Beginner in selling Bull Put Spread

[Megane]

So, my November’s options were all winners

AMZN 880/875 0.24 @ 25 contracts for a profit of 590$
GOOGL 895/890 0.18 @ 14 contracts for a profit of 232$
RUT 1425/1420 0.22 @ 17 contracts for a profit of 350$

As for december, I was a little late to place my trades and had a hard time to get fill on my option choice so I only got the following:

RUT 1400/1395 0.19 @ 25 contracts for a possible profit of 440$
AMZN 1060/1055 0.27 @ 1 contract for a possible profit of 26$ (I just couldn’t get fill on more....

 

[Kim Klaiman]

Please don't forget that selling far OTM low delta credit spreads is by definition high probability strategy. Especially when you do one side only (puts) in a bull market.

The trick is not to get the occasional losers to erase months of gains. What you do when the stock moves against you? Adjust? Close at predefined loss? Easier said than done.

This strategy give illusion of safety and conservatism - nothing could be further from the truth.

 

[Megane]

So all went well for december
RUT1400/1395 0.19 @ 25 contracts for a profit of 440$
AMZN1060/1055 0.27 @ 1 contract for a profit of 26$ (I just couldn’t get fill on more....

And waiting for the weekly December 29
GOOGL960/950 0.40 @ 9 contracts for a possible profit of 428$

And the following goes for January
RUT1420/1415 0.25 @ 14 contracts for a possible profit of 330$
AMZN1090/1080 0.45 @ 10 contracts for a possible profit of 436$
GOOGL1000/995 0.25 @ 7 contracts for a possible profit of 165$

 

[Megane]

So the weekly December 29 is expired !
GOOGL960/950 0.40 @ 9 contracts for a profit of 428$
Therefore, December gave me $894 so 3% for the month or 36% annualized !

And the following goes for January
RUT1420/1415 0.25 @ 14 contracts for a possible profit of 330$
AMZN1090/1080 0.45 @ 10 contracts for a possible profit of 436$
GOOGL1000/995 0.25 @ 7 contracts for a possible profit of 165$
RUT 1470/1465 0.20 @ 16 contracts for a possible profit of 298$

I am still actively looking for doing the same strategy on a stock or index in the financial sector but no luck so far. Any advise or suggestion would be greatly appreciated !

 

[ironchef]

Please don't forget that selling far OTM low delta credit spreads is by definition high probability strategy. Especially when you do one side only (puts) in a bull market.

The trick is not to get the occasional losers to erase months of gains. What you do when the stock moves against you? Adjust? Close at predefined loss? Easier said than done.

This strategy give illusion of safety and conservatism - nothing could be further from the truth.

You are barking up the wrong tree. OP is very happy with and proud of the strategy she discovered.

I remember 2000 and 2008. But this time it is different, those days will not come.

 

[Megane]

Please don't forget that selling far OTM low delta credit spreads is by definition high probability strategy. Especially when you do one side only (puts) in a bull market.

The trick is not to get the occasional losers to erase months of gains. What you do when the stock moves against you? Adjust? Close at predefined loss? Easier said than done.

This strategy give illusion of safety and conservatism - nothing could be further from the truth.

Sorry Kim I didn't see you post earlier.

I am aware of the occasional big lost that can swap my $. I sell my way out when strike get 70% or less OTM and deal with the lost and never go riskier.

You have to keep in mind that I use this strategy only on 8% of my portfolio right now. I have 50% in stocks and about 40% in cash waiting for big drops.

Do you have a better strategy for that 8% riskier part of my portfolio ?

 

[Megane]

I remember 2000 and 2008. But this time it is different, those days will not come.

Well these days will certainly come back but in the mean time, I try to make the best of the good time. Would you have a better strategy to suggest for that little risky part of my portfolio ?

 

[ironchef]

Well these days will certainly come back but in the mean time, I try to make the best of the good time. Would you have a better strategy to suggest for that little risky part of my portfolio ?

Sorry I am just a mom and pop retail trader so do not have any expert advice for you. For that you have to ask the experts and professionals around here.

However, I can give you my personal trading experience/philosophy:

1. I did a few (lost count but 2-3 hundreds a month) mechanical buy-write calls/puts in 2013 and netted less than buy and hold the underlying. So, I don't do buy-write mechanically anymore. As reference, you can look up the returns of the CBOE buy-write indices PUT and BXM.

2. I am too dumb to do spread and/or complex combinations. I simply do not have the smart to analyze all the inter-relationships of all the greeks and how the various strikes react to changes.

3. I only do simple straight options (both longs and shorts), betting on the direction of the underlying. If I stretch the truth, I would say my win rate is 50:50. I do get a decent positive expectancy, thanks mainly to this raging bull market.

4. Frankly I don't know which part of your portfolio is risky but I stopped writing puts, naked or secured since late last year and I also kept taking chips off the table.

5. Like you I try to make the best of the good time. Hopefully when it stops, it won't hurt as bad as 2000 and 2008.

If you want to learn, read the posts of the pros as there are lots of good advice I found very helpful. For example, this thread helped solidified my understand and approach:

https://www.elitetrader.com/et/threads/writing-options-for-a-living.53037/

Good luck and best wishes.

 

[ironchef]

So the weekly December 29 is expired !
GOOGL960/950 0.40 @ 9 contracts for a profit of 428$
Therefore, December gave me $894 so 3% for the month or 36% annualized !

And the following goes for January
RUT1420/1415 0.25 @ 14 contracts for a possible profit of 330$
AMZN1090/1080 0.45 @ 10 contracts for a possible profit of 436$
GOOGL1000/995 0.25 @ 7 contracts for a possible profit of 165$
RUT 1470/1465 0.20 @ 16 contracts for a possible profit of 298$

I am still actively looking for doing the same strategy on a stock or index in the financial sector but no luck so far. Any advise or suggestion would be greatly appreciated !

Doing well?

 

[Megane]

Doing well?

It ain’t pretty as you may expect. I had to buy my way out of 2 bull put spread (SHOP & BLK) because things were to risky but not too much lost there.

My Bull put spread on RUT 1520/1515 at 21 contracts is ugly and took me by surprise a day i could not get access to my account. Now i am wondering if i buy my way out for ~7500$, wait for the best at expiration this thursday (loosing 9500$ or win 500$) or roll it over next month. I never rolled over, what is the down side to it ?