My numbers show, that selling ITM verticals is much more profitable than OTM... why? Because all amateurs are selling OTMs,
Selling ITM's, same as Buying OTM's .... a directional play with negative theta?
3K monthly income on a 100K account
- Thread starter aibanez
- Start date
Selling ITM's, same as Buying OTM's .... a directional play with negative theta?
Generally selling OTM verticals is pretty crappy in my experience, much better to buy them IMO.
I mean you basically sell an option with low IV and hedge with a higher IV option which will seriously eat into any profits you get. Much better to sell the high IV option and buy the low IV option.
Obviously there are some things like vanna & vomma (I think it was) that will affect the further OTM options very negatively (or positively, if you're long these options)
I mean you basically sell an option with low IV and hedge with a higher IV option which will seriously eat into any profits you get. Much better to sell the high IV option and buy the low IV option.
Obviously there are some things like vanna & vomma (I think it was) that will affect the further OTM options very negatively (or positively, if you're long these options)
KISS is the best approach
Making money at anything is often simple, but rarely easy.
Consistently being right more than 50% of the time and having bigger winners than losers is not easy. Like I said before, my win% is over 90%, but my losers are much bigger than my winners.
Consistently being right more than 50% of the time and having bigger winners than losers is not easy. Like I said before, my win% is over 90%, but my losers are much bigger than my winners.
You're not trading; what you're doing is selling insurance.
True.
dejatrader ..... IMO the15.41%, 19.16%,29.26% and 11.57% monthly returns are impossible selling far OTM naked puts. Could you post a trade with real quotes that will bring in $11,000 to $29,000 monthly selling far OTM puts with an account balance of $100,000?
I posted a naked put GOOGL example with very little room for error that brings in $5,950 (6%) monthly. I don't see how you can get much higher than 6% monthly. http://www.elitetrader.com/vb/showpost.php?p=3994610&postcount=45
Now remember .... I don't want a song and dance. I just want you to post an actual trade example with real quotes.
dejatrader ..... IMO the15.41%, 19.16%,29.26% and 11.57% monthly returns are impossible selling far OTM naked puts. Could you post a trade with real quotes that will bring in $11,000 to $29,000 monthly selling far OTM puts with an account balance of $100,000?
I posted a naked put GOOGL example with very little room for error that brings in $5,950 (6%) monthly. I don't see how you can get much higher than 6% monthly. http://www.elitetrader.com/vb/showpost.php?p=3994610&postcount=45
Now remember .... I don't want a song and dance. I just want you to post an actual trade example with real quotes.
I already showed you how to adjust that GOOGL trade that you posted as an example, to exceed the returns I'm making, if you're willing to take the risk. And you would have a LOT of room for error. But if you want another example here you go. These are actual completed trades in my account last month...
INCY trading at $48.31 on 5/27/14
Entry: Sold Jun20 40 Put for $0.83 ($83)
Margin $680.60
Commission $0.05
Exit: Expired worthless
12.19% ROI in 25 calendar days
RMTI trading at $10.07 on 5/27/14
Sold Jun20 7 Put for $0.35 ($35)
Margin $270
Commission $1.09
Exit: Bought back for $0.05 ($5) on 6/2/14
Commission $0.34
10.58% ROI in 7 calendar days
This one would have been 12.56% ROI if I held to expiration.
COUP trading at $28.44 on 6/4/14
Sold Jun20 20 Put for $0.20 ($20)
Margin $272.50
Commission $0.79
Exit: Expired worthless
7.05% ROI in 17 calendar days
I included this one to show that I'll take lower returns as expiration gets closer because it still works out to a good annualized rate.
When possible I will also sell calls against these puts, or buy protecting puts, to make better use of my margin as I illustrated with your GOOGL suggestion.
I can't confirm those quotes. Can you post current quotes as if the trade was being opened today? Keep it brief ... no long winded reply.
Here's a good one:
INSM last trade at $20.01
Sell Jul18 16 Put for $0.35
Margin $283
12.36% ROI in 16 calendar days (if you had sold it yesterday when the market was open).
The premium will probably drop quite a bit on this one Monday morning, but it might still be worth selling.
INSM last trade at $20.01
Sell Jul18 16 Put for $0.35
Margin $283
12.36% ROI in 16 calendar days (if you had sold it yesterday when the market was open).
The premium will probably drop quite a bit on this one Monday morning, but it might still be worth selling.