Option selling for premium

[ironchef]

@John9999 To me, selling options for 0.05 or 0.10 doesn't make sense. The risk is too high compared to reward. And generally speaking, I don't like to sell weekly options due to high negative theta. You might win 3-5% most of the time, but when you lose, the losses are brutal. For example: http://www.5percentperweek.com/customer/customerMain.php?section=tradePage&step=viewClosedTrades or https://manywaystotrade.com/option-scalper/ Plus I like to have some other strategies to reduce the risk and provide hedge in case the premium selling strategies move against me.

@spindr0 I heard this argument many times. "If your trading system is so good, why to sell it for few hundred bucks? Why not to keep it to yourself and and earn a zillion dollars?" Matthew Klein, CEO of Collective2.com, provided few good reasons Why To Sell A Winning System.

The same question can be asked of virtually the entire financial industry. Why do top-tier hedge funds accept investor money? If the guys at Two Sigma are so smart (and they are), why don’t they just trade their own money from an unmarked building in Soho? Why go through the hassle of raising capital from investors?

But even if you don't buy any of those reasons, the only question you have to ask yourself: is the subscription service helpful to you? Does it help you to become a better trader? Does it help you to make money?

If the answer to those questions is yes, this is the only thing that should matter to you. Why the service is doing this is secondary.

Sorry, I am a skeptical retail guy. I read your posts carefully, they are quite educational so I appreciate your participations.

I am responding to your post not in disrespect but as an observation.

When I looked at the performance of hedge funds, actively managed mutual funds, most of them don't do any better than passive funds, so those managers really don't have a "winning formula" to share, they are just asset accumulators living off fees.

My conclusion is it is much easier to get rich by living off fees and services than by trading so anyone who can will try to get rich with fees and services rather than trading for oneself. Perhaps you are an exception and if so my hat off to you sir.

My respect goes to my fellow traders who risk their own money, live and die by their own skills, without the safety net of fees or OPM.

Best wishes to all.

 

[caacapital]

selling premium is a dangerous game you should always have a long option to limit your downside. you might win 90% of the time but the 1 time you lose all your winnings can turn into a loss if your not careful.

 

[spindr0]

You asked why someone would be selling a winning system. The article provides the answers. How this is beneficial to me should be not your concern. When you give you money to a money manager, do you ask how does it benefit the money manager?

Comparing yourself to a money manager is a specious analogy and rest assured that it is NEVER my concern how selling advice is good for a snake oil salesman.

 

[spindr0]

My conclusion is it is much easier to get rich by living off fees and services than by trading so anyone who can will try to get rich with fees and services rather than trading for oneself.

Scraping fees from investors and traders (rather than from actually trading) provides a very nice ongoing annuity.

 

[Kim Klaiman]

Sorry, I am a skeptical retail guy. I read your posts carefully, they are quite educational so I appreciate your participations.

I am responding to your post not in disrespect but as an observation.

When I looked at the performance of hedge funds, actively managed mutual funds, most of them don't do any better than passive funds, so those managers really don't have a "winning formula" to share, they are just asset accumulators living off fees.

My conclusion is it is much easier to get rich by living off fees and services than by trading so anyone who can will try to get rich with fees and services rather than trading for oneself. Perhaps you are an exception and if so my hat off to you sir.

My respect goes to my fellow traders who risk their own money, live and die by their own skills, without the safety net of fees or OPM.

Best wishes to all.

You must be really confused, so let me say it one last time:

I DO NOT MANAGE MONEY.

All I do is running an educational trading forum where I share my experience and my trades, along with team of mentors who do the same. The rest is up to members. Like one of the members mentioned, "I spent thousands on mentoring, so $125 is a bargain to me".

You can definitely try and get some education from free forums where you should filter information because 90% is garbage. Or you can get into a paid forum where members have respect to each other and only serious traders stay. It is really up to you, so I don't understand what is the issue.

And yes, our members live and die by their own skills. Nobody is managing their money and nobody is telling them what to do. Those who are willing to put the time and effort are killing it. Those who don't leave. It's that simple.

 

[Kim Klaiman]

Comparing yourself to a money manager is a specious analogy and rest assured that it is NEVER my concern how selling advice is good for a snake oil salesman.

Skepticism is always healthy. Hatred and jealousy are not. They will eventually kill you. Chill out and open your heart, even to something you might not understand or accept.

 

[Sweet Bobby]

selling premium is a dangerous game you should always have a long option to limit your downside. you might win 90% of the time but the 1 time you lose all your winnings can turn into a loss if your not careful.

This is poor advice.

 

[ironchef]

You must be really confused, so let me say it one last time:

I DO NOT MANAGE MONEY.

All I do is running an educational trading forum where I share my experience and my trades, along with team of mentors who do the same. The rest is up to members. Like one of the members mentioned, "I spent thousands on mentoring, so $125 is a bargain to me".

You can definitely try and get some education from free forums where you should filter information because 90% is garbage. Or you can get into a paid forum where members have respect to each other and only serious traders stay. It is really up to you, so I don't understand what is the issue.

And yes, our members live and die by their own skills. Nobody is managing their money and nobody is telling them what to do. Those who are willing to put the time and effort are killing it. Those who don't leave. It's that simple.

I do get your points, thank you. I also appreciate your posts as I enjoy studying and understanding different methods of trading. Your posts are quite educational and yes I did study your method based on them and visiting your site, so no need to argue or debate anymore. Hang around please.

If your students are killing it, you must be too and I congratulate all of you.

Have a good day and best wishes to you.

 

[ironchef]

This is poor advice.

Why may I ask?

 

[tommcginnis]

I have sold short premium with success before. I am like looking to find options at $.10 or $.05 with a week or so left. How do I find the right candidates. Does anyone have a service to recommend.

1) Find/post the price curve of a far-OTM option, and explain why it's a good idea to sell something with a 1|100000000000000 reward-to-risk ratio where, as the clock ticks down, there is nearly-zero decay.

2) Selling options for premium-generation is a risk-acceptance insurance business model: this model is based on applying measures of Central Tendency to various assets around the real world: cars, house, your health, and the price of Intuitive Surgical and USSteel and JNJ sitting in your portfolio. If you don't understand this insurance business model, and what makes the option prices rise and fall, and by how much, and when and for how long, you don't belong there.

The answer to your question is ridiculously easy. But right now, you're sitting in the starting line of the Indianapolis 500, and posting for directions on how to navigate the oval track. If I tell you the old, "Drive fast. Turn left." you're going to blow up your account. I cannot assist in that.

Find the value-decay curve of a far-OTM option, and take a good look at it: it is NOT the ATM curve that you believe it is. And it will kill you.