If you don't take the shares then you are closing at a loss.
How is this strategy possibly sustainable?
- Thread starter wxytrader
- Start date
You should be careful by making such wild statements.
With just the options w/o any underyling stock, making profit is very well possible, not only making loss; ie. your statement is not generally true. Otherwise just prove please what you stated/claimed, ie. demonstrate an example trade, for verification by others.
I am referring to selling option because the probability of profits when buying options is horrendous...selling a credit spread is always preferable imo to buying a debit spread.
Ok selling a 195 IWM put. If price drops below 195 you will be realizing a loss when you close the position. You can hedge it many different ways of course, but there is always risk of early assignment so you can't really afford to hold the position ITM...and any position 12 delta or more is touched frequently.
Oh regarding hedging...I read an article about buying a protective put, versus shorting futures, versus using stop losses to hedge a long position, and the data showed that shorting futures was the most effective form of hedging a position, protective put was second and stop losses were the worst performers...I'll try to find it again.
Here is one about trailing stops...interesting, never been a fan of stop losses but I may try out some trailing stop strategies as they seem to perform similar to buy and hold.
https://www.quant-investing.com/blog/truths-about-stop-losses-that-nobody-wants-to-believe
P.S I'm sure a certain member here can come up with various ARB methods to shave off profits from skews in vol etc but I have never tried this method so I concede my ignorance
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Whats the big deal about closing at a loss??
No stops,no rolls,no delta hedging??
You shooting for 100% win rate??
Manage your risk...
No stops,no rolls,no delta hedging??
You shooting for 100% win rate??
Manage your risk...
We went over this..Selling a spread vs buying the spread are the equivalent R/R, given the same expiry and strikes..(ignore divs).
You need to understand early assignment risk bit better..Ignoring carry vs div and borrow,early assignment is a gift. Someone is giving you a free option. THINK about it.
More importantly, if you are short an option it moves against you,early assignment should be the least of your concerns...
Have you looked at Orats??
You need to understand early assignment risk bit better..Ignoring carry vs div and borrow,early assignment is a gift. Someone is giving you a free option. THINK about it.
More importantly, if you are short an option it moves against you,early assignment should be the least of your concerns...
Have you looked at Orats??
I am referring to selling option because the probability of profits when buying options is horrendous...selling a credit spread is always preferable imo to buying a debit spread.
Ok selling a 195 IWM put. If price drops below 195 you will be realizing a loss when you close the position. You can hedge it many different ways of course, but there is always risk of early assignment so you can't really afford to hold the position ITM...and any position 12 delta or more is touched frequently.
Oh regarding hedging...I read an article about buying a protective put, versus shorting futures, versus using stop losses to hedge a long position, and the data showed that shorting futures was the most effective form of hedging a position, protective put was second and stop losses were the worst performers...I'll try to find it again.
Here is one about trailing stops...interesting, never been a fan of stop losses but I may try out some trailing stop strategies as they seem to perform similar to buy and hold.
https://www.quant-investing.com/blog/truths-about-stop-losses-that-nobody-wants-to-believe
P.S I'm sure a certain member here can come up with various ARB methods to shave off profits from skews in vol etc but I have never tried this method so I concede my ignorance
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I am referring to selling option because the probability of profits when buying options is horrendous...selling a credit spread is always preferable imo to buying a debit spread.
Ok selling a 195 IWM put. If price drops below 195 you will be realizing a loss when you close the position. You can hedge it many different ways of course, but there is always risk of early assignment so you can't really afford to hold the position ITM...and any position 12 delta or more is touched frequently.
Oh regarding hedging...I read an article about buying a protective put, versus shorting futures, versus using stop losses to hedge a long position, and the data showed that shorting futures was the most effective form of hedging a position, protective put was second and stop losses were the worst performers...I'll try to find it again.
Here is one about trailing stops...interesting, never been a fan of stop losses but I may try out some trailing stop strategies as they seem to perform similar to buy and hold.
https://www.quant-investing.com/blog/truths-about-stop-losses-that-nobody-wants-to-believe
P.S I'm sure a certain member here can come up with various ARB methods to shave off profits from skews in vol etc but I have never tried this method so I concede my ignorance
You don't understand synthetics as tao points out. The difference between the 90/110 bear call spread and the 90/110 bear put spread is the edge on the box. So, you had better have significant edge on direction if you're not going to learn the basics of vol.
The 90/110 bear call spread will outperform the 90/110 bear put spread 4:1
At what underlying price at expiration? At same initial S also at expiration?
Hmm. can't believe.
Can you give a proof of your claim? By posting the PnL chart or data.