Question regarding selling puts for premium

[i960]

No clue. I just put on high probability trades but close at 2x credit received for my losing trades. 10 months a year are winning months. Rinse and repeat. Good luck!

Something tells me (mainly your surety) that you're selling 15 delta OTM premium (probably puts) and are playing the steamroller game.

All in all, it's much safer than trading Futures or Forex which are purely directional. I stink at picking direction.

This is a fallacy. You still have to have a take on the direction of things, which might not be price. You may not think you have to care about price, but you still have to care about vol. The strategy you're using has only worked in a low vol environment and you're most likely going to get mauled once VIX goes to 50.

 

[Texas Johnny]

More ATM Straddles along with OTM Strangles (between 10 and 16 Delta). Yes, I am risking more to make little. That's what option selling is all about.

 

[xandman]

Keep up the good work. Thanks for sharing.

 

[luisHK]

Nope, but I've eaten my fair share of it! Great stuff.

Argh !?! If you can deal with durian than obviously you have nothing to be afraid of when it comes to a few option contracts.

 

[Texas Johnny]

Something tells me (mainly your surety) that you're selling 15 delta OTM premium (probably puts) and are playing the steamroller game.



This is a fallacy. You still have to have a take on the direction of things, which might not be price. You may not think you have to care about price, but you still have to care about vol. The strategy you're using has only worked in a low vol environment and you're most likely going to get mauled once VIX goes to 50.

On the contrary, selling premium works best in a high vol environment. As VIX increases I'll ramp up trading size as most option sellers do. Yes, going from low to high VIX is painful, but once you are up there, it's the best trading environment to be in. ATM Straddles don't care about price. It's a great strategy. Check out tastytrade. They got me started. Backtesting helped me to refine it. Now I trade it.

 

[Xenomorph]

On the contrary, selling premium works best in a high vol environment. As VIX increases I'll ramp up trading size as most option sellers do. Yes, going from low to high VIX is painful, but once you are up there, it's the best trading environment to be in. ATM Straddles don't care about price. It's a great strategy. Check out tastytrade. They got me started. Backtesting helped me to refine it. Now I trade it.

I'm not sure you are being completely honest with yourself. You are talking about a 'high volatility' environment where price bounces 'predictably' between a high and low range. But if price bolts far beyond your range you can be screwed, as evidenced by Karen the 'supertrader' nearly fleeing to Mexico a few years ago when the market raced far beyond her expectations. The talking heads at Tastytrade are not to be trusted. I'm not saying they are bad guys, but they are selling you something. They FEED off of traders. They get kickbacks from Ameritrade when you place a trade through the Dough platform. Great traders trade. That's what they do. They don't suck fees from other traders. ATM straddles absolutely do care about price. If you go long an ATM straddle and price flattens, you lose big time. If you go short an ATM straddle and the market roars, you lose big time.

 

[Texas Johnny]

I'm not sure you are being completely honest with yourself. You are talking about a 'high volatility' environment where price bounces 'predictably' between a high and low range. But if price bolts far beyond your range you can be screwed, as evidenced by Karen the 'supertrader' nearly fleeing to Mexico a few years ago when the market raced far beyond her expectations. The talking heads at Tastytrade are not to be trusted. I'm not saying they are bad guys, but they are selling you something. They FEED off of traders. They get kickbacks from Ameritrade when you place a trade through the Dough platform. Great traders trade. That's what they do. They don't suck fees from other traders. ATM straddles absolutely do care about price. If you go long an ATM straddle and price flattens, you lose big time. If you go short an ATM straddle and the market roars, you lose big time.

Yep. Don't do it then. Again, it's all about risk management. I like tastytrade. Check out their market measures. If you don't believe the results, backtest the strategies yourself. I have and they are legit. I haven't fled to Mexico yet...I think there are monkeys down there with coconuts. That scares me. Prefer to stay put and sell puts.

 

[i960]

On the contrary, selling premium works best in a high vol environment. As VIX increases I'll ramp up trading size as most option sellers do. Yes, going from low to high VIX is painful, but once you are up there, it's the best trading environment to be in. ATM Straddles don't care about price. It's a great strategy. Check out tastytrade. They got me started. Backtesting helped me to refine it. Now I trade it.

That's not what I was saying. I was saying VIX explosion *is* going to be painful because you're short vega right now and most likely depending on leverage to make any decent coin. The only trade I agree with *is* ATM straddles. OTM strangles in a low vol->high vol env? Good luck.

I also highly doubt you're delta hedging in any form so not only may you get crushed by vol you may get crushed by delta as well.

 

[Xenomorph]

Yep. Don't do it then. Again, it's all about risk management. I like tastytrade. Check out their market measures. If you don't believe the results, backtest the strategies yourself. I have and they are legit. I haven't fled to Mexico yet...I think there are monkeys down there with coconuts. That scares me. Prefer to stay put and sell puts.

Options traders like to imagine what they do is akin to Poker, but it's not. It's more like Craps. Money management won't save you in the long run. You will lose everything, either all at once or in chunks. Options were never designed for speculative investment. The deck is stacked against you. You have to be right about too many things. It doesn't matter how creative you get with which contracts you buy or sell. You are dancing at the base of an active volcano.

 

[Guile]

It ain't the instrument, it is the leverage and unbounded losses that get you. If your fearmongering helps you sleep better, great. Trading is like fighting...a contact sport. Expect to get hit now and then. You might even get taken out of the game. If that's too scary, just play a different fucking game!