Selling Naked Puts on Up Days

[Robert Morse]

I really view them as separate trades, and I do consider them naked. But I understand what you’re saying. I’m a creature of habit, and all my different strategies are tracked on different pages of my spreadsheet, so I call them naked puts since I track them individually.

I have a different mentality. As market maker I taught myself to ignore the trades after they were executed. I only cared about the net greeks of each symbol and how they related to my overall risk. Then, what I want my net position to look like. I did each trade because at the time of the trade, I found value in it. Like adding ingredients to chili. I only care what the chili tastes like not what I put in it when I sit down to eat.

IMO, to many traders do 3 or 4 spreads in a symbol and track the spreads, not the net positions. They want to know if they are making money or losing on a spread. I want to know only my net P/L. Then, am I long or short deltas? Am I long or short Vega? Am I long or short theta? What greeks do I want to place my risk on because of my expectations? You need risk some place, so that is OK, but it has to meet your expectations of what will or won't happen of a time period.

Bob

 

[Sweet Bobby]

I have a different mentality. As market maker I taught myself to ignore the trades after they were executed. I only cared about the net greeks of each symbol and how they related to my overall risk. Then, what I want my net position to look like. I did each trade because at the time of the trade, I found value in it. Like adding ingredients to chili. I only care what the chili tastes like not what I put in it when I sit down to eat.

IMO, to many traders do 3 or 4 spreads in a symbol and track the spreads, not the net positions. They want to know if they are making money or losing on a spread. I want to know only my net P/L. Then, am I long or short deltas? Am I long or short Vega? Am I long or short theta? What greeks do I want to place my risk on because of my expectations? You need risk some place, so that is OK, but it has to meet your expectations of what will or won't happen of a time period.

Bob

I certainly take my portfolio greeks into consideration, probably to a fault. I also spend too much time looking at my risk profile and testing my portfolio under various market scenarios. So far so good.

 

[sonoma]

It’s a matter of selling into strength

That phrase usually means someone wants to fade a market that's moving up. In that case, then what you'd want to do is sell a call, not the put.

 

[Sweet Bobby]

That phrase usually means someone wants to fade a market that's moving up. In that case, then what you'd want to do is sell a call, not the put.

I don’t sell calls. I have a strong aversion.

 

[Handle123]

If you shorting or have shorted Index futures or done a Spread ES between June/Sept as the hedge, makes more sense to sell Put at nearing support area of the underlying and expect ES bounce, Prem should be higher as it dropping, and risk be tighter as opposed to selling it as ES going higher. If you have your chart reading down, shouldn't matter whether you selling one or other, just make sure one is hedged correctly....

 

[oldmonk]

this seems like a brag thread, tbh. we're all happy for you that you did well selling index put spreads. the market has been on a rip since the December cataclysm, and as long as it stays that way, your strategy will continue to do well. so pray and hope for the best.

 

[zdreg]

[

Got it. I have dealt with a large number of naked option sellers over the years including raising money for a CTA that does that. The single most important part of it is the plan when it does not work. You say that you do not sell naked, so that changes the post.

you are incredibly polite in your response.

 

[El OchoCinco]

It’s a matter of selling into strength

If you are that confident in the strength of the market you have a much higher return and profit buying calls than selling puts.

 

[zdreg]

If you are that confident in the strength of the market you have a much higher return and profit buying calls than selling puts.

+ less risk.

 

[maxinger]

Selling Naked Puts on Up Days and
Selling Naked Calls on Down Days


There are people who do it and earn tons of money.
They are experienced and they know when to do such thing.

For those who are not competent, they ended up margin call
or have their positions flattened by the broker.