any option sellers

Hello, guys.
Want to throw in some additional info about short options.

I've been shorting naked options for some time with TOS live account, but then had to closed it a year ago. Now I've returned to testing the strategy with paper money in TOS. Want to share some results and waiting for your comments.

My strategy is straight simple, something like it's been said in that popular interview with option trader Karen on Tastytrades (TOS) Youtube video channel.

I'm selling:
- no equity futures options, only commodities due to it's more smooth movement and higher return
- just a month (30 days) prior to expiration, in order to get smaller exposure time
- less than 5% of being ITM probability according to TOS platform, in order to get far OTM strikes
- both calls and puts making a strangle with free (of margin) doubling of premium collected
- no spreads in order to pay less comissions and make adjustment more simple (in case if needed)

That's it. My trade plan says to pay attention when ITM probability goes to 30% and rollover to next month and far strike, but that's never happen yet, so I've never adjusted positions.

Take a look at pics, feel free to comment. As it's paper money account, I'm pretty agressive when choosing strikes closer to underlying price.
 

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Quote from Dael:

Hello, guys.
Want to throw in some additional info about short options.

I've been shorting naked options for some time with TOS live account, but then had to closed it a year ago. Now I've returned to testing the strategy with paper money in TOS. Want to share some results and waiting for your comments.

My strategy is straight simple, something like it's been said in that popular interview with option trader Karen on Tastytrades (TOS) Youtube video channel.

I'm selling:
- no equity futures options, only commodities due to it's more smooth movement and higher return
- just a month (30 days) prior to expiration, in order to get smaller exposure time
- less than 5% of being ITM probability according to TOS platform, in order to get far OTM strikes
- both calls and puts making a strangle with free (of margin) doubling of premium collected
- no spreads in order to pay less comissions and make adjustment more simple (in case if needed)

That's it. My trade plan says to pay attention when ITM probability goes to 30% and rollover to next month and far strike, but that's never happen yet, so I've never adjusted positions.

Take a look at pics, feel free to comment. As it's paper money account, I'm pretty agressive when choosing strikes closer to underlying price.
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Selling options naked is crazy if ur not planning to buy the asset. One blow up can wreck 10 good trades. Don't be cheap buy the hedge. I can just see it now, sell 1 cl put at 105 the next day the strait of Hormuz is closed and ur bankrupt. Lol
 
Quote from taipan77:
Selling options naked is crazy if ur not planning to buy the asset. One blow up can wreck 10 good trades. Don't be cheap buy the hedge. I can just see it now, sell 1 cl put at 105 the next day the strait of Hormuz is closed and ur bankrupt. Lol
More...
Bankrupt? Sure? ;)

In a worst case scenario of a sharp move on bad news... say +10% on crude oil (never seen +10$ a day)... all I've got are higher margin (3x) and not that bad PnL (-$1,800), see pic attached.

Margin can be lowered making spread with some OTM longs. PnL can be reduced with hard decision - close the position, open new far OTM in next month.

Yeah, it's all about the stats of a price will or won't go above the strikes.
 
ask victor neiderhoffer about selling unhedge options. do you really think that you are smarter than the people on the floor of the option exchanges, who hedge their trades. are you a professional in the insurance business? the answer is obviously no.
 
Quote from Strangler:

I'm an option seller and May was my 2nd worst month in 3+ years.

Not sure what strategies they use but the SPY straddle got hammered to the upside in May.
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Worst month here, at least in absolute amount. Hit by more short calls than puts, but also by bonds diving - than end of the month by equities following bonds. - 32k mtm on May 31st only while trying to enjoy a week end by the sea. Ugly. FWIW took my frustration onto hotel management and got upgraded to the presidentuial suite . lol, that was sweeter.

June is looking better, although I did one stupid and costly mistake.
 
Quote from Dael:

TOS screen attached
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Dael,

Keep us posted here how you do on your trades with this paper account.

Have you thought about when you have a second account to trade a different strategy??

EF
 
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