does anyone here use futures options instead of futures to trade calendar spreads on things like grains or oil? Any pointers or tips, thanks.
You need to be very careful. Each contract is unique. They can and do move in opposite directions. Caveat emptor...
If you are trading time delta, you would be giving up more edge to trade the less liquid options. However, you could be a master at legging in..... As for trading FOP calendars to be short/long the front month vol, I would not do it on CL or ZS because time delta risk is too great and not clearly visible (if at all) in the greeks. I would like to marry the vol trading and time spreading, but I get discombobulated over my exposure to volatility, correlations and expected return distributions of the paired strategies. Convexity in futures time spreads change sides. It is freaking confusing. VAR is nice. But, I don't want to be a deer in headlights when stuff hits the fan.
One thing futures options allow you to do is make conditional spreads. E.g. you can make a bet that the curve will steepen in a sell-off by buying the front month put and financing it with a sale of the Nth month put. There are a lot of variations on this (you can do it in a beta-neutral form, in a theta-neutral form etc) and you success will ultimately depend on your ability to call the conditional movement, the options are just a convenient instrument to express that view. I used to do that a lot in Eurodollars, where it's easier to do using mid-curve options. Oil markets have an OTC product called "early-ex options" that are identical to mid-curves in structure