Are naked puts really this safe????

[atticus]

Quote from MasterAtWork:

No, because if you read what i've written, a put is not a call. There is no symmetry except for forex options.
So, my arguments are not in opposition.

Carry is embedded in model-vol. So yes, you're arguments are in opposition. So why is it that deep itm puts/otm calls are not "boosted" due to transaction costs? Carry? ;p Perhaps because, "Correlation between vol and asset price change a smile to a smirk" Is that right?

Keep on editing.

 

[dmo]

Quote from MasterAtWork:

The vol of vol, volga/ vomma or convexity of vega

Vomma? Man, you quant guys are way beyond me. Vomma sounds like what I do when I have the flu.

All I can tell you is that when I was in T-bond options and the bonds started dropping and bearish fear took hold, institutions that held large long bond positions would suddenly start sending orders into our pit to buy OTM puts in staggering amounts - wave after wave of buying - and bid those put premiums up to the stratosphere. Like they were gonna vomma.

When bonds were going up these guys were nowhere to be found. Probably at the beach, thinking about how much money their long bond portfolios were making.

So that's another reason I buy the "portfolio insurance" theory - I watched it work in living color with my own eyes for years. I always assumed this was obvious to everyone. It's a revelation to me that anyone could doubt it.

 

[MasterAtWork]

Quote from atticus:

Carry is embedded in model-vol. So yes, you're arguments are in opposition. So why is it that deep itm puts/otm calls are not "boosted" due to transaction costs? Carry? ;p Perhaps because, "Correlation between vol and asset price change a smile to a smirk" Is that right?

Keep on editing.

Well, you got my answer just above.
What do you mean with "keep on editing"?

 

[MasterAtWork]

Quote from dmo:

Vomma? Man, you quant guys are way beyond me. Vomma sounds like what I do when I have the flu.

All I can tell you is that when I was in T-bond options and the bonds started dropping and bearish fear took hold, institutions that held large long bond positions would suddenly start sending orders into our pit to buy OTM puts in staggering amounts - wave after wave of buying - and bid those put premiums up to the stratosphere. Like they were gonna vomma.

When bonds were going up these guys were nowhere to be found. Probably at the beach, thinking about how much money their long bond portfolios were making.

So that's another reason I buy the "portfolio insurance" theory - I watched it work in living color with my own eyes for years.

As institutions that held large long bond positions start to buy options, they need people to sell them.
The price people would sell them depend on the risk of the instrument, and for an option like an otm put, the vomma is an indicator of risk and how price will be impacted by the sensitivity of de vega to a change of implied vol, the so called vomma.
To see people doing thing without naming them (sometimes without knowing them) doesn't mean they don't exist. People knew how to sail before knowing fluid mechanic.

 

[MasterAtWork]

Quote from dmo:



So that's another reason I buy the "portfolio insurance" theory - I watched it work in living color with my own eyes for years. I always assumed this was obvious to everyone. It's a revelation to me that anyone could doubt it.

who? Does it mean that is the only reason? Doesn't it mean that if to me, skew is made by several reasons, it rejects yours? I find it's a little bit binary.

Btw, if vomma sounds like what you do when you have the flu, volga may sound like a russian river? Delta would be related with Mississippi?

 

[dmo]

Quote from MasterAtWork:

who? Does it mean that is the only reason? Doesn't it mean that if to me, skew is made by several reasons, it rejects yours? I find it's a little bit binary.

Btw, if vomma sounds like what you do when you have the flu, volga may sound like a russian river?

Well of course that's true, me saying that it's obvious to me proves nothing. Just recounting my experience FWIW. At the end of the day it's just my opinion and worth what you paid for it.

 

[beep1]

Quote from optioncoach:

You admit you do not know what I trade cause it is what you "hear". You are also using aliases which shows you are being duplicitous (sp) yourself. So you know nothing of my trades except that I can tell you , you are wrong and even Atty confirmed it.

Except for the occasional short straddle in limited numbers which I stated I NEVER sell naked options. SO nothing hypocrtical in my posts warning newbies against selling naked options at all. Even the most experienced short premium sellers will advise newbies against selling premium. Many more experienced traders than I would still not recommend naked options to newbies even if they do it themselves. It is not hypocrticial it is smart advice to a newbie.

i am not whom you responded to. because two persons take similar opinions on one issue, you conclude they are the same? should we add inability to reason properly as another of your not so positive attributes?

the issue is not the question of naked selling. i have put it in bold in my previous post, yet you attempted once more to deflect the issue. the basis of the issue that i have been stating a number of times now is expressed in your latest note:

Quote from optioncoach:

Even the most experienced short premium sellers will advise newbies against selling premium.

i believe that the majority of these experienced traders know every well that allocating their money in NET LONG PREMIUM is a losing proposition even for themselves with their experience/skill. i have not used this belief in my conclusions on your posts, but i have used your own posts containing trades to reach my conclusions.

i would take the advice in the above quote as genuine and non-biased if i had seen trading experiences from you where you would have showed positive results, similar to what you did on various occasions in the case of net short premium.

frankly, i doubt that the majority of experienced traders will make money NET LONG PREMIUM. I would even say that the majority of experienced traders will lose money if they were to change from NET SHORT to NET LONG premium.

i would be interested to follow a journal from you where you would be net long premium, and we would then see how much money you would make or lose. given your experience/skill, if it turns out that you will be less successful on long side of premium compared to short side, then newbies should not attempt it.

 

[El OchoCinco]

You want proof here it is.

The risk reward profile for an Iron Condor can be achieved by entering a long Condor for a net debit with just calls or puts and an Iron ButterFly can be replicated using a net debit long butterfly. An OTM put spread can be done using a deep ITM call spread for a net debit.

So just take anyone successfully using Iron Condors or Iron Flys and do them as net debits and there is your proof someone can make money with net debit spreads.

Take my Credit Spread Journal and look at each trade as its synthetic debit spread and you have your proof in the pudding.

So I just proved someone can make money trading net debits. It was my preference to do the spreads as net credits but my FLYs are either net debits through calls or puts, or net credits as legged into Iron Condors.

You seem to know a thing or two about options so not sure why you make such a big distinction about net long or net short premium unless you are only limiting net short premium to naked option sellers which is very limited. If I traded a fund and made money soley on Iron Butterflies would you argue that proves only ner short premium can make money?

Also this is your bold post:

"the concern has never been that you recommend to beginners to sell options, the concern was (and still is), as evidenced by your latest post, what you do for your account is what bothers you if someone else were to do it. how could you reconcile these facts?"

the reconciliation is easy for anyone with a brain. What bothers me is beginners making naked puts sound like easy money. regardles of whether I have ever traded them, it makes sense to hate the ignorance of risk espoused by beginners how short puts is easy money. There is nothing to reconcile. It goes back to my previous post that just because experts trade naked options does not mean they would recommend them to beginners.

Just let it rest because you are trying to pick a fight where none exists. The only thing I can see you trying to say is that if I trade short puts I should not comment that beginners shoudl avoid them.

 

[Emilio_Lizardo]

Quote from dmo:

Quote from MasterAtWork:
The vol of vol, volga/ vomma or convexity of vega

Vomma? Man, you quant guys are way beyond me.

DMO, MAW/RFT is not a quant. He doesn't even trade. He is a fake quant like Maestro except that he knows how to cut and paste from Wikipedia, Investopedia, and other sources. However he has no real understanding of what he is posting.

 

[MasterAtWork]

Quote from Emilio_Lizardo:

DMO, MAW/RFT is not a quant. He doesn't even trade. He is a fake quant like Maestro except that he knows how to cut and paste from Wikipedia, Investopedia, and other sources. However he has no real understanding of what he is posting.

I agree Emilio. I'm on your side Emilio. Right ahead Emilio.