Selling Premium - Strategy Never Discussed

@robertSt

Are you looking at the premium as an absolute number or looking at stocks with high premium vs their historical?

Just trying to see if you feel higher vol stocks offer some kind of edge as opposed to lower vol, as the implied is generaly normalized based on the underlyings characteristics?

Thks for your insight.

Ftr, im short CCL 15.5 PUT and INO 11.00 PUT, expiry 9thOct, let me know what you think.
 
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Norris80 said:
Ftr, im short CCL 15.5 PUT and INO 11.00 PUT, expiry 9thOct, let me know what you think.
More...

I'm not Robert, but why would you sell puts in those names at those strikes at this time?

Obviously don't know when you entered these trades but it looks like more overhead resistance is near than support underneath, Just curious. Good luck.
 
Trading these super-high volatility stocks can pay a lot of premium, but they can also be very dangerous if you aren't prepared to adjust when things go against you.

I'm not chasing the absolute highest premium I can find. Try to find a balance between stocks that are reasonably safe while still paying worthwhile premium. 2% for a few days is good enough. For me, that generally means not being exposed during earnings. There is no need to increase the chance of an adverse reaction doing serious damage.

The most important thing is to know what you are going to do when it goes against you. Don't let it get too far away from you.

One strategy: Buy the put back and sell a lower strike with the same expiration. This will put you lower and closer to the stock, while preserving 40%-50% of the original premium. Then you can roll further out in time if you still need to.

Experience is the great teacher.

Good luck
 
DTB2 said:
I'm not Robert, but why would you sell puts in those names at those strikes at this time?

Obviously don't know when you entered these trades but it looks like more overhead resistance is near than support underneath, Just curious. Good luck.
More...

Hi DTB,

Thanks for the good luck.

In answer to your question, no real reason apart from the fact theyre a similar vol profile that robertST seems to target and that i just wanted to get a feel of how well you can manage the position etc?

Can i ask, how do you see more resistence than support in these? I cant get on with directional bias as i just think i might aswell trade the underlying in that case.

Thanks
 
robertSt said:
Trading these super-high volatility stocks can pay a lot of premium, but they can also be very dangerous if you aren't prepared to adjust when things go against you.

I'm not chasing the absolute highest premium I can find. Try to find a balance between stocks that are reasonably safe while still paying worthwhile premium. 2% for a few days is good enough. For me, that generally means not being exposed during earnings. There is no need to increase the chance of an adverse reaction doing serious damage.

The most important thing is to know what you are going to do when it goes against you. Don't let it get too far away from you.

One strategy: Buy the put back and sell a lower strike with the same expiration. This will put you lower and closer to the stock, while preserving 40%-50% of the original premium. Then you can roll further out in time if you still need to.

Experience is the great teacher.

Good luck
More...

Thanks robertST

Youve answered several of my questions in that 1 post.
 
Norris80 said:
Hi DTB,

Thanks for the good luck.

In answer to your question, no real reason apart from the fact theyre a similar vol profile that robertST seems to target and that i just wanted to get a feel of how well you can manage the position etc?

Can i ask, how do you see more resistence than support in these? I cant get on with directional bias as i just think i might aswell trade the underlying in that case.

Thanks
More...

Re: CCL you want it to close in or above the shaded area, which it hasn't done since Sept 17. I'm assuming you sold the put recently? Otherwise you sold an ITM put??

upload_2020-10-1_8-1-15.png
 
robertSt said:
Trading these super-high volatility stocks can pay a lot of premium, but they can also be very dangerous if you aren't prepared to adjust when things go against you.

I'm not chasing the absolute highest premium I can find. Try to find a balance between stocks that are reasonably safe while still paying worthwhile premium. 2% for a few days is good enough. For me, that generally means not being exposed during earnings. There is no need to increase the chance of an adverse reaction doing serious damage.

The most important thing is to know what you are going to do when it goes against you. Don't let it get too far away from you.

One strategy: Buy the put back and sell a lower strike with the same expiration. This will put you lower and closer to the stock, while preserving 40%-50% of the original premium. Then you can roll further out in time if you still need to.

Experience is the great teacher.

Good luck
More...

@robertSt

Just to conclude your informative post, could you help me with the following please:

"2% for a few days is good enough"
- this is 2% of the underlying price?

"Don't let it get too far away from you."
- do you have a rough % figure from experience where you start to initiate adjustments etc?

Im v.aware youre quite subjective in practice, Im not trying to be spoonfed here just trying to leverage on your experience.

Thanks again.
 
@robertSt

Its Friday,

CCL off by apx 7/8% since i sold my ATM Oct '09 Put. (Just 1 lot)
Next expiry offering surplus premium ATM.

Would you be looking to roll here or wait further into next week?

Thanks
 
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