guys, you may have read too much into what I was asking for here. I would hope that noone would look at naked selling as a serious trading strategy without Understanding the risk involved and how to manage it. noones making anyone reply to this thread. Just thought Id throw it out there. There are a lot less meaningful threads on this site.
Sell Puts
- Thread starter maninjapan
- Start date
If someone held a gun to my head, I'd probably short puts on big mining stocks. By many accounts we are still in a long-term, secular bull market in natural resources, and the selloff in these stocks has been way overdone - many have lost 80% of their value in just a few months. That selloff has caused these companies to shelve plans to expand production, further making the supply/demand equation bullish going into the future. Sentiment toward these stocks (and what they produce) is exceptionally bearish, with EVERYBODY "knowing" that they can only go further down due to the economic slowdown. Finally, the fed is printing dollars at a furious pace - I read yesterday that its balance sheet has doubled in the past 5 weeks.
Adding to the previous sentence, let me quote from Milton Friedman - "I know no example in history of a rapid increase in the quantity of money that was not accompanied by a roughly corresponding substantial inflation."
Adding to the previous sentence, let me quote from Milton Friedman - "I know no example in history of a rapid increase in the quantity of money that was not accompanied by a roughly corresponding substantial inflation."
As mentioned by someone in an earlier post, you sell puts on stocks that you're willing to own at a lower price. If you're not willing to own it, you had better be neutral to bullish on it and ready to cut a loss quickly if it moves against you.
Currently, I wouldn't sell a naked put on anything. Stocks (and the market) are way too volatile and this is a trader's market/dream. IMHO, exposing yourself for weeks or months for a small naked put (or call) premium is a poor risk/reward ratio.
Trade baby, trade
Currently, I wouldn't sell a naked put on anything. Stocks (and the market) are way too volatile and this is a trader's market/dream. IMHO, exposing yourself for weeks or months for a small naked put (or call) premium is a poor risk/reward ratio.
Trade baby, trade
This is not a recommendation. But I would say that the probability of large mining companies such as FCX breaking down significantly below their recent lows in the near future seems remote. You can add seasonalities to all the other reasons I mentioned.
But most important really to my sense that Monday October 27 marked a low in these stocks is the behavior of the options.
Hi Mark,
Yes, short-term trading is not for everyone. And yes, it requires a totally different skill set and probably a different mind-set as well. But given the choice of chasing small premiums on naked options in a volatile market (IMHO, a lousy R/R ratio), I think that it would be a better idea to work really hard on learning that new skill set, and in particular, very disciplined money management.
Exposing oneself naked for a coupla weeks to a coupla months just makes no sense to me. Hedging makes a lot more sense. Taking advantage of the volatility (trading) makes the most sense to me. But everyone is entitled to have their own opiinion and pick their own poison.
Regards,
Spin
Yes, short-term trading is not for everyone. And yes, it requires a totally different skill set and probably a different mind-set as well. But given the choice of chasing small premiums on naked options in a volatile market (IMHO, a lousy R/R ratio), I think that it would be a better idea to work really hard on learning that new skill set, and in particular, very disciplined money management.
Exposing oneself naked for a coupla weeks to a coupla months just makes no sense to me. Hedging makes a lot more sense. Taking advantage of the volatility (trading) makes the most sense to me. But everyone is entitled to have their own opiinion and pick their own poison.
Regards,
Spin
We are in agreement. Trading within a personal comfort zone is essential.
I agree that selling naked puts in this market is asking for trouble - unless the individual wants to own the stock.
But I have no clue how to try to become a very short term trader - and that specific poison is not for me.
I'm pleased that it's working well for you.
Mark
I wrote 20 DEC puts for GE at 1.35
I would like to add to my GE position but would like to collect a premium while I wait and if it does not get put to me oh well.
Collecting 2,675 bucks to wait 39 days is not to shabby.
Premiums are still good for options writing.
I would like to add to my GE position but would like to collect a premium while I wait and if it does not get put to me oh well.
Collecting 2,675 bucks to wait 39 days is not to shabby.
Premiums are still good for options writing.