Options writing - unhedged & Hedged

[traderwald]

Hey guys,

As it is commonly said, writing unhedged options is a risky trade. I want to check if combination trades such as covered call writing or Debit / Credit spreads are also risky as other unhedged call writing ?


Thank you

 

[viruscore1]

Hey guys,

As it is commonly said, writing unhedged options is a risky trade. I want to check if combination trades such as covered call writing or Debit / Credit spreads are also risky as other unhedged call writing ?


Thank you

as long as you're not leveraged and have the cash to your assignment you r good to go.

 

[guru]

Hey guys,

As it is commonly said, writing unhedged options is a risky trade. I want to check if combination trades such as covered call writing or Debit / Credit spreads are also risky as other unhedged call writing ?


Thank you

Actually writing a put is identical to selling covered call at the same strike. It has the same exact profit/loss, same margin, same behavior, same everything - there is zero difference. For example when I don’t have a stock and want to sell a covered call then I have a choice of either buying the stock and selling a call, or simply selling a naked put. They both will have identical result.

Also, there are various covered call and put writing ETFs and they do not beat the market while having similar risk to the underlying they trade. Usually it’s SPY and they behave similarly to SPY so there isn’t much benefit to writing calls, covered calls, or puts.

Spreads have different risk profile and I’m not sure how to compare them to writing options, but they all carry risk.
With spreads you may lose everything you’ve put in, so you’d have to trade much smaller than stock itself. But you cannot lose more than you’ve put in (you have defined risk), while with covered calls and writing options you can lose more than you may expect.

 

[traderwald]

as long as you're not leveraged and have the cash to your assignment you r good to go.

How much cash would I need to write a Put option of a futures contract ? Would it be enough to have the cash to cover the margin required for the Futures contract or would I need more than tha?f

 

[viruscore1]

How much cash would I need to write a Put option of a futures contract ? Would it be enough to have the cash to cover the margin required for the Futures contract or would I need more than tha?f

Margin is leverage. Options on futures is another form of leverage. If the trade goes against you, a way out is a loss. Roll into next trade and hope it goes in your favor. Keep losses small. The guy in the video didn't. You would need enough cash to cover assignment of underlying. You are playing with fire. Here's an example of a futures trader...

 

[Overnight]

Margin is leverage. Options on futures is another form of leverage. If the trade goes against you, a way out is a loss. Roll into next trade and hope it goes in your favor. Keep losses small. The guy in the video didn't. You would need enough cash to cover assignment of underlying. You are playing with fire. Here's an example of a futures trader...

No, he was NOT a futures trader. He sold naked NG option puts IIRC. NG market spiked up, he got assigned, and BOOM! All his client money gone.

 

[viruscore1]

No, he was NOT a futures trader. He sold naked NG option puts IIRC. NG market spiked up, he got assigned, and BOOM! All his client money gone.

Options on NG is not futures? Anyway, I wonder how much money he lost ...
https://www.cmegroup.com/trading/energy/natural-gas/natural-gas_contractSpecs_options.html

 

[Overnight]

Options on NG is not futures? Anyway, I wonder how much money he lost ...
https://www.cmegroup.com/trading/energy/natural-gas/natural-gas_contractSpecs_options.html

No, options on futures is options, not futures.

Like how options on stocks are options, not stocks. Options are something so far and away from the underlying, I am in awe of people who understand that stuff.

 

[viruscore1]

No, options on futures is options, not futures.

Like how options on stocks are options, not stocks. Options are something so far and away from the underlying, I am in awe of people who understand that stuff.

If you say so. You know options without an underlying can't exist. I trade options on stocks using end user futures model. Take delivery on otm short put assignment with discount and collect dividend. Mere humans can't do that on futures market, no dividend. He was in futures and not stocks IMO.

 

[Overnight]

If you say so. I trade options on stocks using end user futures model. Take delivery on otm short put assignment with discount and collect dividend. Mere humans can't do that on futures market, no dividend. He was in futures and not stocks IMO.

In your opinion? *sighs*

He sold naked NG options and got buggered. Were you not here when that went down? It was all the rage here when it happened, to pick on him.