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Writing Options on ES and SP (S&P Futures) instead of SPX
- Thread starter andysmith
- Start date
This is a pretty silly question, but I just wanted to double check.
If I'm short an option on a Jan contract (and assuming it a naked one), if I were to get assigned, I would be assigned a Mar Futures contract, right??
Ex: I am Short Jan 1200 Put & the March S&P futures settles at 1195 on the third Friday of January. Monday morning, I would be long the S&P futures at 1200.
If I'm short an option on a Jan contract (and assuming it a naked one), if I were to get assigned, I would be assigned a Mar Futures contract, right??
Ex: I am Short Jan 1200 Put & the March S&P futures settles at 1195 on the third Friday of January. Monday morning, I would be long the S&P futures at 1200.
Can someone do a comparison for me on the below scenerio?
With the SPX at 1250 say I sold a 15pt spread Iron Condor,
50-1195x1210 Bull Put spread for .50
50-1295x1310 Bear Call Spread for .60
Total credit is : 1.10
Margin Requiremts are : 75,000 (15K per 10 contracts)
Can I do this using the SP or ES?
Do they have far OTM strikes for sale about 25 days out?
I'm using Reg-T margin, how will SPAN change this?
Should I use the ES or SP to replicate this trade?
If IB doesn't trade the SP because it's Pit traded, who does? Would I have to talk to somebody on the phone?
Sorry for all the questions, but I'm looking at the futures markets but I'm having a hard time finding out good answers posted online.
Thanks,
sd
With the SPX at 1250 say I sold a 15pt spread Iron Condor,
50-1195x1210 Bull Put spread for .50
50-1295x1310 Bear Call Spread for .60
Total credit is : 1.10
Margin Requiremts are : 75,000 (15K per 10 contracts)
Can I do this using the SP or ES?
Do they have far OTM strikes for sale about 25 days out?
I'm using Reg-T margin, how will SPAN change this?
Should I use the ES or SP to replicate this trade?
If IB doesn't trade the SP because it's Pit traded, who does? Would I have to talk to somebody on the phone?
Sorry for all the questions, but I'm looking at the futures markets but I'm having a hard time finding out good answers posted online.
Thanks,
sd
Quote from daytrader85:
This is a pretty silly question, but I just wanted to double check.
If I'm short an option on a Jan contract (and assuming it a naked one), if I were to get assigned, I would be assigned a Mar Futures contract, right??
Ex: I am Short Jan 1200 Put & the March S&P futures settles at 1195 on the third Friday of January. Monday morning, I would be long the S&P futures at 1200.
Correct. December option contracts become December futures, and January, February, March contracts become March futures.
Thanks for the reply.
I actually have one more question.
If I have an account size of $25,000. I have open spread(s) and have margined of let's say $10,000. Could I put the remaining $15,000 in a T-Bond? So, the excess margin is not just sitting there but actually earning something?
Then when I need the excess margin, could I just simply sell the bond and use it open another spread??
Hope my questions make sense.
Thanks.
I actually have one more question.
If I have an account size of $25,000. I have open spread(s) and have margined of let's say $10,000. Could I put the remaining $15,000 in a T-Bond? So, the excess margin is not just sitting there but actually earning something?
Then when I need the excess margin, could I just simply sell the bond and use it open another spread??
Hope my questions make sense.
Thanks.
Quote from skdoyle1:
Can someone do a comparison for me on the below scenerio?
With the SPX at 1250 say I sold a 15pt spread Iron Condor,
50-1195x1210 Bull Put spread for .50
50-1295x1310 Bear Call Spread for .60
Total credit is : 1.10
Margin Requiremts are : 75,000 (15K per 10 contracts)
Can I do this using the SP or ES?
Do they have far OTM strikes for sale about 25 days out?
I'm using Reg-T margin, how will SPAN change this?
Should I use the ES or SP to replicate this trade?
If IB doesn't trade the SP because it's Pit traded, who does? Would I have to talk to somebody on the phone?
Sorry for all the questions, but I'm looking at the futures markets but I'm having a hard time finding out good answers posted online.
Thanks,
sd
To put on the 1210/1295 Iron Condor on the futures market, the margin will be a lot less. I would say by more than 3 times. But, if the market does approach your short strikes, the margin will increase. So watch out for that.
There are a lot of other brokerage firms that allow trading on SP options. You could go to CME.com and find the brokerage firms and give them a call, or send them an email.
Hope this helps.
One more thing I wanted to add....
Another advantage to the SPAN margin, is that the strike spread do not have to be the same. In your position that you mentioned, the spread between the short and long legs are 15 pts. That's how you get your Reg-T margin. But, with SPAN, your spread does not have to be equal. The margin is calculated as a whole. Depending on how for OTM the your short legs will be the first part taken into account when calculating the SPAN margin. The second, it will see if those short legs are covered with and long legs, it will then see what the spread between the short and long spreads to give the final margin value.
Another advantage to the SPAN margin, is that the strike spread do not have to be the same. In your position that you mentioned, the spread between the short and long legs are 15 pts. That's how you get your Reg-T margin. But, with SPAN, your spread does not have to be equal. The margin is calculated as a whole. Depending on how for OTM the your short legs will be the first part taken into account when calculating the SPAN margin. The second, it will see if those short legs are covered with and long legs, it will then see what the spread between the short and long spreads to give the final margin value.