Anyone selling premium only

[cdcaveman]

this thread is like so many before it... i've learned alot over the past year reading similar ones and researching from there..

i think there is sort of progression of trading that happens for the person coming into trading options...

you buy premium.. find out about what "theta is" lose money
you sell premium... either via naked puts or credit spreads..
you win alot.. then lose all your winnings back

you go back to the drawing board.. start reading about relative pricing, term structure, and just volatility arb in general.. .

being as it that you can't extract the implieds exactly from the realized when trading volatility you end up speculating in other risks..

i can not hide from risk... i can not get stuck just selling or just buying options because i limit my opportunity..

in essense you are always trading relative pricing... the implied volatility that you are buying or selling against what is realized.. being as it that you can not extract that purely like in a variance swap you are subject to hedging error. "Error" is just another source of risk and is speculated upon...

Hence the expression "gamma scalping"

 

[zdreg]

Quote from metameta:

but its so fun dammit

it is fun until you get a margin call which you obviously cannot meet. if you think this business is for fun you will soon be flipping hamburgers as a job , if you can get one.

 

[optionbull]

Quote from metameta:

I just think call spreads with that account size would work best.

Try call spreads with 10% of your account and give them time to mature.

Maybe sell a few puts.

Just start small until you understand the mechanics of everything you are doing.

I don't know just my two cents.

The one thought that comes to mind is the last "crash" excluding any flash crash, was probably once in lifetime event, they brought down the whole market ... even the good ones like you mention that pay dividend and sell product, measurable.

Not sure what your doing is looking in isolation ?

I am saying I can sell index and know that there will be a day when it crashed, but if I am able to rid a few quarters FIRST before that crash I live to se another day because i have OTM spread on..

or I become a great call spread picker ??

thnx

 

[cdcaveman]

Quote from optionbull:

The one thought that comes to mind is the last "crash" excluding any flash crash, was probably once in lifetime event, they brought down the whole market ... even the good ones like you mention that pay dividend and sell product, measurable.

Not sure what your doing is looking in isolation ?

I am saying I can sell index and know that there will be a day when it crashed, but if I am able to rid a few quarters FIRST before that crash I live to se another day because i have OTM spread on..

or I become a great call spread picker ??

thnx

there is an inherent advantage to selling index puts relative to single name puts.... there are alot of dead single names, and the index is price relatively higher then its constituents put together

 

[metameta]

Quote from zdreg:

it is fun until you get a margin call which you obviously cannot meet. if you think this business is for fun you will soon be flipping hamburgers as a job , if you can get one.

i love this one. read my posts. keep leverage low, don't concentrate.

my family had a hamburger business for over 40 years in southern california.

all we own now is commercial real estate with taco stands on it paying us rent.

i'll see if they are accepting applications.

 

[oldtime]

Quote from metameta:

i love this one. read my posts. keep leverage low, don't concentrate.

my family had a hamburger business for over 40 years in southern california.

all we own now is commercial real estate with taco stands on it paying us rent.

i'll see if they are accepting applications.

now you are making me hungry

I am for the most part a vegetarian

and 90% of what I cook and eat is Mexican

But I could go for a good old fashioned hamburger

 

[luisHK]

Quote from hoop121:

.

it's been 5 years since a major correction and right now premium is at an extreme discount. even Talib himself said that tail risk is already under-priced, etc.

. even Taleb himself ? Isn t he one of the most vocal proponent of this idea ?

 

[oldtime]

what was that they called it?

series 63 or 64?

at anyrate, you had to sit through a class

they told you how all these English shippers were doing just fine

until one of their ships sank

and then they went broke

so they came up with the idea of mutual insurance

 

[metameta]

Quote from oldtime:

now you are making me hungry

I am for the most part a vegetarian

and 90% of what I cook and eat is Mexican

But I could go for a good old fashioned hamburger

If you are a vegetarian you definitely have to try the flying dutchman on the secret menu at In-N-Out

 

[zdreg]

Quote from metameta:

i love this one. read my posts. keep leverage low, don't concentrate.

my family had a hamburger business for over 40 years in southern california.

all we own now is commercial real estate with taco stands on it paying us rent.

i'll see if they are accepting applications.

you are in luck nowadays. when capitalism reigned in the US it was shirt sleeves to shirt sleeves in 3 generations.