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Are naked puts really this safe????
- Thread starter RedDuke
- Start date
"Hi Chris, I believe the subject is naked puts!"
Well to me, whether you hedge the position with long futures, index puts etc... you are still making your $ from collecting the premium on the naked puts you sell.
However, I have a trade of selling naked puts that has worked consistently for the 6 years I have used it. So it can be done. Once again, it ties up margin.
Well to me, whether you hedge the position with long futures, index puts etc... you are still making your $ from collecting the premium on the naked puts you sell.
However, I have a trade of selling naked puts that has worked consistently for the 6 years I have used it. So it can be done. Once again, it ties up margin.
Quote from chrismontez:
"Hi Chris, I believe the subject is naked puts!"
Well to me, whether you hedge the position with long futures, index puts etc... you are still making your $ from collecting the premium on the naked puts you sell.
However, I have a trade of selling naked puts that has worked consistently for the 6 years I have used it. So it can be done. Once again, it ties up margin.
Sure, it works until it doesn't. There are far better risks to be taken.
"Sure, it works until it doesn't. There are far better risks to be taken."
Well show me one and then I'll show you a system that has consistently brought in $ for 6 years without ever having a short put exercised .
Well show me one and then I'll show you a system that has consistently brought in $ for 6 years without ever having a short put exercised .
Quote from chrismontez:
There is another strategy based on writing naked puts that I believe can work consistently, whereby you short puts on the strongest stocks in an index and then buy puts on the index . The number of puts you buy is calculated based what % of the index the stocks you shorted make up the index. The math on the strategy looked convincing, but it required a substantial account for the margin.
You're talking about, all be it in simplistic form, whats known as dispersion. The problem is that all or close to all the dispersion books got smoked. Its not really a retail investors strategy because of what you mentioned... capital
"Its not really a retail investors strategy because of what you mentioned... capital"
That's it in a nutshell. To make it worth doing and bringing in a good 6 figure income takes millions in the account.
That's it in a nutshell. To make it worth doing and bringing in a good 6 figure income takes millions in the account.
For a retail guy. If your a firm and you use some of the sector indexes it wont be millions in haricut money.
this thread is really about foolishly selling naked puts not dispersion. Ask putz master how selling nakked puts worked out for him. oh wait he is still trying to cover that up!
this thread is really about foolishly selling naked puts not dispersion. Ask putz master how selling nakked puts worked out for him. oh wait he is still trying to cover that up!
Quote from chrismontez:
"Its not really a retail investors strategy because of what you mentioned... capital"
That's it in a nutshell. To make it worth doing and bringing in a good 6 figure income takes millions in the account.
is the return comparable to 41% annual compounded return during 92-99 by "Capital Decimation Partners"?
with less risk?
Quote from xflat2186:
In 92-99 people were putting those numbers up throwing darts. Most of them are not in the market anymore they went back to their previous jobs.
this is not about darts. andrew lo made up a hypothetical fund selling naked puts. the fund would have returned 41% 92-99 but the strat was not forward tested in his paper. andrew lo himself said that the fund was guaranteed to implode. so it is not a viable long-term strat. still, i would be interested in knowing how the particular approach would have done going forward. would it have imploded in 01-02, in 08, etc.?