Why Mainstream Investors Should be Selling Options


Jun

5

2018

Why Mainstream Investors Should be Selling Options

  1. Hello there, can you please give a recommendation on a broker/online broker that average investor should use to sell options?
    I am using Interactive Brokers, and for some reason I have an issue with the volume of commodity options: the volume is really low. For example in corn market, Aug 18 corn options have a very limited volume, only a few (if any) strike prices has volume of over 1000. In some markets it shows the ridiculous volume of less than 100 for many strike prices. Is there anything wrong, or maybe I am using the wrong broker?

    • Michael Gross Says:
      June 11, 2018 at 3:15 pm

      Long,

      For individual investors, selling options with a few hundred open contracts is sufficient. Interactive Brokers is a good company. However, if you want to shop around, you might try TD Ameritrade’s Think or Swim platform.

      Best of luck to you.

      Regards,
      Michael

  2. Kenneth Says:
    June 6, 2018 at 1:05 pm

    Hi James,

    First up, thanks for your fabulously written book and your regular blog posts. I’m a big fan. Have started selling commodities options about a year ago, and I find your strategies really effective.

    I’m just wondering whether this option selling strategy would remain effective once more mainstream investors come onboard. Case in point, more mainstream investors selling options is likely to drive down the premium, given that the demand for these options remains constant. Do you think this would then cause the option selling strategies to be less effective in term of potential risk-to-rewards?

    Hope to hear your views on this!

    Cheers and keep up the great work 🙂
    Ken

    • Michael Gross Says:
      June 11, 2018 at 3:23 pm

      Ken,

      Thank you and thanks for a great question. Commodities options have been around for decades. As in any market, there is a balance between buyers and sellers. Any type of media coverage or popularity tends to bring traders on both sides of the market. And increased trading volume is a bonus for everybody. I see commodity option volume increasing in the coming years as more mainstream investors discover the asset class. However, I do not see a big wave of sellers overwhelming buyers. If anything it should benefit both sides of the market.

      Regards,
      James

  3. Alistair Irving Says:
    June 6, 2018 at 6:28 am

    Could do with this company in UK working in GBP.

  4. By the way, I do have your “OPTION SELLING” book. And it’s great. thanks

  5. I’ve sold stock options in a virtual account. And I really enjoyed the reward for selling the options and not having to put money in the option unless I had to buy it back. Selling options on Futures is new to me, but I can see that it is very profitable.

  6. Shushhhhhhhhhhhh James!! Buying options is the far less risky endeavor!

    • Michael Gross Says:
      June 11, 2018 at 3:19 pm

      Jon,

      Really? Sorry, but I don’t like putting my money in an investment that will likely go to zero about 80% of the time. That does not sound “far less risky” to me. If you are making a living buying options, please let me know. You’d be the first person I ever met that does so.

      Regards,
      James

      • Apologies James, my (English) sense of humour seems to have missed the mark. I am indeed a full time option seller, however with all the great info you provide for free on your site I worry that soon there won’t be anyone left to buy the options I’m selling!

      • Michael Gross Says:
        June 13, 2018 at 1:42 pm

        Jon,

        No worries. Futures options are a big playing field. There will always be buyers – banks, end users, hedgers and of course, the general public.

        Regards,
        James

  7. Sib Ghosh Says:
    June 5, 2018 at 7:59 pm

    90% option buyer loose money. The option seller has more chances to win the bet.

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