Are naked puts really this safe????

[guy990opl]

Hi there,


sorry I haven't been on in the last few days...to answer to your question ... I don't know I would have to try to get my feet wet before I can say yes or no, but as I said before
for me it is all about the strategy not the underlying.

If I put down 1 to make 10 I have 90% chances to lose and 10% to win, however if I risk 10 to make 1 then there are 10% chances to lose and 90% chances to win.

Quote from MasterAtWork:

Hi guy990opl,

Don't need to reply if you don't want, I just want to show you something. Take all I say as friendly as it's been written.

[...]

 

[blackjack007]

Quote from jagmot:

OC has a directional bias. He is stating that there is more risk to the downside, ie. he thinks the market is heading lower. He is not saying that the pricing of calls is inefficient to puts. Nice try though.

the market clearly has a directional bias, that's why puts are considerably more expensive than calls. the bias is built into the pricing.

by choosing calls over puts he is in effect implying the market bias is wrong and that the call side is overpriced.

 

[beep1]

Quote from optioncoach:

Man the stupidity continues. I never said I sell premium. Try and read what was written. I specifically said in my post if I was going to sell options naked I would sell calls instead of puts as the risk seems higher to the downside now. My answer was in the context of the discussion of short option selling not giving trading advice to others based on how I trade. It was pretty clear even you would not have missed the context. I already said a few times I do not preach selling naked options to anyone.

People here have a problem following the line of conversation which is typical of ET. And I do believe in positive theta as many who know me know of the FLYs I trade which are positive theta.

"Man the stupidity continues.."

That is why I had to ask you, because your posts are like swiss cheese with a lot of holes. I will give you time to cool down, then I will show you the holes. In the meantime re-read your posts, and you might be able to see your holes if you have not already. And why assume you are the only smart guy in the room, particularly when you are not?

 

[beep1]

Quote from newguy05:

This is pure comedy, i actually loled. Optioncoach made a comment about selling call instead of put if a gun was to his head, and now he's getting tag teamed by 4 people.

ROFL!

Is it paranoia or you like to lick things? If you like to lick, make sure what/who you lick is worth the licking, and is clean and no hole.

 

[atticus]

Quote from blackjack007:

the market clearly has a directional bias, that's why puts are considerably more expensive than calls. the bias is built into the pricing.

by choosing calls over puts he is in effect implying the market bias is wrong and that the call side is overpriced.

It's not a directional bias, it's the consequence of the need for portfolio hedging. The skew holds in massive bull markets as well. Those otm puts trade at the same vols as the itm calls.

 

[sellindexvol66]

Quote from atticus:

It's not a directional bias, it's the consequence of the need for portfolio hedging. The skew holds in massive bull markets as well. Those otm puts trade at the same vols as the itm calls.

i must say that is a very good explanation to why there is the put skew in equities.


can you briefly explain why certain commodities has a call skew(such as cl)? is it simply because the hedging must be done to the upside because the strong moves tend to go in that direction?

 

[dmo]

Quote from sellindexvol66:

i must say that is a very good explanation to why there is the put skew in equities.


can you briefly explain why certain commodities has a call skew(such as cl)? is it simply because the hedging must be done to the upside because the strong moves tend to go in that direction?

I know what you mean, but CL is probably not the best example. At the moment, the CL skew is quite even up and down - a true smile of volatility. I love the crude skew because it is very pliable - the call skew can be steep while the put skew is flat, the put skew can be steep while the call skew is flat, etc. That baby moves, unlike the SPX skew which is rigid as a board and never budges.

A better example of what you're looking for is gold, or the grains. Why do those exhibit skews that are the opposite of the SPX skew? My answer is to look for where the emotion is - the excitement and the panic. In stock, it's the downside. In natural resources, it's the upside.

That's really just another way of expressing the same thing Atticus said. Most of the world is long stock so portfolio protection means buying puts. The world is short wheat and soybeans, so portfolio protection means buying calls. You and I are "short wheat" because we're going to consume more bread and pasta in the future than we own today.

Does most of the world panic when stocks go up? Of course not. Does most of the world panic when wheat goes down? No again.

 

[beep1]

Quote from dmo:

I know what you mean, but CL is probably not the best example. At the moment, the CL skew is quite even up and down - a true smile of volatility. I love the crude skew because it is very pliable - the call skew can be steep while the put skew is flat, the put skew can be steep while the call skew is flat, etc. That baby moves, unlike the SPX skew which is rigid as a board and never budges.

A better example of what you're looking for is gold, or the grains. Why do those exhibit skews that are the opposite of the SPX skew? My answer is to look for where the emotion is - the excitement and the panic. In stock, it's the downside. In natural resources, it's the upside.

That's really just another way of expressing the same thing Atticus said. Most of the world is long stock so portfolio protection means buying puts. The world is short wheat and soybeans, so portfolio protection means buying calls. You and I are "short wheat" because we're going to consume more bread and pasta in the future than we own today.

Does most of the world panic when stocks go up? Of course not. Does most of the world panic when wheat goes down? No again.

Your understanding of commodities skew will receive a standing ovation from a series of numbers equal in value to a number that looks like this letter "O" or the expression below
:eek:

 

[sellindexvol66]

Quote from dmo:

I know what you mean, but CL is probably not the best example. At the moment, the CL skew is quite even up and down - a true smile of volatility. I love the crude skew because it is very pliable - the call skew can be steep while the put skew is flat, the put skew can be steep while the call skew is flat, etc. That baby moves, unlike the SPX skew which is rigid as a board and never budges.

A better example of what you're looking for is gold, or the grains. Why do those exhibit skews that are the opposite of the SPX skew? My answer is to look for where the emotion is - the excitement and the panic. In stock, it's the downside. In natural resources, it's the upside.

That's really just another way of expressing the same thing Atticus said. Most of the world is long stock so portfolio protection means buying puts. The world is short wheat and soybeans, so portfolio protection means buying calls. You and I are "short wheat" because we're going to consume more bread and pasta in the future than we own today.

Does most of the world panic when stocks go up? Of course not. Does most of the world panic when wheat goes down? No again.

thanks dmo. i really hope these teenage dumbasses don't disillusion you to the point of leaving.


i guess anyone who talk's shit and then doesn't back it up is a real class act.

 

[Prevail]

For some, a put spread, is the best way to short premium and keep vega risk lessened. Or a diagonal can be used.