Is naked option writing really that bad?

[Pekelo]

stop screaming. are you a refugee from Yahoo Finance Chat?

You mean the guy has been profitably writing naked options for 10 years and comes here asking us if it is OK??? Legit for sure....

 

[viruscore1]

Is there a difference between writing naked option vs cash (margin) covered? From my experience, to write any option, there must be enough margin to cover position if assigned.

 

[zdreg]

You mean the guy has been profitably writing naked options for 10 years and comes here asking us if it is OK??? Legit for sure....

he said that he wrote on indexes for a long time,. the market has been going up for nine years with barely a retracement. his record is quite possible.
then to top it off maybe he had a dream/inkling/promonition that the good times are coming to the end and decided to post on ET?

 

[SteveH]

Apparently, he should have taught Karen "The Super Trader" a thing or two. Just goes to show that doing stuff on your own (aka trading in a cave) is the best teacher of right and wrong...and sometimes.

 

[lindq]

Is there a difference between writing naked option vs cash (margin) covered? From my experience, to write any option, there must be enough margin to cover position if assigned.

Not true with most brokers. They aren't there to protect you.

 

[zdreg]

[

Is there a difference between writing naked option vs cash (margin) covered? From my experience, to write any option, there must be enough margin to cover position if assigned.

don't you people know the rules when you trade? google margin requirements out of the money options to get up to date margin requirements. then check if your broker has higher requirements.

 

[Pekelo]

he said that he wrote on indexes for a long time,. the market has been going up for nine years with barely a retracement.

You might want to check out the 3rd quarters of 2011 and 2015. Anyone writing naked index puts would have had such a wonderful experience that they didn't need to ask questions like the OP did.

And when you have a 10 years tested working strategy if I tell you it is dangerous would you change it? So simply, there is no point to this thread...

 

[zdreg]

Not true with most brokers. They aren't there to protect you.

they are there to protect themselves, some firms are not interested in traders. their goal is to have as much assets in-house as possible and then to make money off idle cash balances, stock loan fees etc.

 

[viruscore1]

[
don't you people know the rules when you trade? google margin requirements out of the money options to get up to date margin requirements. then check if your broker has higher requirements.

That question is to trigger stupid remarks. You took it hook, line and sinker. Care for another?

 

[zdreg]

As more options became available, weekly, every other day etc, my stress level has been slightly reduced and returns are unaffected.

unhedged you are guaranteed on individual stocks to blow up on short term naked options. this is true and is a big if you are using the maximum margin available on your account.