Crayon,
In response to a couple of your questions/comments:
1. The image I posted was from Quikstrike.net, an application for futures options only. If you're just getting started with stock options, you might try the options calculators and HV/IV charts on the CBOE and OIC (OptionsEducation.org) sites. Those calcs and graphs are from ivolatility.com, which is a low cost resource (and I think it's a decent one, but I recommend a free trial or a one-month purchase so they turn off the annoying ads).
2. A graphing calculator is nice, but you don't need one to 'shock' your potential position. A basic Black-Scholes calculator will be fine to adjust the time, stock price and volatility inputs. These days, free graphing software isn't hard to come by at retail-focused brokerages.
3. I can't speak for Maverick, but if he seemed short with you, maybe it's because he's addressed the same line of inquiry many times over the years. In my limited time on this site, people sometimes have the idea that theta is magical and option selling is a sure fire winner. If you wade through some of the threads (and with experience), you'll learn otherwise. You might pick up some ideas about how to better formulate a strategy, even if it's "DON'T DO THIS" -- there are a few threads that include fantasic blow-ups by people selling way too many OTM options in a single or a few underylings.
4. Re the idea of selling options on large companies unlikely to have a 30% to 50% drop -- of course, it's possible and some people do just that. But remember two things: 1) 2008 when the bluest of blue chips tumbled, and 2) that many of these companies are going to have low implied volatility, making option selling an even higher risk, lower return endeavor.
5. Be careful with the whole "If I get put a stock, I'm getting something at a discount that I wanted to buy anyway" thing. It sounds good in theory, but when events change and you're short puts and taking heat on a lot of them, the furthest thing from your mind will be what a wonderful discount you're about to get. You just want to manage your position, make sure you have enough margin, and don't lose too much money. Sooner or later, you WILL have days like this.
In response to a couple of your questions/comments:
1. The image I posted was from Quikstrike.net, an application for futures options only. If you're just getting started with stock options, you might try the options calculators and HV/IV charts on the CBOE and OIC (OptionsEducation.org) sites. Those calcs and graphs are from ivolatility.com, which is a low cost resource (and I think it's a decent one, but I recommend a free trial or a one-month purchase so they turn off the annoying ads).
2. A graphing calculator is nice, but you don't need one to 'shock' your potential position. A basic Black-Scholes calculator will be fine to adjust the time, stock price and volatility inputs. These days, free graphing software isn't hard to come by at retail-focused brokerages.
3. I can't speak for Maverick, but if he seemed short with you, maybe it's because he's addressed the same line of inquiry many times over the years. In my limited time on this site, people sometimes have the idea that theta is magical and option selling is a sure fire winner. If you wade through some of the threads (and with experience), you'll learn otherwise. You might pick up some ideas about how to better formulate a strategy, even if it's "DON'T DO THIS" -- there are a few threads that include fantasic blow-ups by people selling way too many OTM options in a single or a few underylings.
4. Re the idea of selling options on large companies unlikely to have a 30% to 50% drop -- of course, it's possible and some people do just that. But remember two things: 1) 2008 when the bluest of blue chips tumbled, and 2) that many of these companies are going to have low implied volatility, making option selling an even higher risk, lower return endeavor.
5. Be careful with the whole "If I get put a stock, I'm getting something at a discount that I wanted to buy anyway" thing. It sounds good in theory, but when events change and you're short puts and taking heat on a lot of them, the furthest thing from your mind will be what a wonderful discount you're about to get. You just want to manage your position, make sure you have enough margin, and don't lose too much money. Sooner or later, you WILL have days like this.
