Hi, Are there any web sites that have useful info about trading options on futures (options with futures as the underlyings) ? Thanks,
http://www.cme.com/education/course...n_courses_classroomcourses_optionscourses.cfm http://www.nfa.futures.org/investor/bofc.html
What I don't understand is how unsuccesfull the SP emini options are compared to it's pit traded sibling-SP options, considering that a lot of the volume has migrated from the SP pit to the E mini the past 3 years. I was on the floor when I shook the hands of Elsie the cow when they introduced milk or butter futures/options at the NYBOT and right there and then we thought ," Ain't gonna happen" just wasted money launching this contract. But the SP emini options? Futures trade over 500,000 a cay the calls/put about 10-30 lots. Any explanation why?
I thought I was missing something here as well. I have been selling deep OTM SP options, then hedging with the ES when it gets close to my strike. Each SP Put/Call is 10K in margin. I had been reading about options directly on the ES contracts, which seem to have greatly lower SPAN margins, but like you say nobody trades them. Most of the quotes I'm getting are 20 - 30 contracts per day front month ATM, whereas SP front month ATMs are several thousand. I am definitely missing something.
"Are there any web sites that have useful info about trading options on futures (options with futures as the underlyings) ?" http://www.ifgnet.com/ http://finance.lycos.com/home/options/education.asp?options=bo1 http://www.numa.com/derivs/ref/os-guide/os-0.htm http://www.hkex.com.hk/TOD/SCORE/english/Part0_0.html http://option-wizard.com/futures/futurestop10.shtml PS in my view options are priced like lottery tickets or insurance contracts: low premium, high payout, low low low probabability of payout. SELLING options makes sense to me, but study the risk (if you know about futures, you already have insight into this risk). always manage risk. michael
One major reason that pit traded options are much more commonly traded than their e-cousins in lots of underlying futures contracts has to do with the much more complex strategies in options. I am an option member of the CBOT, and in the pits, it is not uncommon to be asked for a bid or offer on a multi leg strategy like a condor, and then see that one order filled by two or three different people, each doing a different complex spread strategy themselves, with maybe one or two of the single legs filled from a simple, single leg customer order. In the pit, I can also execute complex hedges if necessary to offset the risk I take on by making markets like that, so I am willing to do much larger size in the pit, as I can immediatly hedge my risks somehow or another. There just isn't an electronic platform yet that can accomodate all that adequately. Jessie
One major reason that pit traded options are much more commonly traded than their e-cousins in lots of underlying futures contracts has to do with the much more complex strategies in options. I am an option member of the CBOT, and in the pits, it is not uncommon to be asked for a bid or offer on a multi leg strategy like a condor, and then see that one order filled by two or three different people, each doing a different complex spread strategy themselves, with maybe one or two of the single legs filled from a simple, single leg customer order. There just isn't an electronic platform yet that can accomodate that adequately. Jessie
I know the gentleman who co-wrote Options on Futures and the other author runs www.optionsnerd.com if anyone is interested in futures option writing.
I'd argue that their system has more to do with it than anything. complex option strategies are not the majority of orders and even if they were, they can be handled nicely via various systems.