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If you sell naked puts to collect premiums and base your decisions on the premium, it’s a bad idea. If you do it to buy stock you want to own, it’s a good idea. The key is not to sell more contracts than the number of shares you wouldn’t mind to own. Actually, if implemented this way, you...

See a quote in one of my previous posts: "Over a period of four decades, I have spent thousands of hours trying to devise the "perfect" option strategy using both puts and calls, a strategy that consistently made money in both up and down markets, one which would never give me a single...

Yes, you are correct about this. However, even if we completely remove the November trades, they still would end 2008 almost breakeven, after starting the year with 34% loss and having another 30% loss in October. Having returns of 140-170% per year (compounded) in three "normal" years and small...

If I'm trading call and put spreads at the same distance from the underlying, why do you call it directional bet? Then once again, isn't the extreme bull market we had in 2009 almost as bad for those strategies as bear market? "proceed with extreme caution and expect the worst" - isn't this...

A question to experts: One of the services that I mentioned has the following comment about their Jan. 2008 loss: To our surprise, and against all recommendations and basic money management rules, a great number of our subscribers had allocated 95% to 100% of their trading portfolio to...

I can definitely do it. Meanwhile, here is the history of my IC trades since April 09: May: -7% in 31 days June: 21% in 27 days July: 21% in 55 days August: 29% in 25 days September: -5% in 70 days October: 16% in 45 days November: 26% in 46 days December: 31% in 43 days An...

Like I mentioned in my first post, I started using iron condors in April 2009. Despite very strong move since then (rut moved from 450 to 600 – that’s 33% in 7 months, doesn’t happen very often), I had 14% average gain (including two losers). I made 8 trades, 2 losers (6-7% each) and 6...

I think that everyone agrees that risk management is the key, but I guess the key question is put very well by Terry: “The question for all of us to ask is "Are we willing to accept the risk of a dramatic market event that might take place only once in 50 or 100 years, knowing that we will...

I know. He doesn't hide it. Even in this article, he mentions that "In the January 2008 expiration month, the Russell 2000 (IWM) fell 14.5%, wiping out much of the average 60% gains our portfolios had earned in 2007." But he has many valid points.

I just read a very interesting article on Terry’s Tips website. Here are some extracts from the article. Over a period of four decades, I have spent thousands of hours trying to devise the "perfect" option strategy using both puts and calls, a strategy that consistently made money in both...

You can say the same about every strategy. If you were long bank stocks, it worked for years, but in 2008 you would lose 70-90%. Risk management is the key to every strategy.

I think we all agree that the key to successful trading is risk management, no matter what strategy you use. I would like to go into some details about my trading strategy and I would appreciate any feedback. Currently, my strategy is the following portfolio allocation: • 20-25% - two RUT...

This is irrelevant to margin calculation. If I make $2, it's 25% profit (2/8). If I lose $2, it's 25% loss. If I lose $4, it's 50% loss. If I lose the whole $8, it's 100% loss. Lets take as an example IC with $2 creadit. In order to lose 50%, the spread in money should be worth about $6...

Why not? What are the correct calculations?

You are making excellent points, and I would like to comment on some of them. First of all, I don’t think that it is easy. The purpose of my post was to share my limited experience and to get comments and feedback, so we all can become better traders. Extreme bull markets are not much...

I wasn't sure that I'm allowed to mention names of those services, but since you mentioned condoroptions - no, it's not condoroptions. condoroptions actually had few months with very big losses. The first one is wickedprofits. You can see their performance here -...

I did calculated it as return on margin. If I collect $2 for an Iron Condor, my margin requirement is $8 (10-2). If I buy it back for $0.3-0.4, I make $1.6 on $8 margin. That's 20% on margin.

You are right of course. What I meant is sit tight and watch the time working for you. If I collect $2 for an Iron Condor, and I can buy it back for $0.3-0.4, I make $1.6 on $8 margin. That's 20% in 6-8 weeks. In 6 out of 8 my trades since May, this is what happened.

No, I'm not looking at option selling strategies as a way to generate income. I want to increase my returns and increase probability of success. I understand that those strategies are not going to work every month with the same success. However, we know that markets do move in range most of...