Quick Options on Futures Question

Discussion in 'Options' started by NewIdiot, Mar 3, 2018.

  1. NewIdiot


    My Broker in interactive brokers, I asked them the same question and they had no way on the platform.

    How can I judge the liquidity, open interest/volume of options on futures?
    I've been just blindly placing an order and seeing if I get filled, usually I can't get filled with a market order. Does that mean zero people are trading this option? I find it hard to believe.

    I've been trying with options on futures for CME Japanese Yen as well as Eurex's V2TX volatility.
  2. Robert Morse

    Robert Morse Sponsor

    Only from the bids and offers you see on the CME
    Never, ever enter market orders in options. The level for obvious errors are very high on the CME and it cost $1000 to file a complaint.
    I'm not familiar with these markets. If they trade like other markets, there are times of the day that are more liquid. If you have no expectation of liquidity, I would avoid trading the options and stick with the future.
    dealmaker and Chubbly like this.
  3. Lee-


    Please tell me which illiquid contracts you're sending market orders for and I'll make sure you get filled. ;)
  4. NewIdiot


    If I can't use a market order for an option, I'm supposed to send in a limit order for the current price listed?
  5. Robert Morse

    Robert Morse Sponsor

    Use limit orders at pricing you want to do play.
  6. NewIdiot


    Okay so on the Eurex website that Error Correction Funder posted above shows that there is open interest on many strike prices, but most of them have 0 actual volume. Does this mean it's illiquid?

    When it says open interest, is that people put in limit orders to buy AND sell that haven't been filled yet? Or is it just buy orders?

    Does this mean that I'd be better off just buying the future instead of a call option? Because if it moves against me let's say 3 units on the V2TX spot index, I'd have something nobody would want to buy?
  7. Robert Morse

    Robert Morse Sponsor

    If a strike has no open interest. that is only one piece of information. If over all, no OI, that means no order flow and no market makers to make two sided markets. Order flow brings MM to offer liquidity.
    OI are completed trades before that date that are contracts still in effect.
    Yes or pick another future that has liquidity in their options. NO customer order flow, stay away.
  8. NewIdiot


    Ok thanks so much for answering those questions. What you said makes sense about it being how many contracts are out there, not how many limit orders are in place at that moment.

    I'm trying to understand delta pricing, is this correct..?
    If I buy an S&P500 Mini Put with a deta of -.388, does that mean for each 1 point move in the S&P500, my contract changes in value $194? ($50 per point x 3.88)
    #10     Mar 4, 2018