Question re using options to front-run futes

Discussion in 'Risk Management' started by Ansare, Dec 22, 2011.

  1. Ansare

    Ansare

    I trade only /es and /yi or /si. My knowledge and experience with options is very limited.

    There are times when I am ready to stick a toe in the water but don't want to commit to a full contract. So, if I wanted to buy, say, 1/3 of an /es position that would mean an investment of 50 x current price, say 1200, divided by 3, or 20k. Two questions 1) is it best to use SPY, SPX or /ES options? 2) I know I want a 20k investment in the "market," but am totally unclear how to determine the number of options necessary.

    On the sell side, if I'm short 1 contract of /yi, and want to protect profits yet keep a 25% position by buying SLV puts, how do I determine exactly the number of options to buy? If /yi's at 30, a 25% position would equal 7,500.00. I've now exhausted my limited math skills.

    TIA for any assistance. Merry Christmas and Happy Holidays to all.