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The short side of commodities options

  • #21
  • Mar 8, 2012 5:58am Mar 8, 2012 5:58am
can we trade gold options in options express. i have an account with them but they only allow stocks.
  • #22
  • Mar 8, 2012 6:05am Mar 8, 2012 6:05am
Quoting Sahil
I will still recommend Options xpress as their platforms and service is good.
ALso Pommegranate, are you trading full size future as the margin on those asre around 3000USd and not 300USd
Optionsxpress provides pit access for some products, but not electronic, like coffee, Cocoa and sugar. So you'd have limited access.

The margin I have is $300 and I trade full contracts - minis have no liquid option markets. Before choosing a b.roker, ask if they can provide SPAN margin calculation, it's significantly lower than ordinary margin calculation and absolutely critical if your strategy is writing futures options.

For example I have 85k USD account with ADM, my ordinary margin is currently at 826k USD, but my applicable SPAN margin is 45k USD. Immense difference as you can see.
  • #23
  • Mar 8, 2012 6:09am Mar 8, 2012 6:09am
  •  Sahil
  • | Joined Jan 2009 | Status: Options Trader - Commodities & FX | 24 Posts
Quoting Nomi1
can we trade gold options in options express. i have an account with them but they only allow stocks.
You can trade any commodity via options express but you need to add this trading functionality to your account. THis strategy is classed as High risk and they may ask to provide extra information to add this to your account

Thanks
  • #24
  • Mar 8, 2012 6:10am Mar 8, 2012 6:10am
Quoting Nomi1
can we trade gold options in options express. i have an account with them but they only allow stocks.
Yes, they allow. Symbol GC. You should ask them to make futures and futures options available for your account.
  • #25
  • Mar 8, 2012 6:11am Mar 8, 2012 6:11am
  •  Sahil
  • | Joined Jan 2009 | Status: Options Trader - Commodities & FX | 24 Posts
Quoting Pommegranate
Optionsxpress provides pit access for some products, but not electronic, like coffee, Cocoa and sugar. So you'd have limited access.

The margin I have is $300 and I trade full contracts - minis have no liquid option markets. Before choosing a b.roker, ask if they can provide SPAN margin calculation, it's significantly lower than ordinary margin calculation and absolutely critical if your strategy is writing futures options.

For example I have 85k USD account with ADM, my ordinary margin is currently at 826k USD, but my applicable SPAN margin is...
Thanks for you reply, Can you tell whetehre ADM will allow international accounts as i am not based in US?
Also do they have minimum amount required or can you recommed me so i will open an account with them.
Thanks
  • #26
  • Mar 8, 2012 6:26am Mar 8, 2012 6:26am
Quoting Sahil
Thanks for you reply, Can you tell whetehre ADM will allow international accounts as i am not based in US?
Also do they have minimum amount required or can you recommed me so i will open an account with them.
Thanks
No need for recommendations, just contact their client support. They all (ADM, RJO and ThinkorSwim) accept international clients. I am also not US-based.
  • #27
  • Mar 8, 2012 6:28am Mar 8, 2012 6:28am
I'm not sure about minimum account. I started with 50k. I believe you could start also with 10k, but you'd have to ask.
  • #28
  • Mar 8, 2012 7:50am Mar 8, 2012 7:50am
According to this link you posted, the $10 put strike is paying $40. I'm I looking at this wrong, or did price change that much in a day?

http://www.admis.com/QuotesChartsNew...de=i&bc_view=&

Also, what is max. risk on one of these types of trades?

Quoting Pommegranate
New trade guys, this time also with Silver!

Just shorted Dec 2012 Comex Silver future's 10 put option for 0.030 or $150 per contract. Silver currently trading at 33.47 .

My bet is that Silver will not crash to 10.0 by 27th of November when this contract expires.

The contract I shorted takes up approximately $300 of my account margin. If it expires out of the money and the whole $150 will become my profits then I have 50% return on my employed capital.

Next week I'll try to post a trade other than Silver to make this thread more interesting.

Also...
  • #29
  • Mar 8, 2012 8:12am Mar 8, 2012 8:12am
Quoting eagle4x
According to this link you posted, the $10 put strike is paying $40. I'm I looking at this wrong, or did price change that much in a day?

http://www.admis.com/QuotesChartsNew...de=i&bc_view=&

Also, what is max. risk on one of these types of trades?
The settlement price was yes $40, yet I shorted it yesterday for $150 as somebody on the short side was buying it back at ridiculous prices. In fact, somebody wants to buy this contract currently for $125 and I've just put up a short order at $175 . Check this online with your b.roker.

Maximum loss. If Silver would fall to zero (0.0) by Nov 27 (the expiration) and I would be that stupid to still hold on to this position then my maximum loss would be 10 points or $50000 per contract minus $150 that I received for short option = $49850 ! Always keep your risks in mind!
  • #30
  • Mar 31, 2012 5:59am Mar 31, 2012 5:59am
Hi Pommegranate!

I see that all the trades you posted here have now returned a nice profit and the contracts you shorted have mostly become worthless. You've done a rally nice job also giving insights into your trading strategy.

Have you done any new trades lately, I see that you've stopped posting for some reason? Thanks.
  • #31
  • Jun 10, 2012 2:28am Jun 10, 2012 2:28am
Quoting Cheese_Mouse
Hi Pommegranate!

I see that all the trades you posted here have now returned a nice profit and the contracts you shorted have mostly become worthless. You've done a rally nice job also giving insights into your trading strategy.

Have you done any new trades lately, I see that you've stopped posting for some reason? Thanks.
5 days after pomm last posted gold dropped from 1705 to 1641 in intraday futures trading. Selling Calls after that date, even 30% OTM would be much riskier in light of possible quick rebounds back toward 1700. generally prior to March 05, 2011, selling Gold options was much less risky than it is today... thus I would think pomm is probably finding other trading possibilities than the short side of commodities
  • #32
  • Jun 20, 2012 4:59pm Jun 20, 2012 4:59pm
Too bad we'll never hear from him again. He is labeled as commercial member.
Call me nuts, but I'm pretty sure that Pommegranate was Armada Market's CEO himself or at least some guy from Spada Capital.
:: everything is awesome ::
  • #33
  • Aug 25, 2012 7:04am Aug 25, 2012 7:04am
Quoting Black Fox
Too bad we'll never hear from him again. He is labeled as commercial member.
Call me nuts, but I'm pretty sure that Pommegranate was Armada Market's CEO himself or at least some guy from Spada Capital.
I don't know whether he was or wasn't but I've been trading that same strategy (writing deep OTM futures options on commodities) for a year and a half now. If there is anybody interested, I can post my trades here.
  • #34
  • Aug 25, 2012 7:27am Aug 25, 2012 7:27am
He is commercial. Here's a piece of cheese,
Quoting Cheese_Mouse
Hi Pommegranate!

I see that all the trades you posted here have now returned a nice profit and the contracts you shorted have mostly become worthless. You've done a rally nice job also giving insights into your trading strategy.

Have you done any new trades lately, I see that you've stopped posting for some reason? Thanks.
XAU-XAG/USD_Gold n Silver Trader's Thread = Technicals, Fundamentals & News
  • #35
  • Aug 25, 2012 9:05am Aug 25, 2012 9:05am
Quoting XTrade
He is commercial. Here's a piece of cheese,
As far as I know - oneeuro has much experience in these markets and really great results.

Best wishes,

Peter
Jesus Christ is my only Lord !
  • #36
  • Aug 25, 2012 10:23am Aug 25, 2012 10:23am
As of nearly one year I have my account with Generic Trade - they have excellent commissions: 59 cents (plus exchange fees) per side per contract. There's no minimum required to open an account, but one should have at least 1000$ to maintain flexibility. The more the better - one can diversify more and risk less. They offer span margin requirements.
I've more than doubled my account during that year, but I don't keep options till expiration - I buy them back (close positions) when they loose 50% of initial value.
  • #37
  • Aug 25, 2012 7:37pm Aug 25, 2012 7:37pm
Watching the coffee market and crude to sell puts. Looking fo weakness in grains to sell calls, wheat in particular.
  • #38
  • Aug 26, 2012 10:15am Aug 26, 2012 10:15am
Quoting Palmer
Watching the coffee market and crude to sell puts. Looking fo weakness in grains to sell calls, wheat in particular.
Crude and grains - agree, but coffee - don't know yet; gonna wait for flowering season. To choose the market direction I use fundamentals mainly.
  • #39
  • Aug 26, 2012 10:50am Aug 26, 2012 10:50am
Exactly....waiting to see if the current support in coffee holds here also. If not, 150 next downside target.
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  • #40
  • Aug 28, 2012 7:04am Aug 28, 2012 7:04am
Sold the CZ 12 1000 calls for $400
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