Options on futures are still misunderstood by many retail options traders. While selling options on stocks and ETFs is widely discussed, fewer traders understand why futures options behave differently—and why they can offer both higher income potential and higher risk.
In this interview, we explore options on futures with TOS (The Options Seller), an experienced premium seller who focuses on futures options on the Nasdaq 100 (NQ) and S&P 500 (ES). The discussion covers how futures options work, why premiums are often richer, how leverage changes the math, and what traders must understand before using them for income.
Video: selling options on futures for income (NQ & ES explained)
The Options Seller
TOS, short for The Options Seller, is an options trader located in Los Angeles, USA, who specializes in selling premium using futures options. She primarily trades NQ and ES futures options, focusing on short-duration trades with an emphasis on risk management, margin awareness, and active position control.
In addition to trading, she runs a private trading community where she shares her analysis and trades in real time.
What are options on futures?
Options on futures are option contracts where the underlying asset is a futures contract, not a stock or ETF. If an option is exercised or assigned, the trader receives a futures position rather than shares.
Futures were originally designed for hedging physical commodities such as corn, cattle, gold, and oil. Today, futures also exist on financial indexes, making them highly relevant for active options traders.
In this interview, the focus is on index futures, primarily:
- ES (E-mini S&P 500 futures)
- NQ (E-mini Nasdaq 100 futures)
These contracts track their respective indexes directly and trade nearly 23 hours per day.
Understanding futures multipliers and notional value
One of the most important differences between equity options and options on futures is the notional value created by futures multipliers.
TOS explains this:
- ES futures use a multiplier of $50 × the S&P 500 index level
If the S&P 500 is trading at 6,900, one ES contract represents about $345,000 in notional value. - NQ futures use a multiplier of $20 × the Nasdaq 100 index level
At an index level of 19,000, one NQ contract represents roughly $380,000 in notional value.
This large notional exposure is what makes futures highly leveraged instruments. Traders do not post the full notional amount; instead, they post margin, which is a fraction of the total value.
- Check out other interviews from Theta Profits:
- Zoheb Noormohamed: The 1-1-1 options strategy
- Doc Severson: 0DTE Iron Fly
- Daniel Nikolaides: Earnings trades
Why options on futures often pay more premium
According to TOS, one of the main reasons traders are drawn to options on futures is premium.
Futures options—especially on NQ—often provide richer premiums than equity options, according to TOS. This is driven by several structural factors:
- Higher volatility in futures markets
- Large notional exposure per contract
- Daily expirations (0DTE)
- Nearly round-the-clock trading
Daily expirations are particularly important. While many equity options expire weekly or monthly, futures options expire every trading day, allowing premium sellers to find opportunities far more frequently.
Micro futures and managing risk
To reduce risk and make futures more accessible, TOS strongly recommends starting with micro futures.
Micro contracts are one-tenth the size of standard futures:
- MES (Micro ES) uses a $5 multiplier
- MNQ (Micro NQ) uses a $2 multiplier
This significantly reduces notional exposure and dollar swings. For example, a 100-point move in the S&P 500 equals about $5,000 on ES, but only $500 on MES. This makes micro futures far more suitable for learning and for smaller accounts.
TOS’s main strategy: put credit spreads on NQ futures options
TOS’s primary strategy is selling put credit spreads on NQ futures options.
Her process typically includes:
- Analyzing price action using technical analysis
- Identifying support and resistance levels
- Using gamma exposure data to understand market positioning
- Selling puts below identified support levels
- Often converting naked puts into put credit spreads to cap risk
She prefers put credit spreads because they:
- Reduce margin requirements
- Define maximum risk
- Provide protection during volatile market conditions
Because futures options have daily expirations, she trades this strategy frequently, allowing for consistent premium collection while keeping duration short.
Leverage: the advantage and the danger
Leverage is central to options on futures.
TOS explains that futures typically provide 13–14x leverage, compared to roughly 4x leverage for most stock options. This allows traders to generate more premium per dollar of capital, but it also magnifies losses.
A key warning repeated throughout the interview is not to oversize positions. Because margin requirements can appear small relative to notional value, traders can easily take on more risk than they realize.
Understanding assignment risk, margin expansion, and worst-case scenarios is essential before trading futures options.
Repair strategies to futures options
One advantage of options on futures is the ability to actively manage and repair positions.
TOS discusses several approaches, including:
- Taking assignment of the futures contract
- Hedging with the underlying futures
- Rolling positions to later expirations
- Selling calls against assigned futures positions
These tools provide flexibility, but only for traders who understand futures mechanics and have sufficient capital to manage assignments.
Reported results and performance
In the interview, TOS shares her reported results from trading futures options.
She states that her trading in 2025 produced:
- A 91% win rate
- Approximately $77,000 in returns on an account size of around $100,000
She emphasizes that these results come from disciplined sizing, consistent execution, and active management—not from taking excessive risk.
Who are options on futures best suited for?
Based on the discussion, options on futures are best suited for:
- Intermediate options traders
- Traders comfortable with leverage
- Accounts with sufficient capital
- Traders seeking frequent income opportunities
- Those willing to actively manage risk
They are not a shortcut to easy money and are not appropriate for traders who do not understand margin and assignment risk.
Summing up
Options on futures can offer higher premium, daily opportunities, and greater flexibility than stock options. At the same time, they introduce significantly more leverage and complexity.
As TOS emphasizes throughout the interview, success with options on futures depends on understanding notional value, margin requirements, and position sizing. For prepared traders, they can be a powerful income tool. For unprepared traders, they can be unforgiving.
The core takeaway is simple: options on futures can pay more, but only when traded with discipline and respect for risk.
Books recommended in this video
TOS recommends three books for people who would like to learn more about options trading:
- Tom Hougaard: Best Loser Wins
- Mark Douglas: Trading in the Zone
- Lawrence G. McMillan: Options as a Strategic Investment
