Selling Options for passive income by Robert Kiyosaki

taowave said:
If you really think selling option spreads is far superior to selling naked options, then you may have discovered a new "arb",much like a B-fly,but not a B-fly :)
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Selling option spreads has a higher chance of success than naked options, yes. Backtesting on programs like Orats will confirm that. There, I helped with your promotions. Where is my cut? :)
 
ironchef said:
The best financial minds, traders, are the options traders, very few amateurs can get an edge. After several years studying and trying, I am still losing money in B-fly.

If we amateurs play, we provide liquidity, i.e., I am paying for @taowave's and @destriero's yachts. :D:D:D
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Losses are inevitable. The best financial minds, traders all lose money. Even @taowave himself has admitted he's lost money (sincerely hope he doesn't anymore). No matter how good you are, you are going to lose money in trading. That's just the nature of the business. The goal in trading is not to never lose money; it's to make money and make more than you lose. As long as you can make more than you lose, you are good. Don't listen to people bragging about their yachts, watches or whatever. They could all be fake. I never pay attention to people's material wealth or their "supposed" material wealth. I look at their trading strategy. If their strategy makes sense then they might be good. If their strategy is garbage, then their "supposed" material wealth is all fake or as my nephew would say, "trash". LOL

Never focus on what they have. Focus on what they do. That's my motto. Cuz if what they do doesn't make sense, everything that they have is fake or can be all gone one day, sometimes sooner than you think.
 
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mervyn said:
Spreads, debit or credit, in general, will lose money long term. Limited risks and limited rewards, you have to win lot of time. Naked directional bets are better way to trade. There is no neutral position in the market.
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Naked directional bets with no limit, yes otherwise you are still dealing with limited rewards.
 
There's so much truth, wisdom and love to fellow traders.

Its indeed true that writing options can generate income, just not all the time.

The trend is your friend until it bends ...n losses are part of the game.

Our goal as trader should be aimed at being the best loser, watching the losses in your account grew higher every year (provided you're in the game n not busted, your losses are 20% while gains are 80%)
 
And here I was thinking there was hope for you.......


TheDawn said:
Selling option spreads has a higher chance of success than naked options, yes. Backtesting on programs like Orats will confirm that. There, I helped with your promotions. Where is my cut? :)
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Even Taowave??

I appreciate the praise,but I have been very fortunate my wopper losses were done working at banks,and not on my dime..

Everyone loses,the question is how big


TheDawn said:
Losses are inevitable. The best financial minds, traders all lose money. Even @taowave himself has admitted he's lost money (sincerely hope he doesn't anymore). No matter how good you are, you are going to lose money in trading. That's just the nature of the business. The goal in trading is not to never lose money; it's to make money and make more than you lose. As long as you can make more than you lose, you are good. Don't listen to people bragging about their yachts, watches or whatever. They could all be fake. I never pay attention to people's material wealth or their "supposed" material wealth. I look at their trading strategy. If their strategy makes sense then they might be good. If their strategy is garbage, then their "supposed" material wealth is all fake or as my nephew would say, "trash". LOL

Never focus on what they have. Focus on what they do. That's my motto. Cuz if what they do doesn't make sense, everything that they have is fake or can be all gone one day, sometimes sooner than you think.
More...
 
And what exactly does a "higher chance of success yield"?

Are you talking strictly win rate? As a trader,your job isnt,or shouldnt be to maximise the "likelyhood" of success.

No,programs like Orats wont confirm your "belief"

Are you saying that shorting straddles is an inferior strategy to iron condors?

Most of the replys are a VERY simplistic view of option trading,which is OK if you have done the homework..and know what the fook you are doing..





TheDawn said:
Selling option spreads has a higher chance of success than naked options, yes. Backtesting on programs like Orats will confirm that. There, I helped with your promotions. Where is my cut? :)
More...
 
I read a couple of his books. They are good and basic...Follow Rich Dad, not Poor Dad and you should be good.

If you have skills (and common sense) you may want to wait for a recession. Then buy the worst house in the best neighborhood...Turn it into a rental. You do the sweat labor (you can do), then have the contractors do the rest. I would then get a rental company to manage it for the first year. You are out of your league when it comes to choosing tenants...Let a professional do it.

Concerning selling covered call options...Just read my threads here on these forums.

It should be covered calls (with put buybacks)...Since it takes years to know/master the other trades.

A few things I have learned here over the years concerning covered calls. If it is a quality company, then do a call way OTM (out of the money). Others will disagree with this strategy (believing one or two months out would be better). The company must be a quality company with good consistent earnings. A biotech company with one product going through an approval process, would be the EXACT opposite of what you want to do!! You would be clinging to stage approval. The company could drop in half ("not be a going concern") in a day/hour!!

Think buying Microsoft, Apple, ADM...An industry leader. You can do a "leap"...Look up leaps (Investopedia will become your friend).

If the stock drops 20%, be willing to buy back the option and cut your losses...Unless you believe to was a "one off" for the company. Be careful...I thought GM's loss in 2008 was a one off...No, it was fundamentally a wrong trade. It went bankrupt...Then they reissued stock.

If you have a good stock (with a covered call) you could lose it because it is a "good stock" and the markets sees it's value.

So I do it, but I have had to learn from my mistakes...

One last thing that throws a wrench into things...Super inflation. By doing covered calls, the stock may rise from the market risings. People have dollars so they invest into good companies...The company has a good quarter (and with the abundance of money out there), the option gets called away. You then have to look for your next investment...Undervalued companies. A never ending cycle...Not for the faint of heart.

Sooo...Fund your IRA/401k to the max. Watch your spending...Find value in products (cars, house, groceries, entertainment). Have a 6 month emergency fund. Buy some QQQ and S & P 500 index...And stop and smell the roses.
 
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