Sold 1 Feb NG at 2.563
Bought 1 Mar NG at 2.60
(-$3.5*2 + -$3.5 = -$10.5 futures execution and options assignment commissions.)
The Feb sell will offset the 3 put. The spread at the time of execution was 0.037, so my new break-even based on Mar contract is 2.815 (after commissions).
I'll put an order to sell a call and a put option soon. To sell a call, I need a bit of bounce and to sell a put, I need a further drop. Until then, looks like I'm going to be in the wait mode again.
I'm wondering if history repeats itself between Feb and June like boogster says.
7 comments:
So, you bought a Feb put to cover your shorted Feb 3 put? Then, you bought a March call? Damn, I don't know why I'm so confused...
I bought feb futures to offset feb 3 put because the put will be assigned today (options expiration) so that I'm flat on any feb contract. Since I want to hold on to a long, I bought March contract.
Normally, you'd sell something and buy it back to cover and never deal with assignment, but I like to get assigned and sell futures because I don't want to be a victim of market makers who are playing with premiums.
It's a bit tricky the first time around, but once you figure out once, you're good forever.
In stock if you sell 1 put option, you get assigned 100 shares of long, but in futures, 1 short put options means, 1 long contract.
On the other hand, if I sold a call and get assigned, I'd be holding a short futures after expiration.
you bought a feb call or bought a feb put to offset your shorted feb 3 put?
Here's what happened
1. Sold 1 Feb 3 put.
2. Assigned to 1 long feb futures at 3.0 after options expires. I'm net long 1 futures (it's as if options were converted to futures if they expire in the money).
3. I sold 1 feb futures. At the same time, I bought 1 mar futures. I'm net 0 on feb and net +1 on mar futures.
I think assignment is a tricky part and that's something a lot of people to avoid when options expire in the money.
Option in the money at expiration -> assignment
----------------------------
Long call -> long futures
Long puts -> short futures
Short call -> short futures
Short puts -> long futures
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