Need advice on a futures option..please

Discussion in 'Options' started by winsomelosesome, Feb 18, 2009.

  1. Please...some honest insults

    I dont trade options, but did this one time

    I bought a ZBH9 138 put several weeks ago at 3 15/64

    With the future currently at 128 12/32.......

    The bid is 5 x 7 22/64 ask is 5 x 9 63/64

    With the intrinsic value well over I pretty much

    stuck with 7 22/64 if I want to get out now?

    I thought there was supposed to be a semi-legitimate

    spread offered ........

    Any advice from someone with experience? ....Thanks.....
  2. You own a 138 put; the underlying future is at 128'10 right now.

    You paid about 3 handles for this put.

    You could EXERCISE the put & become short US-H9 @ 138, then manage the position as you see fit.

    if you want a quick exit, you could exercise the option then offset your short futures position.

    PM me if you have any questions.

    Nice trade!:)
  3. GCSICLRBC....Thanks
  4. dmo


    You never need to settle for less than the intrinsic value of an option on a futures contract. The clean easy way for you to lock in the intrinsic value is to simply buy a futures contract. Assuming the put is still ITM at expiration, your position will disappear when your short put is exercised. If the put is otm at expiration - then so much the better!

    Think it through and you'll see why. Come back if you're still confused. No insults, I promise.
  5. In a market like this, I would buy a ZB future instead of trying to exit the long put in this "unfair" market. By buying the ZB, you lock in a profit. If the ZB continues to fall, you lock in your 10 points (minus the 3 15/64). If it rises and finishes ATM or slightly OTM, you get the same profit (10 points from the long future minus the 3 15/64). If it is rises, say 10 points above to 148, then you get 20 points from the long future minus the 3 15/64.
  6. Thanks some similar advice offline from dmo.
    You both have me rethinking my trading of futures only.
    I may have to start looking at combining both the futures
    and options...I was traveling most of the last 5 weeks
    and although I was confident in the ZB sure felt good to know my losses were limited....Thanks again everyone

    ps...glad I asked for honest answers
  7. I trade the ZB and ZN. Look up my previous journals.

    Late last year and early this year I knew that a multi-day down move in the bonds was coming but I did not want to hold futures long-term, especially in today's environment.

    I explored my options (pardon the pun) and found TBT. It has very liquid options. The spread you describe is outrageous and I haven't seen anything like that with TBT.

    Take a look and see for yourself. I"ve added it to my list of swing trade / long-term hold instruments.