Fairly new to trading -SPX Options question !

[J_Smith]

Have you already glanced at a payoff ?
Even probability weighted, it's false.
And dynamically ? It depends.

Not trading that way at the moment, and will prob be a while, but it is something I will be checking out before I place any trades.

As mentioned, I pay more attention to the charts than the maths, so with respect to CS's last post, I would not sell puts now, I would wait for a better time to sell!

J_S

 

[newwurldmn]

Selling naked options worked very good for me .I've been doing it for over two years with great returns.( about 35 % / year). I also don't think the concept needs to be so scary ! In my view , with SPX at ~1870 shorting 1375 puts is less risky then selling a vertical spread at 1600 and with more premium received.Probability of going in the money with the spread is far greater then with the naked put . I understand there are more $ at risk with naked options but with the position almost 500 points away of current S&P price there is no way in the world that I will not have enough time to react if the index starts going south ( even in a black swan situation ) . I keep at least 40-50 % of my account funds available to use as needed to reduce or completely eliminate risk if trades goes against me.

If you are making 35 percent selling otm spx options you are trading too big.

 

[Cswim63]

Hello traders,

I'm kind of new to the trading world and I need some advise in what I plan to do :
my plan is to short 1 x strangle on SPX at about 10 delta each leg, ~ 40 to 60 days to expiration . Then just don't mess with it unless one of the legs is touched ( if ever ) , point in witch I will short / long 2 x ES futures to hedge the challenged position . If SPX continues to go against my short position , the two /ES futures will cancel the loss as they will move along . If SPX moves away from the challenged leg then I will buy / sell the ES futures to flatten the position . The initial credit on SPX options and the potential additional credit from rolling down the unchallenged SPX leg will provide me with some cushion to play with the ES entry / exit points around the challenged SPX position . Does anybody see anything wrong with this plan ? Maybe some suggestions ?

Thank you in advance for your time .

Its probability vs expectancy. Your expectancy is way higher than you think. If I gave you a revolver with one bullet in a ten round chamber and asked you to play Russian roulette, you would probably say no. But if the gun had a thousand round capacity, would you change your mind? The correct answer is no BTW.

 

[J_Smith]

Its probability vs expectancy. Your expectancy is way higher than you think. If I gave you a revolver with one bullet in a ten round chamber and asked you to play Russian roulette, you would probably say no. But if the gun had a thousand round capacity, would you change your mind? The correct answer is no BTW.

What if you know that the firing pin was removed!

J_S

 

[Cswim63]

What if you know that the firing pin was removed!

J_S

Yeah and in the one in ten example I had to say probably cause you know there's guys here at ET with three posts who might take me up for the right sum

 

[J_Smith]

Yeah and in the one in ten example I had to say probably cause you know there's guys here at ET with three posts who might take me up for the right sum

All trading involves risk, so best to accept the fact and get on with the job.

If you have money, you can make money, and you do not need any "professionals" to advise you, as all they want is some of your money.

If you are unable, or unwilling, to learn what is required to make money, then you must accept the consequences, being paying out money to others, and running the risk of being deceived, which is very common in all areas of life, but especially in the financial industry.

Selling out of the money puts, is one way to make money, if you have money, and I can say that, because I done it in the past, and seen what can be achieved.

However, even though you can not lose, if done correctly, unless you have loads of money, you will find it hard to make good money, as with everything in life, one thing is always relative to another.

This discussion has actually rekindled an interest in selling Index puts, and I think I will get out my little black diary from 2007, and start to put all my 85 or so winning trades by selling mostly puts, into a sound trading approach, that covers everything - initial entry, adjusting positions, and trade closure.

I know a lot more now, than I did back then, and rest assured I will never panic again and throw away money.

Sometimes one simple post can change your life for the better!

J_S

 

[rmorse]

You will find that your clearing firm will not let you sell as much as you would have been able to sell back then. Does not mean it still not worth doing, but potential returns will be lower. I calculate these possible returns as potential profit/margin used.

 

[J_Smith]

You will find that your clearing firm will not let you sell as much as you would have been able to sell back then. Does not mean it still not worth doing, but potential returns will be lower. I calculate these possible returns as potential profit/margin used.

That will not be a problem at all, as I do not overtrade anymore, and as I do not have millions, I have come to accept the fact that my returns will be in direct proportion to how much I am willing to risk.

If I had millions it would be a different story, and I would prob not bother trading anyway, as there would be no need.

We all know the story, more wants more, but sometimes it is just best to accept what you have, and live accordingly.

Hard to believe a person lost 4 billion euro trading cfd's on Anglo Irish Bank, just imagine what he could have made selling Index puts, if he hadn't listened to so called "professionals"

J_S

 

[Sig]

All trading involves risk, so best to accept the fact and get on with the job.

If you have money, you can make money, and you do not need any "professionals" to advise you, as all they want is some of your money.

If you are unable, or unwilling, to learn what is required to make money, then you must accept the consequences, being paying out money to others, and running the risk of being deceived, which is very common in all areas of life, but especially in the financial industry.

Selling out of the money puts, is one way to make money, if you have money, and I can say that, because I done it in the past, and seen what can be achieved.

However, even though you can not lose, if done correctly, unless you have loads of money, you will find it hard to make good money, as with everything in life, one thing is always relative to another.

This discussion has actually rekindled an interest in selling Index puts, and I think I will get out my little black diary from 2007, and start to put all my 85 or so winning trades by selling mostly puts, into a sound trading approach, that covers everything - initial entry, adjusting positions, and trade closure.

I know a lot more now, than I did back then, and rest assured I will never panic again and throw away money.

Sometimes one simple post can change your life for the better!

J_S

The concept of risk adjusted return is key. It seems pretty clear you're not familiar with it. I just wish I could figure out a way to be a counterparty to everyone with this attitude!

 

[J_Smith]

The concept of risk adjusted return is key. It seems pretty clear you're not familiar with it. I just wish I could figure out a way to be a counterparty to everyone with this attitude!

Think what you like, it will make no difference to me one little bit

J_S