es future options

Discussion in 'Options' started by Mdtbyk, Feb 22, 2017.

  1. Mdtbyk

    Mdtbyk

    why can't i sell a call of 2325 it gives me 45.5*50 premium?
     
    #11     Feb 22, 2017
  2. tommcginnis

    tommcginnis

    #12     Feb 22, 2017
  3. CyJackX

    CyJackX

    You need to take a COMPLETE course on options if you do not understand why that idea is a complete non-starter and a very bad idea.

    Remember, when you are SHORT an option and it ends IN THE MONEY...you ARE FORCED to PAY THE DIFFERENCE between STRIKE and EXPIRATION PRICE at EXPIRATION.

    So, selling a 2325 CALL when it is at 2360 means, at the moment, you will OWE 35 points LATER, and MORE if ES climbs, EVEN THOUGH you get 45.5 Points NOW.

    Because you already will owe 35 points at the end, you aren't getting 45.5 points...You're only really getting the difference in TIME value (10.5 points). The other 35 points are INTRINSIC value that you OWE if you are short and KEEP if you are long an option.
     
    #13     Feb 22, 2017
    tommcginnis likes this.
  4. xandman

    xandman

    Do you have the means to model your options trades? Listen to what Bob said.

    You just doubled down your delta risk for around a buck premium. Crazy.

    The call is about $10 extrinsic value which just covers your put.
     
    Last edited: Feb 22, 2017
    #14     Feb 22, 2017
  5. JackRab

    JackRab

    You are short a future, if you sell a call... you're doubling down on that position. Which means if ES goes up further, you losing not in a 1:1 ratio but (depending on how many calls you sell) 1:2.

    The most you could recuperate, is selling the 2360 put... which gives you 20 bucks in premium...

    But you will still have upside risk... just a little bit less...
     
    #15     Feb 22, 2017
  6. Mdtbyk

    Mdtbyk

    Thabks why can't I sellthe 2320 put? I have the underlaying asset and the losses are there I can get 500$ there and my losses are smaller ?
     
    #16     Feb 23, 2017
  7. Also you need to stop shorting a bull market.
     
    #17     Feb 23, 2017
  8. Mdtbyk

    Mdtbyk

    doesn't every up market have some downsides ?
     
    #18     Feb 24, 2017
  9. tommcginnis

    tommcginnis

    Irrelevant.
    Every lottery has a winner.

    The *relevant* question is: is my risk commensurate with my sought reward. That is *it*.

    If you can reframe your market question in terms of risk and reward, you'll be getting somewhere.

    If you leave it as "doesn't every up market have some downsides" -- that's totally true. (See; lottery.)
    But that's not what will impact your net liq.

    Deal with the risk; deal with the reward; DON'T deal with lotteries.
     
    Last edited: Feb 24, 2017
    #19     Feb 24, 2017
    Mdtbyk likes this.
  10. tommcginnis

    tommcginnis

    BTW, and not to add confusion to your mix but, while you are aware that the clock is ticking on your short future contract, THERE ARE SUBSEQUENT futures available.

    Thus, into your mix, you can roll this Mar17, (lengthening the time to a solution OR to further losses) OR you can buy a Jun17 (effectively freezing the losses right where they're at, while providing other opportunities -- including options bought and sold)

    The immediate takeaway is: Don't feel trapped by the coming expiration.
     
    #20     Feb 24, 2017
    Overnight likes this.