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A Fortune in Selling Naked Call Options (w/Martingale)
- Thread starter jones247
- Start date
Quote from jones247:
Let's remember the edge that selling a call ATM after a big upswing can provide. The Theta and Vega should both work in my favor. Also, ATM has some cushion built-in, as it is still more expensive for the buyer to exercise an option ATM than to buy the stock in the open market.
Walt
But those ATM's are SO close - one trading day away - to being ITM, unless you did catch the top which even the pros can't do on a consistent basis.
Quote from jones247:
Let's remember the edge that selling a call ATM after a big upswing can provide. The Theta and Vega should both work in my favor. Also, ATM has some cushion built-in, as it is still more expensive for the buyer to exercise an option ATM than to buy the stock in the open market.
Walt
My last on this thread. Selling an atm option after a big upswing is not an edge. If it were, you wouldn't be here crowing about it. In any event, I wish you luck with this strategy and hope you remain profitable.
Quote from jones247:
I understand that selling calls on anything less than a mega cap stock is a ticking time bomb. However, I don't know of anytime in the market place when a stock index or a stock that has a market cap > 50 billion increases more than 30% in any given month. This statistical fact would serve as the edge for this strategy.
Walt
Take a look at FXI. GOOG even recently...
I totally dun get it.
If you guys oppose to this strategy,may I know what is your preference strategy?
Spread?Fly?Condor?
Is there any safety way to trade option?I thought option is exposed to black swan event no matter what the strategy is.
But I am a newbie,so I really want to know the better strategy.(while there is no best,be at least better than the other.)
Please reply me.
If you guys oppose to this strategy,may I know what is your preference strategy?
Spread?Fly?Condor?
Is there any safety way to trade option?I thought option is exposed to black swan event no matter what the strategy is.
But I am a newbie,so I really want to know the better strategy.(while there is no best,be at least better than the other.)
Please reply me.
I sold naked puts and calls on spx for 3 years rolling up/down, out and increasing size. It yielded about 1% per month from 2002 thru 2005. Then I read Natenburg and shut that crap down in a hurry. I consider myself very LUCKY to not blow out my account.
I could't get naked selling out of my head and a year later, I engaged in a strategy which employed very consistent overbought/oversold indicators on equities. I sold naked, accepted assigment, rolled up/out, increased size. I had a whole toolbox. I was printing money, walking around with a stupid smile all day.
Unfortunately, my perceived edge had me on the train tracks in front of NEW last winter. I gave back 6 months of nickels in a few weeks.
Now I trade spreads like the bitch that I am.
I could't get naked selling out of my head and a year later, I engaged in a strategy which employed very consistent overbought/oversold indicators on equities. I sold naked, accepted assigment, rolled up/out, increased size. I had a whole toolbox. I was printing money, walking around with a stupid smile all day.
Unfortunately, my perceived edge had me on the train tracks in front of NEW last winter. I gave back 6 months of nickels in a few weeks.
Now I trade spreads like the bitch that I am.
sorry to hear that tman.... but I believe that writing calls against futures indices or mega cap stocks after an upward spike of 10%+ is the safest way to approach this strategy. Futhermore, I would only double up (martingale) once or twice, depending on my sentiment and other fundamental factors.
Walt
Walt
Quote from jones247:
sorry to hear that tman.... but I believe that writing calls against futures indices or mega cap stocks after an upward spike of 10%+ is the safest way to approach this strategy. Futhermore, I would only double up (martingale) once or twice, depending on my sentiment and other fundamental factors.
Walt
At least, sell straddles - with the same reward you'll cut the risk twice as the market will go against you only in one direction.
Quote from mihalich:
At least, sell straddles - with the same reward you'll cut the risk twice as the market will go against you only in one direction.
Good point mihalich... as a matter of fact, I've been testing the selling of straddles just in-the-money, with a one month expiration. However, this past month, which expired on the 18th of January, was brutal for me. Many of my straddles lost because I held on too long. Some of them did not have a stop loss, as I wanted to test the market for a retracement. Unfortuneately, the retracement never came for many of my positions. It seems that the market is becoming more volatile. There are several postulates for that, but the more important thing is to determine how to profit from a more erratic market. I actually think long straddles, as opposed to short straddles, a week or two before earnings is the best choice in this market.
Walt
Quote from jones247:
Good point mihalich... as a matter of fact, I've been testing the selling of straddles just in-the-money, with a one month expiration. However, this past month, which expired on the 18th of January, was brutal for me. Many of my straddles lost because I held on too long. Some of them did not have a stop loss, as I wanted to test the market for a retracement. Unfortuneately, the retracement never came for many of my positions. It seems that the market is becoming more volatile. There are several postulates for that, but the more important thing is to determine how to profit from a more erratic market. I actually think long straddles, as opposed to short straddles, a week or two before earnings is the best choice in this market.
Walt
well you've taken your big loss now. within a short time, the mkt should reward the volatility seller...
the casino doesn't quit on his first big loss.. he stays in the game.