How long $3000 will last option trading

SOLD -1 VERTICAL SPX 100 MAY 06 1230/1220 PUT @.35 CBOE, SPX MARK 1308.85

 

With commodities you can EASILY lose more money than you have in your account. Say you have a position and a couple of days it makes limit moves in the opposite direction. You can't get out. All you can do is set there and cry.

T

 

That's why with a small amount , you sell deep out of the moneys.
Option selling is inherently less risky than trading the underlying.

 

Well each commodity has a margin requirement. I can't remember off the top of my head but say you bought 1 contract of NKD (nikkei 250 futures contract) and the position moved against you.

If you have $4000 and the requirement is $3000, if the NKD drop more than 200 points ( $1000 because of a multiplier of 5), your position will automatically be liquidated since it'll fall below $3000.00

The problem with this is that NKD do not trade for 24 hours so it could open down 1000 points (equivalent to $5000 drop) and then you'll owe more than what's in your account.

Now if you trade with more liquid and virtually 24-hour futures such as NQ, ES, YM, or ER2, the chances of a gap against you is smaller (not necessarily zero) so your account may get liquidated closer to the margin requirement.

hope that makes sense.

 

Thanks! Supposed after liquidating my account, the brokerage firm figure that I still owed extra $2000. Do they require me to give them more money ?

 

Technically yes, but it would be on them to collect it from you.

 

SOLD -1 VERTICAL MRK 100 APR 06 35/37.5 CALL @.35 ISE, MRK MARK 34.46

SOLD -4 VERTICAL SPX 100 MAY 06 1225/1215 PUT @.45 CBOE, SPX MARK 1298.36

BOT +1 VIX 100 MAY 06 20 CALL @.25 CBOE, VIX MARK 12.20

I followed Coach Phil SPX/VIX trade.

SOLD -2 VERTICAL SPX 100 MAY 06 1225/1215 PUT @.50 using interactive brokers.

 

SOLD -1 DIAGONAL SPY 100 MAY 06/APR 06 126/125 PUT @.50 ISE, SPY MARK 129.92

Rolled my calendar APR/JUN 125 to diag
short MAY 126 PUT/LONG JUN 125 PUT

 

Bought MAY 129 XSP put in the morning for $1.85. This is probably my hedge.

Sold 1x 1215/1225 May put for $0.60.

Sold SPY 100 MAY 06/APR 06 126/126 PUT @.65
. Rolled my calendar APR/JUN 126 to MAY/JUN 126 put.

Total on SPX
-1 1220/1230 MAY put
-7 1225/1235 MAY put
-1 1260/1265 APR put
-1 1230/1235 APR call
-1 1250/1260 APR put
-1 1335/1345 APR call

 

Bought April AMD 32.5/30 put .35. Profit $30. I don't want to risk this over the earning.