No Risk 2% - options strategies
- Thread starter ADLE
- Start date
Sell RUT iron condor for credit of 1.50, 50 days from expiry, short strikes delta 8 or 9 with 10 points between long and shorts. Probability of profit is greater than 80% IF you do nothing and simply let it expire. This equates to a 17% return over 50 days. Hope that is enough for you, but I wouldn't recommend this method - too risky.
Be aware that risk reward is 8.5 to 1.5 and this position needs to be managed if the market gets to your adjustment points. Iow there is a less than 20 % chance that you will lose but it's imperative that this position is managed according to a plan - this means stop loss in place when/if underlying gets to within 'x' points of your short strike. Return, if managed properly, is between 3 to 6% per month in the hands of someone who knows what they're doing.
db
Sure, sell 1month out naked otm put or call of any stock that will give you at least 2% profit on your portfolio. Success is 90%. If position goes against you which is 10% of the time, take the loss. Rinse and repeat.
and when it goes against you, you can easily lose 5-12 months profit.
On occasion, I do a variation of OTM uncovered calls. I do it synthetically: short the stock and write a deep in the money Put. The proceeds from the sale of the put do not bear any cost to carry and can be placed in a debt instrument, thereby earning a modest amount of interest. This would be a particularly interesting trade if interest rates rise.
As long as the Put is in the money, it is vulnerable to early assignment, but that's no big deal. All it would mean is that the position would be closed out and you would immediately realize the modest amount of time value sold when the trade was opened.
If the stock rises and there is the danger of the Put being out of the money sooner than expected, then you will experience a modest loss on the trade, and you can either (a) close the trade and take your lumps, or (b) roll the put either up and/or out in time and hope the stock experiences a retraction.
A final word on this: I look for stocks which do NOT pay dividends because I don't want to pay the dividend on the short stock.
Just something to think about.
As long as the Put is in the money, it is vulnerable to early assignment, but that's no big deal. All it would mean is that the position would be closed out and you would immediately realize the modest amount of time value sold when the trade was opened.
If the stock rises and there is the danger of the Put being out of the money sooner than expected, then you will experience a modest loss on the trade, and you can either (a) close the trade and take your lumps, or (b) roll the put either up and/or out in time and hope the stock experiences a retraction.
A final word on this: I look for stocks which do NOT pay dividends because I don't want to pay the dividend on the short stock.
Just something to think about.
2% a month is doable with "minimal" risk. Spreads can get you there but you have to know when to enter and when not to. Can't predict the market direction, but at least have a general idea of market sentiment.
Also, managing losses is important, cuz if the market goes against you, the gambler inside you may want to see if your bet falls on the 80% side or the 10% side (and a lot of times, it does work in your favor) when it is better to take a small loss or roll out for smaller loss.
First year and half a I made a few near wipeout rookie mistakes and I still make mistakes every once in awhile a few yrs later. But a high-probability system is doable and you can almost thumb your nose at the naysayers who talk about picking up pennies in front of a steamroller...I guess like everyone else says, it all comes down to money management.
Also, managing losses is important, cuz if the market goes against you, the gambler inside you may want to see if your bet falls on the 80% side or the 10% side (and a lot of times, it does work in your favor) when it is better to take a small loss or roll out for smaller loss.
First year and half a I made a few near wipeout rookie mistakes and I still make mistakes every once in awhile a few yrs later. But a high-probability system is doable and you can almost thumb your nose at the naysayers who talk about picking up pennies in front of a steamroller...I guess like everyone else says, it all comes down to money management.
What is with all these crazy option posts coming out of nowhere lately??
People cannot be this..... silly...
People cannot be this..... silly...
I remember some good advice I heard about a year ago from someone on this board.
There is a poster who almost no one could understand because the terms he was using were so advanced. What you need to do is find this poster and read all his stuff. Then you should go study until you understand everything he says. Once you do that and have a good understanding of what he is talking about, you are all set to trade options...
Now does anyone know the name of that poster?
There is a poster who almost no one could understand because the terms he was using were so advanced. What you need to do is find this poster and read all his stuff. Then you should go study until you understand everything he says. Once you do that and have a good understanding of what he is talking about, you are all set to trade options...
Now does anyone know the name of that poster?