10x the daily volume of the /CG contracts.

Can't help with TWS, I use ToS.

Best

 

[kbcool]

I pay <1.00 per contract to trade GLD (and other ETFs) at ThinkorSwim. Shop around and/or negotiate commissions if you're paying >1.00 a contract

Similar commissions with Interactive Brokers. The problem is a $1 spread on gold on weeklies anywhere but in the money is only going to net you 5c - 15c or so which is fair enough for the risk involved I'm not complaining about that but $1 or more on $5 credit is 20% of your potential profit just in commissions. I would gladly trade GLD if this wasn't the case or there was a broker with a cap on commissions.

Similar spreads on SPX or ES which I also do trade by the way have commissions which are always less than 10% and more like a couple of percent most of the time depending on credit received.

Even with the CME low volumes I would be interested to see if the market makers are giving good fills so if anyone knows how to find them in TWS I would like to know. I'll also ask IB themselves.

 

[kbcool]

I talked to IB technical support and although the answer wasn't definitive the rep suggested that the reason they don't offer the gold weekly futures options is because they don't offer instruments with low liquidity which matches with what Steven and CBC have suggested and what my own research has found.

It's a pity that I haven't been able to find a broker that can cap commissions. I understand the pricing models but when you want to buy a large number of contracts the brokers are still going to make a lot of money on commissions. If I put on a $100k spread per week for example then it seems greedy to be expecting $20k in commissions but even with IB's volume discounts you're still likely to be paying that much. It's not until you get into the 100k+ contracts per month that the commissions become affordable.

 

[Steven Leeds]

Similar commissions with Interactive Brokers. The problem is a $1 spread on gold on weeklies anywhere but in the money is only going to net you 5c - 15c or so which is fair enough for the risk involved I'm not complaining about that but $1 or more on $5 credit is 20% of your potential profit just in commissions. I would gladly trade GLD if this wasn't the case or there was a broker with a cap on commissions.

Similar spreads on SPX or ES which I also do trade by the way have commissions which are always less than 10% and more like a couple of percent most of the time depending on credit received.

Even with the CME low volumes I would be interested to see if the market makers are giving good fills so if anyone knows how to find them in TWS I would like to know. I'll also ask IB themselves.

That's why I like the E-mini S&P 500 options (/ES).

For example I put on a MAR17 (DTE 17) PUT Vertical credit spread (2300/2295) this morning for $0.50. Risk is $250.00 and I keep the $50 (less about 5.00 in commissions) if it expires OTM*. I find that to be reasonable. Delta 15 on the short leg, very good Theta (44) and a reasonably low probability of touching (32%.) I did the same think opn the Call side selling the 2425/2430 spread also for $0.50. Again low Delta (11) and good Theta (26.)

Hey, what the heck, it just dawned on me, that's an Iron Condor.

Just note, I always trade Delta with a max of 15, Theta a minimum of 20, and POT under 30. *Normally, I always take a profit (usually legging out) when I reach the 75% point (in this case 35 cents) Small but consistent profits works for me. And, of course, at the end of the year all those commissions are tax deductible plus with the /ES you have the tax advantage of trading 1256 contracts vice GLD which (like SPY, IWM, EEM) all taxed as short term gains vice the 60/40 1256 scenario.

I too researched the /CG gold futures weekly Vol/OI last evening and there is very little activity in those contracts. I found that, on average, each weekly had a daily vol of under 400. Not very liquid. ToS doesn't offer the gold futures options weeklys either.

Best