Selling Naked

if you guys refresh your memory, every good book about options says-selling is more profitable than buying. it maybe not suitable for everybody, but it obvious. if every buyer make money on options-who is going to sell it next time? now-think opposite.and like in everywhere in market-something, on which you can make money(big money actually) cannot be easy. it risky, but it possible. if sell ATM puts every time, when VIX make 50-55 upfront for next 2-6 month-you probably make a very good profits.
same thing-just opposite-if you buy puts on VIX 17-20-again-you be in money. Buy-when it cheap-sell when it not. Remember?
 
Originally posted by Bob111
if you guys refresh your memory, every good book about options says-selling is more profitable than buying. it maybe not suitable for everybody, but it obvious. if every buyer make money on options-who is going to sell it next time? now-think opposite.and like in everywhere in market-something, on which you can make money(big money actually) cannot be easy. it risky, but it possible. if sell ATM puts every time, when VIX make 50-55 upfront for next 2-6 month-you probably make a very good profits.
same thing-just opposite-if you buy puts on VIX 17-20-again-you be in money. Buy-when it cheap-sell when it not. Remember?
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Give a man some rope and sooner or later he will be able to justify his own hanging.

I would tell you to re-think that statement but for some reason I don't think it will matter.
 
Originally posted by nugya
Which one is riskier;

1) being short on emini OR
2) selling naked PUT
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I meant to say

1) being long on emini OR
2) selling naked PUT

Soorrrryy:
 
Originally posted by nugya
Which one is riskier;

1) being short on emini OR
2) selling naked PUT
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Yes, really, it depends. Are you saying being short 1 e-mini future vs being short 1 put on the the e-mini as your only position?
If you know about the options greeks, then you know the short future has a constant delta of -1.0 and the short put, depending where its strike is and where the future trades will be somewhere between 0 and 1.0. The at-the-forward put will have a delta of about -0.5, so if you're short the put you're long 0.5 deltas.
But don't forget that when short the put, you're not only long deltas, you're also short gamma, and short vega. That's where the additional risk (or reward) of the put comes in.
For liquidity risk, the put is obviously more risky than the future.
Also, with the future you pretty much know what fair value is (basket value plus cost of carry), but for the valuation of the put, how are you going to know what fair vol is.
 
If you're just trying to get deltas, you should always go with the futures. The future obviously leads the options, since the specialist is using the futures market to make his/her options market. Just for playing the direction of the market, without vol or time plays, you're always better off trading futures over options.
 
Lets assume that we are talking European style options and expiry plays, where greeks don't mean much at expiry.

I am trying point out that selling naked PUT is no more riskier then trading eminis long/short

With selling options even if the market goes against you, time will be on your side:)
 
Originally posted by nugya
Lets assume that we are talking European style options and expiry plays, where greeks don't mean much at expiry.

I am trying point out that selling naked PUT is no more riskier then trading eminis long/short

With selling options even if the market goes against you, time will be on your side:)
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The real difference between the two is that you have limited profit potential with selling puts while you have practically the same downside risk.
 
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