Sep 19 Class Session - Futures

DMR

Dave Redding
Hi Tim:

Great topic. A few questions, posted here as opposed to a direct email. I found your comments very helpful and I hope you continue to explore Futures Contract Options in this forum and Thank You!

  1. Thank you for sharing your ToS techniques on how to manage and understand a construction of an options position with these products.

  2. Your ToS/TD experience/knowledge. Have you been able to locate any/all Futures Option Contracts in ToS/TD? I was struggling to find the underlying on one of Tom's trades several months ago. I finally ended up with a TD Rep on the phone and he reported TD does not offer every series of Futures Contract Options. Is there a service or tool (hopefully free) where one can see a complete listing - separate from ToS? so, I'll know to stop looking for that underlying in my ToS account. Is there a technique or reference that tells me which contract option tables that should be available? And then if it's not visible in ToS or IB, then I know they aren't offering that option series.

  3. On your comment about applying for Futures Contract privileges.

    - I was told by a TD rep that TD does NOT permit Futures Contract Option in retirement accounts. I had applied and been approved (no where did TD tell me this limitation). Then one Sunday in June, I was trying to buy an /ES debit spread. The submitted trade ticket (in my retirement account) went into the "infinite bit bucket" or basically disappeared after I submitted the trade. I finally located a TD knowledgeable person on Tuesday that told me TD's policy on Futures Option Contracts & Retirement Accounts.

    - I gave up on Futures Contract Options with TD. I opened an additional account (retirement $'s) with IB to enable my investment toolbox with these kind of trades. IB was happy to set me up. If anyone reading this has been successful with enabling their TD retirement account with Futures, please let me know how you did it.


  4. If possible, it would be great if the class could explore how best to adjust & hedge positions where one ends up with a mix of Futures Options and Options (SPX, SPY, ...). Are there additional considerations that require attention/management? Specifically, if we have a SPX RTT and we defend that trade on a Sunday night with an /ES PDS ... do we manage the trade the same way as if we added the PDS with SPX between 9:30AM-4:15PM Mon-Fri?

    Are there smart ways to blend Futures Contract Option instruments and standard SPX, SPY options?

  5. We talk often about the mathematical integrity of The Greeks in many forums. When we have a blended position of SPX and /ES, should we still believe the ToS Greek calculations on the total trade position?

  6. Can we explore your point/consideration on the rollover date?
 

tom

Administrator
Staff member
Hi Dave,

I don't think futures contracts offset margin requirements on equity positions unless it's a portfolio margin account. even then, the broker will probably margin each separately. I suspect even combining SPX + ISPY ir RUT + IWM etc has the same problem.

When I trade futures options (FOP) I don't use SPAN margin. I look at the max defined risk (essentially Reg T margin) so I never over leverage myself.

I've trade many retirement accounts at IB in the CTA... a few from Australia too.
 
M

meyer99

Guest
Dave,
This is not perfect, but looking at the deltas will allow you to put futures and indices or ETF/stocks in the same enchilada. For example /ESs futures could be used to hedge SPX options, in the right delta amounts. BUT it is far from perfect.
 

Tim

Member
Staff member
Hi, I will respond to these questions later today (11-5-19) or tomorrow. Sorry to be so late.
 

Tim

Member
Staff member
Hi Tim:

Great topic. A few questions, posted here as opposed to a direct email. I found your comments very helpful and I hope you continue to explore Futures Contract Options in this forum and Thank You!

  1. Thank you for sharing your ToS techniques on how to manage and understand a construction of an options position with these products.

  2. Your ToS/TD experience/knowledge. Have you been able to locate any/all Futures Option Contracts in ToS/TD? I was struggling to find the underlying on one of Tom's trades several months ago. I finally ended up with a TD Rep on the phone and he reported TD does not offer every series of Futures Contract Options. Is there a service or tool (hopefully free) where one can see a complete listing - separate from ToS? so, I'll know to stop looking for that underlying in my ToS account. Is there a technique or reference that tells me which contract option tables that should be available? And then if it's not visible in ToS or IB, then I know they aren't offering that option series.

  3. I dont know the anwsers to most of these questions. I do suspect that, not all brokers offer trading in all futures contracts. There's a pretty comprehensive list on the CBT under "our markets" link here: https://www.cmegroup.com/trading/products/#pageNumber=1&sortAsc=false&sortField=oi


  4. On your comment about applying for Futures Contract privileges.

    - I was told by a TD rep that TD does NOT permit Futures Contract Option in retirement accounts. I had applied and been approved (no where did TD tell me this limitation). Then one Sunday in June, I was trying to buy an /ES debit spread. The submitted trade ticket (in my retirement account) went into the "infinite bit bucket" or basically disappeared after I submitted the trade. I finally located a TD knowledgeable person on Tuesday that told me TD's policy on Futures Option Contracts & Retirement Accounts.

    - I gave up on Futures Contract Options with TD. I opened an additional account (retirement $'s) with IB to enable my investment toolbox with these kind of trades. IB was happy to set me up. If anyone reading this has been successful with enabling their TD retirement account with Futures, please let me know how you did it.

  5. I do not have any retirement acounts at TOS. I thought they alloweed it but maybe not.


  6. If possible, it would be great if the class could explore how best to adjust & hedge positions where one ends up with a mix of Futures Options and Options (SPX, SPY, ...). Are there additional considerations that require attention/management? Specifically, if we have a SPX RTT and we defend that trade on a Sunday night with an /ES PDS ... do we manage the trade the same way as if we added the PDS with SPX between 9:30AM-4:15PM Mon-Fri?

  7. What I have done is 1) Turn on portfolio beta weighted in TOS Analyze page 2) be sure your simulations reflect reality, and that you have only say, SPX simulated (not a bunch of different underlyings) then 3) go to /ES in the symbol box. The deltas and greeks you see in the price slices will then be normalized to those of the symbol you enter in the symbol box. Then simulate buying or selling some /ES to get your ES weighted delta to where you want. I have in fact done this a few times on Sundays and it has worked well to hedge of an SPX position.

    Are there smart ways to blend Futures Contract Option instruments and standard SPX, SPY options?

  8. We talk often about the mathematical integrity of The Greeks in many forums. When we have a blended position of SPX and /ES, should we still believe the ToS Greek calculations on the total trade position?

  9. If you have portfolio weighted beta enabled.

  10. Can we explore your point/consideration on the rollover date?
 

tom

Administrator
Staff member
This is not perfect, but looking at the deltas will allow you to put futures and indices or ETF/stocks in the same enchilada. For example /ESs futures could be used to hedge SPX options, in the right delta amounts. BUT it is far from perfect.
It will definitely hedge your Deltas but you'll have the cover the margin for both underlyings I suspect.
 

HansH

New member
TDA allows futures trading in a retirement account, but not futures options.

IB does allow futures and futures options, but be aware of margin requirements. If I remember correctly, margin can be worse than RegT. It basically makes trading futures options in a retirement account unattractive.
 

tom

Administrator
Staff member
I've done loads of futures options trades in retirement accounts at IB. I don't remember the margin being higher than the max defined risk (essentially Reg-T).
 
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