$1MM liquid -- how difficult to achieve 15% annual ROI with option writing?
- Thread starter platinum
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Thank all of you for the many replies. They have been helpful. I plan to continue my research and diligence on this topic.
After reading all of the controversy and differing opinions here, I will appreciate even more the true value of the 16% return from the tax liens I have invested in over the years. It's ironic how certain of the least glamorous investments have proved to be the most reliable over time.
After reading all of the controversy and differing opinions here, I will appreciate even more the true value of the 16% return from the tax liens I have invested in over the years. It's ironic how certain of the least glamorous investments have proved to be the most reliable over time.
Nope.
Buying puts and selling puts both have similar edges, but the key is to know when to buy and sell puts or spreads that comprise a put and something else, and when you are selling options, how to keep yourself hedged correctly.
The difference that is obvious is that with buying puts, you can't blow up by having an unforeseen event obliterate your account when selling naked puts. I never said you should not buy or sell puts. I said you should not write naked puts. Your loss is limited to the premium you paid when you buy them.
This stuff is elementary, I don't even know why I bother to respond to these questions. We are on a trading website, and you are asking why 1 + 1 = 2.
nitro
If it dropped from the sky or he won the lottery makes no difference to me. The advice he is being given is atrociously bad by people that don't know the first thing about options, and the things they think they know they learned from a seminar. Oh geeesus, too friggin funny.
I don't believe the original post. if is looks like a duck, quacks like a duck, and swims like a duck, it is a duck.
nitro
This is really a very tired argument. Let us suppose that a stock trader purchases puts to hedge his position. If the puts expire worthless (his long position is profitable), is he a "loser"? If I invest in fire insurance and my home does not burn down, did I "lose"?
Finally, I write an option with an expectation of holding it for at least three weeks, and the MM buys and sells it over the course of the day. He makes money on the bid/ask spread and I make money over the three weeks. His time frame is very different from mine.
MM wins on the spread, stock trader wins on the hedge, I win on theta.
This whole "zero sum game" ignores the reality of trading. Such nonsense that made me yawn in my econ classes.
Nitro,
How should I go about protecting myself when I have a naked put position and market moves against me?
I usually buy slightly closer to the money put option to protect myself when the market starts edging toward my naked puts trike, so far it has been working well but I am sure you know more effective ways.
I used to hedge my naked put position (SP500) with ES futures. It was very very very risky
Please enlighten me.
Many Thanks
How should I go about protecting myself when I have a naked put position and market moves against me?
I usually buy slightly closer to the money put option to protect myself when the market starts edging toward my naked puts trike, so far it has been working well but I am sure you know more effective ways.
I used to hedge my naked put position (SP500) with ES futures. It was very very very risky
Please enlighten me.
Many Thanks