Overcoming ICE and CME Exchange Market Data Fees
Trading, like any venture, incurs a cost of doing business. Commissions and fees as part of transactions are compensation to exchanges, clearing houses, and brokerage firms. This standard is understood as it covers employees, services, and security. In 2015 a wrinkle was added to the commodity trading business, CME Group and ICE began the policy of charging traders and brokers alike a fee to receive its streaming real-time quotes and charts. Why pay exchange market data fees? Another cost of doing business.
Leveraging my experience and trade savvy I developed a strategy for my clients to offset the new trading expense. Using a specific set of parameters and risk management structure to meet my client’s risk tolerance, the goal is a monthly trade to collect premium to cover the exchange market data fees and all associated transaction costs.
Collecting premium, or writing options, carries significant risk. The specific structure for this monthly trade recommendation seeks out option contracts with low probability (delta) of expiring in-the-money. Often the short option is covered by a long option to reduce the risk and lower the margin requirement. Uncovered options are liquidated before expiration to reduce the gamma risk (the risk associated with sudden price changes especially near option expiration).
Here is an example using the December 2018 “Data Feed Trade.” On November 30 I recommended to my clients to sell the January 2019 Soybean Meal 305 / 295 put spread for 2.20 points or $220. The margin requirement for the position was just $443. The maximum risk was $780 if futures closed below 295.0 on the December 21, 2018 expiration date. Twenty-two days after the position was initiated the options expired worthless collecting the full $220 premium. That credit covered the exchange market data fees for the month and all commissions and fees, with additional profit leftover.
Results:
2016
Month | Met Objective | Trade |
---|---|---|
February 2016 | ✓ | Sold 1 March 2016 Euro Currency 1.07500 put for 10 points (2/10/16). Bought back the option at 2 points (2/02/16). |
March 2016 | ✓ | Sold 1 May 2016 Euro Currency 1.17500 call for 12 points (3/24/16). Bought back the option at 4 points (4/21/16) |
April 2016 | ✓ | Sold 1 June 2016 Natural Gas 1.900 put for 26 points (4/21/16). Bought back the option at 6 points (5/12/16). |
May 2016 | ✓ | Sold 1 July 2016 Natural Gas 1.950 put for 25 points (5/13/16). Bought back the option at 5 points (6/02/16). |
June 2016 | ✓ | Sold 1 August 2016 Corn 5.00 call for 5 cents (6/14/16). Bought back the option at 1 cent (6/23/16). |
July 2016 | ✓ | Sold 1 September 2016 Natural Gas 3.300 call for 25 points (7/09/16). Bought back the option at 5 points (7/27/16) |
August 2016 | ✓ | Sold 1 November 2016 Crude Oil 57.50 call for 25 points (8/17/16). Bought back the option at 5 points (9/14/16). |
September 2016 | ✓ | Sold 1 November 2016 Coffee 165.00 call for 70 points (9/16/16). Bought back the option at 16 points (10/03/16). |
October 2016 | ✓ | Sold 1 December 2016 Crude Oil 58 call for 25 points (10/13/16). Bought back the option on 5 points (10/26/16). |
November 2016 | ✓ | Sold 1 January 2017 Natural Gas 3.800 call for 25 points (11/18/16). Bought back the option on 5 points (12/20/16). |
December 2016 | ✓ | Sold 1 January 2017 Natural Gas 3.800 call for 20 points (12/21/16). Expired worthless (12/27/16). |
2017
Month | Met Objective | Trade |
---|---|---|
February 2017 | ✓ | Sold 1 April 2017 Crude Oil 48.50 put for 25 points (2/15/17). Bought back the option on 5 points (2/28/17). |
March 2017 | ✓ | Sold 1 March 2017 Crude Oil 60.00 call for 28 points (1/04/17). Bought back the option on 8 points (1/18/17). |
April 2017 | ✓ | Sold 1 July 2017 Chicago Wheat 420 put for 5’4 cents (4/13/17). Bought back the option on 1’4 cents (6/06/17). |
May 2017 | ✓ | Sold 1 August 2017 Natural Gas 2.750 put / Bought one August 2017 2.600 put for 25 points (6/08/17). Bought back the 2.750 put on 5 points (7/17/17). The 2.600 put expired worthless. |
June 2017 | ✓ | Sold 1 August 2017 Natural Gas 2.750 put / Bought one August 2017 2.600 put for 25 points (6/08/17). Bought back the 2.750 put on 5 points (7/17/17). The 2.600 expired worthless. |
July 2017 | ✓ | Sold 1 October 2017 Gold 1160 put for 2.50 points (7/18/17). Bought back the option on 0.50 points (8/09/17). |
August 2017 | × | Sold 1 November 2017 Corn 355 put for 5’0 cents (8/14/17). Collected the full premium. Assigned option contract liquidated at 345’0 for a loss ten cents. Net loss of five cents |
September 2017 | ✓ | Sold one December 2017 Natural Gas 3.550 call / Bought one December 2017 3.800 call for 25 points (10/16/17). Bought back the 3.550 call on 5 points (11/01/17). The 3.800 call expired worthless. |
October 2017 | ✓ | Sold one December 2017 Natural Gas 3.550 call / Bought one December 2017 3.800 call for 25 points (10/16/17). Bought back the 3.550 call on 5 points (11/01/17). The 3.800 call expired worthless. |
November 2017 | ✓ | Sold one March 2018 Cotton 66.00 put / Bought one January 2018 66.00 put for 45 points (10/16/17). Bought back the March put on 5 points (12/27/17). The January put expired worthless. |
December 2017 | ✓ | Sold one March 2018 Cotton 66.00 put / Bought one January 2018 66.00 put for 45 points (10/16/17). Bought back the March put on 5 points (12/27/17). The January put option expired worthless. |
2018
Month | Met Objective | Trade |
---|---|---|
February 2018 | ✓ | Sold one April 2018 Crude Oil 53.00 put at 25 points (2/14/18). Liquidated the option on 5 points (2/22/18). |
March 2018 | ✓ | Sold one June 2018 Crude Oil 55.00 put at 25 points (3/21/18). Liquidated the option on 5 points (4/18/18). |
April 2018 | ✓ | Sold one June 2018 Gold 1280 put / Bought one June 2018 Gold 1260 put for 2.00 points (5/02/18). Both options expired worthless (5/24/48). |
May 2018 | ✓ | Sold one June 2018 Gold 1280 put / Bought one June 2018 Gold 1260 put for 2.00 points (5/02/18). Both options expired worthless (5/24/48). |
June 2018 | ✓ | Sold one August 2018 Crude Oil 59.50 put / Bought one 56.50 put for 25 points (5/31/18). Both options expired worthless (7/17/18). |
July 2018 | ✓ | Sold one August 2018 Feeder Cattle 158 / 161 call spread at 50 points (7/25/18). Liquidated the spread on 2.5 points (8/22/18). |
August 2018 | ✓ | Sold one August 2018 Feeder Cattle 158 / 161 call spread at 50 points (7/25/18). Liquidated the spread on 2.5 points (8/22/18). |
September 2018 | ✓ | Sold one December 2018 Cotton 90 / 95 call spread at 45 points (9/05/18). Liquidated the spread on 3 points (10/11/18). |
October 2018 | ✓ | Sold one December 2018 Silver 13.75 / 13.35 put spread at 45 points (10/12/18). The options expired worthless (11/27/18). |
November 2018 | ✓ | Sold one January 2019 Soybean Meal 305 / 295 put spread at 2.20 points (11/30/18). The options expired worthless (12/21/18). |
December 2018 | ✓ | Sold one January 2019 Soybean Meal 305 / 295 put spread at 2.20 points (11/30/18). The options expired worthless (12/21/18). |
2019
Month | Met Objective | Trade |
---|---|---|
January 2019 | ✓ | Sold one March 2019 Natural Gas 2.700 / 2.600 put spread at 24 points (1/24/19). The options expired worthless (2/25/19). |
February 2019 | ✓ | Sold one May 2019 Euro Currency 112/110 put spreads at 18 points (2.27.19). The options expired worthless (5/03/19). |
March 2019 | ✓ | Sold one May 2019 Euro Currency 112/110 put spreads at 18 points (2.27.19). The options expired worthless (5/03/19). |
April 2019 | X | Sold one September 2019 Cotton 63.00 / 61.00 put spread at 49 points (5/16/19). Bought back the spread on 201 points (8/16/19). Loss of 152 points. |
May 2019 | X | Sold one September 2019 Cotton 63.00 / 61.00 put spread at 49 points (5/16/19). Bought back the spread on 201 points (8/16/19). Loss of 152 points. |
June 2019 | ✓ | Sold one October 2019 Live Cattle 117.000 call at 67.5 points (7.30.19). Bought back the option on 12.50 points (8/14/19). |
July 2019 | ✓ | Sold one October 2019 Live Cattle 117.000 call at 67.5 points (7.30.19). Bought back the option on 12.50 points (8/14/19). |
August 2019 | ✓ | Sold one November 2019 Crude Oil 61.50 / 63.50 call spread at 25 points (8/30/19). Liquidated the spread on 3 points (10/02/19). |
September 2019 | ✓ | Sold one January 2020 Soybeans 10.0 / 10.3 call spread at 4’6 cents or $237.50 (10/17/19). Liquidated the spread on 0’4 cents (11/11/19). Collected $212.50. |
October 2019 | ✓ | Sold one January 2020 Soybeans 10.0 / 10.3 call spread at 4’6 cents or $237.50 (10/17/19). Liquidated the spread on 0’4 cents (11/11/19). Collected $212.50. |
November 2019 | X | Sold the January 2020 Natural Gas 2.350 / 2.150 put spread for 28 points or $280 (11/15/19). The 2.350 put was assigned and liquidated at 2.274 for a loss of $480 in total (12/26/19). |
December 2019 | ✓ | Sold the April 2020 Lean Hogs 63.000 put (1.2875) / Bought the February 2020 Lean Hogs 63.000 put (.5375) at 75 points or $350 (1/17/20). Liquidated the spread on negative 2.15 points (2/03/20). Profit of $1,160. |
2020
Month | Met Objective | Trade |
---|---|---|
January 2020 | ✓ | Sold the April 2020 Lean Hogs 63.000 put (1.2875) / Bought the February 2020 Lean Hogs 63.000 put (.5375) at 75 points or $350 (1/17/20). Liquidated the spread on negative 2.15 points (2/03/20). Profit of $1,160. |
February 2020 | X | Sold the April 2020 Crude Oil 44.00 / 41.00 put spread at 25 points or $250 (2/7/20). The options expired in the money, were exercised, and liquidated for the maximum loss of $2,500 (3/17/20). |
March 2020 | ✓ | Sold one July 2020 Chicago Wheat 6.00 / 6.30 call spread at 6’0 cents (3/26/20). Liquidated the spread on 1’0 cent (5/12/20). Collected $250. |
April 2020 | ✓ | Sold one July 2020 Chicago Wheat 6.00 / 6.30 call spread at 6’0 cents (3/26/20). Liquidated the spread on 1’0 cent (5/12/20). Collected $250. |
May 2020 | ✓ | Sold one July 2020 Soybean 820 put at 5’4 cents (5/21/20). Liquidated the put on 1’0 cent (6/03/20). Collected $225. |
June 2020 | ✓ | Sold one September Crude Oil 50.00 / 54.00 call spread at 30 points (6/23/20). Liquidated the spread on 5 points (7/13/20). Collected $250. |
July 2020 | ✓ | Sold one November 2020 Natural Gas 3.25 / 3.45 call spread at 28 points (9/11/20). Liquidated the spread on 3 points (10/26/20). Collected $250. |
August 2020 | ✓ | Sold one November 2020 Natural Gas 3.25 / 3.45 call spread at 28 points (9/11/20). Liquidated the spread on 3 points (10/26/20). Collected $250. |
September 2020 | ✓ | Sold one November 2020 Natural Gas 3.25 / 3.45 call spread at 28 points (9/11/20). Liquidated the spread on 3 points (10/26/20). Collected $250. |
October 2020 | ✓ | Sold one January 2021 Sugar 15.75 call at 23 points or $257.60 (11/20/20). Liquidated the option on 3 points (12/02/20). Collected $224. |
November 2020 | ✓ | Sold one January 2021 Sugar 15.75 call at 23 points or $257.60 (11/20/20). Liquidated the option on 3 points (12/02/20). Collected $224. |
December 2020 | ✓ | Sold one February 2021 Live Cattle 102 put at 62.5 points or $270 (12/14.20). Liquidated the option on 7.5 points (1/21/21). Collected $220. |
2021
September 2021✓Sold the November 2021 Coffee 160.00 /150.00 put spread at 75 points or $281.25 (8/25/21). Option spread expired worthless on October 8, 2021. Collected $281.25.</tr
Month | Met Objective | Trade |
---|---|---|
January 2021 | ✓ | Sold the April 2021 Chicago Wheat 7.00 / 7.40 call spread at 6’4 cents (2/03/21). Liquidated the spread on 1’4 cents (3/08/21). Collected $250. |
February 2021 | ✓ | Sold the April 2021 Chicago Wheat 7.00 / 7.40 call spread at 6’4 cents (2/03/21). Liquidated the spread on 1’4 cents (3/08/21). Collected $250. |
March 2021 | ✓ | Sold the June 2021 Crude Oil 50 / 46 put spread at 28 points or $280 (3/23/21). Liquidated the spread on 6 points (4/16/21). Collected $220. |
April 2021 | ✓ | Sold the June 2021 Crude Oil 50 / 46 put spread at 28 points or $280 (3/23/21). Liquidated the spread on 6 points (4/16/21). Collected $220. |
May 2021 | X | Sold the July 2021 Natural Gas 3.200 / 3.335 call spread at 25 points or $250 (5/20/21). The options expired in the money, were exercised, and liquidated for the maximum loss of $1,250 (6/25/21). |
June 2021 | ✓ | Sold the August 2021 Silver 25.000 put / 24.500 put spread at 4.0 points or $200 (7/13/21). Option spread expired worthless on July 27, 2021. Collected $200. |
July 2021 | ✓ | Sold the August 2021 Silver 25.000 put / 24.500 put spread at 4.0 points or $200 (7/13/21). Option spread expired worthless on July 27, 2021. Collected $200. |
August 2021 | ✓ | Sold the November 2021 Coffee 160.00 /150.00 put spread at 75 points or $281.25 (8/25/21). Option spread expired worthless on October 8, 2021. Collected $281.25. |
October 2021 | ✓ | Sold the December 2021 Cocoa 2450 put at 23 points or $230 (11/03/21). Option exercised on November 5 as futures closed below 2450. Liquidated the futures contract on 2428 for a loss. Net gain of $10. |
November 2021 | ✓ | Sold the December 2021 Lean Hogs 68 put at 65 points or $260 (11/11/21). Liquidated on 5 points (12/09/21). Collected $240. |
December 2021 | ✓ | Sold the February 2021 Chicago Wheat 835 call at 5’0 cents or $250 (12/29/21). Liquidated the option on 0’4 cent (1/12/21). Collected $225 |
Results:
2022
Month | Met Objective | Trade |
---|---|---|
January 2022 | ✓ | Sold the April 2022 Cocoa 2900 call at 25 points or $250 (2/09/22). Liquidated the option on 3 points (2/18/22). Collected $220. |
February 2022 | ✓ | Sold the April 2022 Cocoa 2900 call at 25 points or $250 (2/09/22). Liquidated the option on 3 points (2/18/22). Collected $220. |
March 2022 | ✓ | Sold the May 2022 Chicago Wheat 13.50 / 14.50 call spread at 5’5 cents or $275 (3/25/22). The options expired (4/22/22). Collected $275 |
April 2022 | ✓ | Sold the July 2022 Corn 830 / 870 call spread at 5’0 cents or $250 (5/20/22). Options expired worthless (6/24/22). Collected $250. |
May 2022 | ✓ | Sold the July 2022 Corn 830 / 870 call spread at 5’0 cents or $250 (5/20/22). Options expired worthless (6/24/22). Collected $250. |
2023
Month | Met Objective | Trade |
---|---|---|
January 2023 | ✓ | Sold the March 2023 Crude Oil 55.00 put at 30 points or $300 (1/05/23). Liquidated the option on 5 points (1/18/22). Collected $250. |
April 2023 | ✓ | Sold the June 2023 30-Year Bonds 126 / 123 put spread at 22 points or $343.75 (4/21/23). Liquidated the spread on 3 points (5/24/23). Collected $296.875. |
July 2023 | ✓ | Sold the September 2023 Crude Oil 87.00 call at 25 points or $250 (7/13/23). Liquidated the option on 3 points (8/15/23). Collected $220. |
August 2023 | ✓ | Sold the October 2023 Live Cattle 187.00 call at 62.50 points or $250 (7/13/23). Liquidated the option on 10.00 points (10/03/23). Collected $220. |
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Risk Disclosure
WHEN INVESTING IN THE PURCHASING OF OPTIONS, YOU MAY LOSE ALL OF THE MONEY YOU INVESTED.
WHEN SELLING OPTIONS, YOU MAY LOSE MORE THAN THE FUNDS YOU INVESTED.
The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.
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