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Selling Naked
- Thread starter nugya
- Start date
Quote from klutz:
vhehn,
Selling covered calls is a lousy strategy, as is selling naked puts.
Agree about the going oversize/overtrading..........been there, done that.
what? you mean this isnt true? lol
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Nice Vhehn, perspective is everything.
Quote from Maverick74:
It doesn't matter what your returns are a year doing this strategy. It could be 1000% a year. One event, one singular event will wipe out every profit you ever made the last 10 years, and then it will take whatever is left. I assure you, you will be bankrupt soon. In the world of dynamic hedging, you cannot hedge a naked portfolio. It's not possible. And in times of crisis everything is 100% correlated to everything else. No such thing as diversifying naked premium.
The black swan always gets it man.
How about not going completely naked but also buying at the same time an option which is much further in the money? It costs a little bit performance but saves one from ruin.
I must admit I didn't write an option yet, just thinking about it.
Quote from Lohnsklave:
How about not going completely naked but also buying at the same time an option which is much further in the money? It costs a little bit performance but saves one from ruin.
I must admit I didn't write an option yet, just thinking about it.
selling naked puts has the same or slightly less risk than going long the same underlying instrument provided you match your size to a worst case scenario. ie if you have enough money for 1000 shares of stock you sell no more than 10 options.
Quote from vhehn:
selling naked puts has the same or slightly less risk than going long the same underlying instrument provided you match your size to a worst case scenario. ie if you have enough money for 1000 shares of stock you sell no more than 10 options.
I'm sorry but this is complete BS
Do guys know how to price an option? u may think downside risk on puts is finite as opposed to calls, but Implied volatility, the major variant in options pricing has no limit !
While there are problems with it also there is the possibility of hedging with futures when that fateful day comes. It is what I do when the iv's rise too quickly. After 9/11 the spreads on atm options were 15 points, futures came in very handy at that time.
Quote from Kap:
I'm sorry but this is complete BS
Do guys know how to price an option? u may think downside risk on puts is finite as opposed to calls, but Implied volatility, the major variant in options pricing has no limit !
what? if you sell 10 puts on msft the worst that can happen is you will own 1000 msft at the strike. same risk as being long the stock.