How legit is options selling?

Is option selling legit

  • Total voters
    19
  • Poll closed .
smallfil said:
I think there is a lot of BS as far as selling options for premium. Do not take my word for it and I backtested manually, stocks trending in one direction. Implied volatility at times would rise maybe, 1-2% yet, the options premium was moving $2-4 dollars upwards. So, the premiums were rising by a huge amount yet, the implied volatility was practically, static? Remember what a lot of experts tell you to sell options for premium when implied volatility is at the highest. If that is the case, it is quite possible, you would be selling premium when the options premiums could be lower. What happens if it then, runs up since, implied volatility is rising? You would be suffering huge losses in short order? Just because some hacks and trolls say something doesn't make it true!
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The hacks don't *just* say sell when IV is high. They say sell when IV is high relative to what you expect realized volatility to be. The problem is (and I think this is why you see so many people selling this model) is that the market has caught on to this discrepancy and IV / realized volatility is very close to 1 these days.
 
Yes, but the cardinal rule is hedging; either in the underlying or against other options. Do not look at the amateur idiot's at optionsellers and convince yourself that shorting premium is not practical.
 
nooby_mcnoob said:
The hacks don't *just* say sell when IV is high. They say sell when IV is high relative to what you expect realized volatility to be. The problem is (and I think this is why you see so many people selling this model) is that the market has caught on to this discrepancy and IV / realized volatility is very close to 1 these days.
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I should add: I haven't been able to find any significant IV-related discrepancy for any recent period of time that would make it possible to profit off of an options selling strategy. Doesn't mean it doesn't exist, might just mean that I need better scanners.
 
nooby_mcnoob said:
I should add: I haven't been able to find any significant IV-related discrepancy for any recent period of time that would make it possible to profit off of an options selling strategy. Doesn't mean it doesn't exist, might just mean that I need better scanners.
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The scanners you built/bought are like a snail trying to race a cheetah compared to you competing with Citadel/Optiver/Akuna to find arbitrage opportunities. If you don't think option selling is a profitable strategy than you chose the correct username.
 
Automation requires something of a model focused on an index or higher level products, I am sure it is possible but more on the quant level I think...
 
The options traders that I saw do really well at prop firms were making markets in options on financially cleared OTC products and then hedging them with analog exchange futures typically. In other words - these were not spaces crowded with ten of thousands of market participants (the OTC Swaps that is).
 
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