Selling Premium - Strategy Never Discussed

[robertSt]

I already said I don't do it anymore. It's meaningless to me. This thread is already years old. I plan to be around for more years. The trade data will grow every week. Be patient.

 

[Sig]

I already said I don't do it anymore. It's meaningless to me. This thread is already years old. I plan to be around for more years. The trade data will grow every week. Be patient.

How can a concept of your risk adjusted return be meaningless to you? That's mind boggling!

 

[robertSt]

Then consider yourself boggled.

 

[danjuma]

I'll commit to posting a trade or two each week. I challenge destriero to do the same.

Yes please continue posting robertSt. Enjoying your posts! Ignore the naysayers!

 

[traider]

Yes keep selling puts, black swans be damned.
The Fed always has your back

 

[manic]

I do a similar strategy, but I start with put credit spreads. If the market tanks, I can roll to OTM puts. Since my put spreads are narrow, I can roll about 3-5 puts spreads into one naked put.

For instance, I sold some 29/28 put credit spreads on PLTR and got about 0.55 per spread. If the stock drops to 15, I could roll about three spreads to a single ATM naked put for the next week. If I were starting with naked puts, I'd probably be able to roll down from 28 to 27 at best.

I also buy iron condors on SPX and RUT as hedges, using a portion of my premium each week.

 

[robertSt]

Who is unaffected by a black swan event? So what is your point? No one should ever trade?

 

[cesfx]

I do a bit of everything, but selling cash covered puts is like 2% of my portfolio action, on stocks that I would have bought at that price. I am not a professional expert but I lived through a couple of black swans.

And it's because everything is affected in one that I feel like I don't need that fat tail risk.

 

[robertSt]

What do you do to minimize black swan exposure? I have repeated many times I don't do leverage. Any one trade is only a small percentage of my total portfolio. How is the 98% of your portfolio that is not involved in put selling safer than that 2%?

 

[newwurldmn]

Well, the logic is that I'm making money. As I said, I don't use leverage. I typically have 5 or 6 positions a week, so even if Twitter or Roku go to zero, I won't be wiped out.

The significant idea in my post is that you can roll down and out for a credit for most positions that go against you, placing yourself back out of the money.

when you mean you don’t use leverage, do you mean that the notional value of what you trade is < than your equity balance?

that if everything expired in the worse way (risk wise) you wouldn’t have to borrow money from margin?