How do holds work when selling naked options?

I am all for constuctive critisizm, and if i fail, it will be a learning lesson and i will be sure to post what went wrong here. I am not afraid of my failures. However I am not looking for remarks about you owning manhattan or any other comment that are not constuctive, and just because you wanted your 2c blow at me.
Can you give me a realistic scenario, and i will tell you what i would do if it went against me in that way? On paper it looks really good. Thanks again for those that are giving me insightful posts back. BTW i am new and young(23) so give me a lil break here lol. They say that option sellers win about 80% of the time and it is harder to succeed buying options. Is that true? I have been playing Virtual trade for about 4 months and paper playing for about another 4 months before that. I know thats not long by any means, but i have not taken a loss yet, so i figure its worth looking into a bit more.
 
Quote from TWORIP:

I am all for constuctive critisizm, and if i fail, it will be a learning lesson and i will be sure to post what went wrong here. I am not afraid of my failures. However I am not looking for remarks about you owning manhattan or any other comment that are not constuctive, and just because you wanted your 2c blow at me.
Can you give me a realistic scenario, and i will tell you what i would do if it went against me in that way? On paper it looks really good. Thanks again for those that are giving me insightful posts back. BTW i am new and young(23) so give me a lil break here lol. They say that option sellers win about 80% of the time and it is harder to succeed buying options. Is that true? I have been playing Virtual trade for about 4 months and paper playing for about another 4 months before that. I know thats not long by any means, but i have not taken a loss yet, so i figure its worth looking into a bit more.
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It is wise to learn from your mistakes but it is wiser to learn from someone else's mistakes.

What you are not seeing (or understanding) in the replies is that this is a path that has been traveled by many thousands before you. It would serve you well to understand the reason behind the posts that you do not like before you dismiss them.
 
Quote from TWORIP:

I am all for constuctive critisizm, and if i fail, it will be a learning lesson and i will be sure to post what went wrong here. I am not afraid of my failures. However I am not looking for remarks about you owning manhattan or any other comment that are not constuctive, and just because you wanted your 2c blow at me.
Can you give me a realistic scenario, and i will tell you what i would do if it went against me in that way? On paper it looks really good. Thanks again for those that are giving me insightful posts back. BTW i am new and young(23) so give me a lil break here lol. They say that option sellers win about 80% of the time and it is harder to succeed buying options. Is that true? I have been playing Virtual trade for about 4 months and paper playing for about another 4 months before that. I know thats not long by any means, but i have not taken a loss yet, so i figure its worth looking into a bit more.
More...

It's not those 80% of the time that is the problem, it's the other 20%! You can have a winning streak of many months or even years and then give it all back and then some on a single bad trade. There is NO inherent edge in selling options vs. buying them, so "they" are wrong or at least don't tell the full story.

The investment banks blew up because of the event that is supposed to happen only every 10,000 years or so, according to the models that is.

The point about Manhattan may seem like a 2c blow at you, but in fact it is a very valid point. On paper we are all billionaires, what counts is the real money so trade with real money first and then you will see for yourself how good or bad your approach is. All we wanna do is help you avoid blowing up before you even get a chance to understand how this whole thing works.
 
Quote from u21c3f6:

It is wise to learn from your mistakes but it is wiser to learn from someone else's mistakes.

What you are not seeing (or understanding) in the replies is that this is a path that has been traveled by many thousands before you. It would serve you well to understand the reason behind the posts that you do not like before you dismiss them.
More...


fair enough, i did'nt want to start any tention, i think places like this are great for eachother, and again i appreciate all the replies. I have also learnt that listening to others and not looking into matter are a downfall too. it would be nice if someone could elaboration on the situations instead of just a short comment of how my paper trading plan is meaningless.
 
Quote from TWORIP:

fair enough, i did'nt want to start any tention, i think places like this are great for eachother, and again i appreciate all the replies. I have also learnt that listening to others and not looking into matter are a downfall too. it would be nice if someone could elaboration on the situations instead of just a short comment of how my paper trading plan is meaningless.
More...

I think the past year and in particular the last few months have provided ample situations where the naked shorts got burned. We don't really know what your plan is so we can't take it apart to give you constructive advice. All you have mentioned so far is that you plan on selling naked calls and puts and if the market moves against you you would just roll.

So to start off, when you roll you lock in a loss. And what exactly would you do when the market moves by 30% in 2-3 weeks? If you keep rolling every 5-10% then you will just lock in a huge amount of losses.
 
Quote from MTE:

It's not those 80% of the time that is the problem, it's the other 20%! You can have a winning streak of many months or even years and then give it all back and then some on a single bad trade. There is NO inherent edge in selling options vs. buying them, so "they" are wrong or at least don't tell the full story.

The investment banks blew up because of the event that is supposed to happen only every 10,000 years or so, according to the models that is.

The point about Manhattan may seem like a 2c blow at you, but in fact it is a very valid point. On paper we are all billionaires, what counts is the real money so trade with real money first and then you will see for yourself how good or bad your approach is. All we wanna do is help you avoid blowing up before you even get a chance to understand how this whole thing works.
More...


Thank you, i see what you are saying. So like a black swan event, would be an example right.
 
Quote from MTE:

I think the past year and in particular the last few months have provided ample situations where the naked shorts got burned. We don't really know what your plan is so we can't take it apart to give you constructive advice. All you have mentioned so far is that you plan on selling naked calls and puts and if the market moves against you you would just roll.

So to start off, when you roll you lock in a loss. And what exactly would you do when the market moves by 30% in 2-3 weeks? If you keep rolling every 5-10% then you will just lock in a huge amount of losses.
More...


i would roll as strike hits and no later. i would roll out and down while reducing contracts just to eliminate cost with the added premium. on paper worst case, it is rolled 6 - 9 months out. this is not to mention the top would offset the losses on bottom (selling puts and calls same time).

example: spy, rolled jan80 to april 70 and reduce from the 10 contracts to say 8 as to not add cost. also with that big of a drop, it will turn and deter quick.

what do you think?
 
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