Which provider allows covered calls on FUTs

T

traderwald

Hi guys,

There are many who allow only long options in Futures. I know IB allows both long and short on Futures options. Which are the others who allow this ?
 
etrades,

I do not mean this to be a dig at all, more a concern. You have asked a number of typical question for a beginner in options. Simple questions that can be understood from research and reading. Options on futures are options on leveraged product. I'm not sure you are ready for options on futures yet.
 
Robert Morse said:
etrades,

I do not mean this to be a dig at all, more a concern. You have asked a number of typical question for a beginner in options. Simple questions that can be understood from research and reading. Options on futures are options on leveraged product. I'm not sure you are ready for options on futures yet.
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Thank you for your response Robert. Appreciate it.

I am reading the basic information but also trying to understand better by asking specific questions here and also maybe get a reply from active traders.
I understand also that I am a beginner in opts on Futs.

Thank you.
 
Robert Morse said:
Options on futures are options on leveraged product. I'm not sure you are ready for options on futures yet.
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Many traders, especially beginners, are anxious to get into leverage. (Of course we all want to get rich ASAP.)

Personally... long time trader that I am... I've rarely had my capital leveraged even 2:1. (Perhaps that's a major reason I'm still around?).

Leverage is great when things go your way but can turn to catastrophy very quickly when going against.

FWIW...
 
Scataphagos said:
Many traders, especially beginners, are anxious to get into leverage.

Personally... long time trader that I am... I've rarely had my capital leveraged even 2:1. (Perhaps that's a major reason I'm still around?)
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Futures have built in leverage so a new trader might not realize it.
 
Thank you Robert and Scataphagos.

I have some questions around the leverage and the idea being discussed above to better understand the leverage and its effect:

1. Even though there is leverage on the Futures contract (let us sat ES) - how is having a covered call differebt than having a simple long ES contract ? In terms of $ value, is there is a huge amount of money that is at stake that has not been taken into account here ?

2. What is the reason to cover the entire value of the ES contract ~ $150k than cover only the margin required and some more - let us say around $30k balance to cover a long ES position. (From what I have checked the max per week move of the ES is about 270 points)

4. Does having a long option reduce the requirement to have the long contract full covered (i.e. upto $150k) ? given there is a long option to cover it.
 
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#1. Your gains are limited and your downside is protected by only to the value of the short call.
#2. Personal choice. You are the one that wants a covered call so only you can determine what to sell. I would never do a buy-write.
#4. Not sure. Do you mean long put vs long future-maybe.

You keep looking at notional value. Not sure that is the best process.
 
Robert Morse said:
#1. Your gains are limited and your downside is protected by only to the value of the short call.
#2. Personal choice. You are the one that wants a covered call so only you can determine what to sell. I would never do a buy-write.
#4. Not sure. Do you mean long put vs long future-maybe.

You keep looking at notional value. Not sure that is the best process.
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#4 :- I mean buying a long ES and a long put on the same.
#2 :- In this point, I do not mean to refer to covered call. I am asking why do we need to have $150k in the account when the max that ES has moved in a week is approx. 270 points. So why is having $30k not sufficient to trade this (since that would cover about a 600 point move in the ES)?


You keep looking at notional value. Not sure that is the best process.
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Hmm I am not sure of what is notional value and what other value is there to look at. I searched in google and found this: https://www.investopedia.com/ask/an...e-between-notional-value-and-market-value.asp

Do you mean suggest about notional value vs Market value ?

- If so, then as I understand based on this article the notional value of the ES is $3,000 and the market value is $150,000 is that correct ?

- If not, please let me know what other value do you mean about this ?
 
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