Covered call to reduce leverage on oil futures?

A $5 move against you in the CL (very possible given recent volatility) would mean a loss of $5000, disastrous in small accounts.

What about selling a call, long the future, so the option delta reduces overall exposure to movement of the underlying; thus reducing overall leverage?

Meanwhile you gain some time decay, too.

Best to sell an ATM, ITM or OTM call?

 

Its a synthetic short put. Just short the put and save yourself the commissions..

 

and how do you protect 5 (or 15!) point move on the downside? CC is a limited hedge with a cap on the upside.

Also check collar: http://www.meta-formula.com/future-options2.html