I have recently been selling more short puts and short calls. I think
most of the arguments on this thread are wrong such as jimmyjazz:
"The black swan pays every investor a visit when she decides to show up."
The best way to deal with "imagined" black swan visits is to always buy
stocks along with long puts. Does anyone think that strategy won't lose more
money than long stock or selling puts to buy stock at a better price?
I am posting because I think underneath this discussion is blind faith
in formal mathematics. For example, I bet everyone here would agree that
one can calculate from option prices whether it is better to sell near
term 4-6 week from expiration short puts than long maybe 4 months options
with maybe 50% less monthly income but more margin for error?
My intuitive feeling is that in the first half of 2013, near term option
selling worked, but I think now there is a new common stock price movement
pattern with quick 10-15% movements that soon reverse. Recent examples
are IOC and LINE. I claim this pattern can not be modeled mathematically
and maybe is related to SOROS reflexivity or maybe it is caused by
popularity of Tastytrade short near term options TV show popularity.
Some of my recent longer term 3-4 out short option trades that have
had lots of local but not global (fundamental) moves:
1) Short TSLA 200 calls - no danger of a buyout since TSLA market cap
is higher than the auto majors.
2) Short EXAS 11 puts (see my previous thread).
3) Short HK 5 puts - lots of warrants convertible by hedgies Feb. 2014.
I started thinking of this from hearing a physics lecture where the
presenter actually said "galaxies can move faster than the speed of light
provided that no information is transferred" is now part of the standard
model (quantum mechanics model?). Duh? For me, David Bohm's view that
the universe (human psychology of trading too) shows the qualitative
infinity of nature.
most of the arguments on this thread are wrong such as jimmyjazz:
"The black swan pays every investor a visit when she decides to show up."
The best way to deal with "imagined" black swan visits is to always buy
stocks along with long puts. Does anyone think that strategy won't lose more
money than long stock or selling puts to buy stock at a better price?
I am posting because I think underneath this discussion is blind faith
in formal mathematics. For example, I bet everyone here would agree that
one can calculate from option prices whether it is better to sell near
term 4-6 week from expiration short puts than long maybe 4 months options
with maybe 50% less monthly income but more margin for error?
My intuitive feeling is that in the first half of 2013, near term option
selling worked, but I think now there is a new common stock price movement
pattern with quick 10-15% movements that soon reverse. Recent examples
are IOC and LINE. I claim this pattern can not be modeled mathematically
and maybe is related to SOROS reflexivity or maybe it is caused by
popularity of Tastytrade short near term options TV show popularity.
Some of my recent longer term 3-4 out short option trades that have
had lots of local but not global (fundamental) moves:
1) Short TSLA 200 calls - no danger of a buyout since TSLA market cap
is higher than the auto majors.
2) Short EXAS 11 puts (see my previous thread).
3) Short HK 5 puts - lots of warrants convertible by hedgies Feb. 2014.
I started thinking of this from hearing a physics lecture where the
presenter actually said "galaxies can move faster than the speed of light
provided that no information is transferred" is now part of the standard
model (quantum mechanics model?). Duh? For me, David Bohm's view that
the universe (human psychology of trading too) shows the qualitative
infinity of nature.