Most time it is good, but like Russian roulette, once in a blue moon it can kill if you write naked or with leverage. I was just trying to minimize the chance of been killed.
Ima go Broke Trading Long Options...Which Strategies to Focus On?
- Thread starter zghorner
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That’s why they have another dogma - trade small.
They must have an edge in writing, so statistically they achieved positive expectancy. In that case, trade often and trade small worked.
I have no edge writing call/put, so I used the opposite dogma: Like playing Russian Roulette, I wrote very infrequently, DOTM with lots of leverages and count on probability in my favor for one time deals.
I don’t think they have any edge. And Tom says it often explicitly. But if you wait for volatility spike AND you size properly, I think you will come out ahead. But because these events don’t come very often, I just think it’s not enough on its own. That’s, imho, what causes lots of people who sell premium blow up - they start selling premium on every minor spike and when the big one comes, they are overextended and playing defense at the perfect time to be playing offense.
That must be their edge?