Are naked puts really this safe????

Quote from MasterAtWork:

I understand what you mean but the point is naked option selling is a skew game. You can' t base a business on a skew game.

Take no offense, but once again, probability doesn't mean a thing. It doesn't exist...

Cheers
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I can precisely tell you the probability of an option hitting my strike price at any given moment. For me selling options it is not a game at all, it is a business, if i wanted to play games I would go to Vegas. Unfortunately this is no easy topic and it is impossible to explain it here.

I have a mentor and the first time we met he draw on a blackboard his strategy for option selling. It took me 3 hours to understand the very basic of what he is doing. This year I am up 36% on my account with things/strategies I am doing already and know already because after six months of mentoring I still have not made any money doing what he is doing. The reason it is not because what my mentor does doesn't work, the reason it is because it is hard stuff to understand and to apply. If it were easy everyone would do it, right ? I would not sell options if there was no theta helping the option seller. A lot of times my outlook of the market is plain wrong, and when you are wrong and you are still able not to lose money or even make a little bit of money is very powerful stuff.

My mentor has a similar performance to mine but his risk profile is very sophisticated compared to mine, at any given time he is not risking more than 5% of his entire capital he does options spreads though.

Again I am NOT saying that selling options is the way to go, but I am saying that it is working for me. Maybe one day I will understand completely everything my mentor is teaching me, but that does not mean that I will be able to have the same perfoemance he is having. Do you see why this is not a black or white thing and it all depends ?

I take no offense, however we have a completely different angle to look at the same thing. It is almost as if I invite you out for a nice meal and you think Mc Donald's while I think about a northen Italian restaurant.

What makes a nice meal ? It depends on the person eating it.

With that I end my comments on this topic, I am not here to convince anyone about anything.

Good Luck to you
 
Quote from optioncoach:

The sillyness continues... You cannot even stop from contradicting yourself.

Naked puts are not safe, and it does not depend. Safe is reserved for treasuries and CDs, not naked options. Can you make money doing it? Sure any strategy can make money but there are no old-timers selling puts for a living, only those with stories about how they blew up after many years of making money.

At a minimum I would advocate put spreads over naked puts which shows a little more respect for the risk.
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Are you a net sellers of premium or a net buyer of premimum?

According to the logic of your previous posts and the posts of others of your thinking there should be no difference.

If you are a net seller of premium (my bet is that you are) then there must exist reasons for why you not a net premimum buyer.

It is the reasons you use for your own money that pushes people to favor selling premium.

Premimum sellers have more room to maneuver.
 
Quote from guy990opl:

I can precisely tell you the probability of an option hitting my strike price at any given moment. For me selling options it is not a game at all, it is a business, if i wanted to play games I would go to Vegas. Unfortunately this is no easy topic and it is impossible to explain it here.

I have a mentor and the first time we met he draw on a blackboard his strategy for option selling. It took me 3 hours to understand the very basic of what he is doing. This year I am up 36% on my account with things/strategies I am doing already and know already because after six months of mentoring I still have not made any money doing what he is doing. The reason it is not because what my mentor does doesn't work, the reason it is because it is hard stuff to understand and to apply. If it were easy everyone would do it, right ? I would not sell options if there was no theta helping the option seller. A lot of times my outlook of the market is plain wrong, and when you are wrong and you are still able not to lose money or even make a little bit of money is very powerful stuff.

My mentor has a similar performance to mine but his risk profile is very sophisticated compared to mine, at any given time he is not risking more than 5% of his entire capital he does options spreads though.

Again I am NOT saying that selling options is the way to go, but I am saying that it is working for me. Maybe one day I will understand completely everything my mentor is teaching me, but that does not mean that I will be able to have the same perfoemance he is having. Do you see why this is not a black or white thing and it all depends ?

I take no offense, however we have a completely different angle to look at the same thing. It is almost as if I invite you out for a nice meal and you think Mc Donald's while I think about a northen Italian restaurant.

What makes a nice meal ? It depends on the person eating it.

With that I end my comment on this topic, I am not here to convince anyone about anything.

Good Luck to you
More...

I am glad that your investment is paying off. (I recall our exchange of months ago when you were planning to do it)

Cheers
 
Hello Riskfreetrading,

how are you ? It is nice to see you, I do remember when we exchanged thoughts 6 months ago, I am glad that at least one person can relate to and understand what I am talking about.

I hope you are having a good year as well :-)


( and you were right ! it is possible to sell options with almost no risk )
 
Quote from guy990opl:

Hello Riskfreetrading,

how are you ? It is nice to see you, I do remember when we exchanged thoughts 6 months ago, I am glad that at least one person can relate to and understand what I am talking about.

I hope you are having a good year as well :-)
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Thanks and I will PM you to catch on things in private. I do not complain. The market has been good to me. Congrats on your success!

Maybe people would be surprised if they knew the investment you have put in your education. I have been very impressed. You deserve your success.
 
Riskfreetrading,

like someone said there is no free lunch

I am paying my mentor $ 2000 x month and when I say that people laugh, go explain them why it is worth it for me.

I will have soon a personal financial website where I will show my performance on the accounts I manage and all. No worries, it is free and I am not selling anything. It is manly to exchange ideas with like minded people and to compare mistakes so that we can avoid them in the future.

I'll give you the link privately when it is ready, about 10 days

Thank You !
 
Hi

I'm not here to tell you which strategy is the best or not. But it can be useful sometime to stress people about tools they got to manage their risk.


"I can precisely tell you the probability of an option hitting my strike price at any given moment."

No you can't. You are able to tell me what a model has defined as a probability of hitting your strike, being in the money. Your model is based on a risk neutral relationship, so you can just tell me the risk neutral probability.

But even If you knew the real probability or the right distribution, it doesn't protect you from big gaps and jumps. 1987 crash probability was about one in 10^50 according Mandelbrot calculus. August 1998 collapse is about one in 20 million "as if you daily traded for nearly 100000 years." Probability doesn't help.

...

"I take no offense, however we have a completely different angle to look at the same thing. It is almost as if I invite you out for a nice meal and you think Mc Donald's while I think about a northen Italian restaurant.
What makes a nice meal ? It depends on the person eating it."

You may be surprised :D

"With that I end my comments on this topic, I am not here to convince anyone about anything."

I'm here to learn too so if there is a good idea, why not. For the moment I'm not convinced, but things can change. Who knows?
I'm sure that you know the saying" a true trader is a human being endowed with the rare gift of a positively sloping learning curve."


"Good Luck to you"

Same here
 
Quote from Jahajee:

My example was sell 1220 put with SPU8 at 1270; when was the last time there was a one-day decline of 50 S&P points? Tell me, you experts, when was this? What was the biggest gap down in SP futures in recent years?

So, I am again reiterating that you can sell SPX puts about 50 points away from current market position and piut a sell stop order a few points above the put strike for protection. You may still lose on a few trades but on most trades you will win IF YOU MANAGE THE TRADE PROPERLY.
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ok smartass, why don't you implement this strategy and let us know how it turns out. start a journal please. you'll have a bite of humble pie within 3 months.
 
Quote from riskfreetrading:

1. Would you die without ever having lived? or
2. Die after living well.

Among those who do not ultimately make it, net premium buyers are similar to case 1, and net premium sellers are in case 2.

Even those who are making it, they are never sure of the time of death, and they are always a candidate for the above two scenarios.

Theory tells us that the above two cases are ultimately the same, but human intuition does not trust it (may be the theory is supposed to be right, but will not right, like financials saved by new shorting rules).

Which type of death would choose, knowing that you are always likely to die (in the option business that is)?

I always thought option 2 is what a smart person should fellow.

And if I have to die, at least I want to be on the side of the insiders (market makers, etc) because they are doing work on my behalf to set a currect cushion (even if that cushion may turn out to be a knife--- at least I will find support in the knowledge that the knife cut my A. and theirs).

Those saying that selling has no advantage, could you answer the above two death questions as they apply to you not as advice to someone else?
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That had to be the most horrid misuse of analogy I've seen in a long time.

Nothing wrong with selling premium, it's the leverage that will kill

Put sellers are avoiding the question What If...

Nothing wrong with buying premium, it's the "home run" mentality that'll kill. If your long option has quadrupled halfway to expiry, maybe it wouldn't be prudent to wait for the quintuple or 7 bagger.
Never look a gift horse in the mouth.
 
Quote from guy990opl:

Riskfreetrading,

like someone said there is no free lunch

I am paying my mentor $ 2000 x month and when I say that people laugh, go explain them why it is worth it for me.

I will have soon a personal financial website where I will show my performance on the accounts I manage and all. No worries, it is free and I am not selling anything. It is manly to exchange ideas with like minded people and to compare mistakes so that we can avoid them in the future.

I'll give you the link privately when it is ready, about 10 days

Thank You !
More...

We are like minded.

www.beatingtheSP500.com

Not selling anything, more of a performance resume.
 
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