My approach to selling puts.

[tonyf]

Let's please put into perspective the success of a short put strategy in a ragin bull market...

That often makes put selling look like a home run cannot lose approach until the market starts dropping and you are selling falling knives.

Also, the market was up so much you would have made way more money with the same type of leverage simply going long the market as short puts are profit capped.

That is correct with a slight difference. I did not lose money since February when the longs were flat or lost money.

 

[tonyf]

Tony,

What ballpark percentage does your assignments run after February?

T

This Friday will be high, c. 80% of available cash.
Yield this month is around 4% when adjusting for assignment.

 

[tonyf]

Not trying to take anything away from OP @tonyf but why is everyone surprised that these returns are magical?

He is long and levered at that in a bull market.

Ps. there is nothing magical here. The only diff. is the charts-and-Greeks free approach. That's it.

Anyone can do it if they care to forensically look at balance sheets and study events.

 

[tonyf]

If you are selling puts at this point in time you will get punished for being a stupid f#ck.

That's what my father said 12 months ago! Market timing (calling the top) is a one off speculative and discrete event. I have no interest in that.

Edit: I am, nonetheless, concerned from the impact of a wide sell off (black swan tail risk). I have not done anything about that yet but it is on my mind.

 

[HunterD]

selling puts work when the market goes up or rockets
but you will lose money while the market drops
be aware of it

 

[traider]

If you confident in your edge , you can hedge out some of your market beta by shorting ES futures or buying SPX puts.

 

[tonyf]

If you confident in your edge , you can hedge out some of your market beta by shorting ES futures or buying SPX puts.

What is the rough cost of hedging a given portfolio with 20% OTM SPX puts on a monthly basis?

 

[newwurldmn]

This Friday will be high, c. 80% of available cash.
Yield this month is around 4% when adjusting for assignment.

What is the notional you are selling relative to your account?

notional = Strike*quantity*100

 

[tonyf]

What is the notional you are selling relative to your account?

notional = Strike*quantity*100

today is 3.3x - but it has hit 7x at the peak.

 

[tonyf]

selling puts work when the market goes up or rockets
but you will lose money while the market drops
be aware of it

That's right, my thinking is that my TCSPs are backed by paper (shares) I would inherit below intrinsic value, hence why I use leverage.
It is a global sell off that worries me on the other hand.