Selling Premium - Strategy Never Discussed

Update:

With CSIQ up 10% today, I bought back the Apr 9 17.5 and sold the same strike two weeks out on Apr 24. Thirty five cent credit for a running net of 1.30, or $1300 on ten contracts.

CSIQ is at 16.30, only 1.20 in the money, which seems close to the strike to me compared to recent prices. I still wouldn't mind owning the stock and writing calls, which might be more lucrative at this point, but I decided to extend the puts two weeks out for another $350.
 
@robertSt Thank you for updating this thread also during the black swan event you mentioned in the first post. I am very new to option trading and just recently stumbled over the wheel strategy, which I am currently back testing. Your updates convinced me, that this is going to be the first strategy that I will pursue. I have one question, if you don't mind. How do you manage the rolling? Are you in front of the terminal throughout the entire day? Is it maybe even possible to automate the rolling based on certain criteria?
 
Kono, I do monitor throughout the day. That doesn't mean I'm glued to the terminal. Depending on the situation, how many positions will need adjustment before Friday expiration, how volatile the market is at the moment, etc, I might leave at intervals for an hour or even two. This works great for me because I love what I do.

In general, the first 45 minutes are when the largest changes are likely to occur.

I like to trade near the money options. The greatest amount of premium, also the greatest chance it will move against you.

My largest piece of advice - Be flexible. Expect it to move against you and expect to adjust. Don't let it get too far away from you, stay close enough that you feel you have some control over the situation.
 
Yes we need more people selling naked options in the market. This will lower the VIX and lower the costs of buying options for those who like to buy them. The people naked will be well compensated and be rolling into profits perpetually so its a fair exchange.
 
robertSt said:
61% - That includes each leg of each trade.
More...

That's about my win rate, are you selling OTM? Sorry I'm too lazy to read this thread over again. I do mostly ATM because of the concavity of gamma and I like my exposure to vega convexity to be slightly negative.
 
Yes, I usually start slightly out of the money. Once it crosses the strike against me, the option value increases by delta, but it begins to exchange time value for intrinsic value. If I got 35 or 40 cents and I can hold on long enough to capture what I call two or three half-day theta segments, it takes quite an underlying move to keep the option above my received price.

Perhaps it's a bit of an art, or at least not entirely objective, about when to adjust. If it moves enough for the delta to approach 1, there is no more time value and no more reason to be in that position. It's time to exchange for something with some time value. I usually close and reposition some time prior to delta reaching 1.

Both gamma and vega peak near the money and taper. Near expiration, vega is typically small while gamma still concentrates if the option is near the money.
 
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