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Selling premium
- Thread starter NKNY
- Start date
Quote from stokhack:
dreamer,
i like your logic, but i see no edge to that trade. Right now we are not trending up or down, somewhat down all year but very choppy. Although i do not trade the spx now there is great potential there. In my account(stocks) i am 40% long and 60% short. The edge comes from strong longs(sorta) that go up more than the shorts and weak shorts(sorta) that go down more than the longs.
Right now SPX dec 900 puts/call are about 26bid/27ask. What is a strategy that gives an egde regardless of which way the market move.
Anyone else throw in two cents two, all hypothetical or as some guys say, paper trading.
Actually, the 10 day moving average is neutral, the 30 day MA is up and the 100 day MA is down. Therefore, today, there is no current trend, up or down.
As I said before, I don't trade the S&P options as they offer an inferior return. I can get double or triple the return on other symbols.
Quote from dreamer:
*Chuckles*
Sounds like you want something for nothing, Walther. Do your study and homework. The answers are out there. Think outside the box. I have not found the answers in any book though I have studied many.
Agree; except the pages that say it can't be done except theoretically.
Therein lies the edge ...
Quote from maglia rosa:
This is implying that vol is cheap, then 1) why wouldn't you buy options on the SPX and 2) if the SPX has high volatility for you, then what products are you selling options on?
On 1), I understand you're only selling options, so I guess that rules it out, but thinking outside the box, it appears illogical to me to pass on a 'cheap vol' buying opportunity.
Why would I trade in the S&P options when I can get double and triple the return on other symbols? That is not logical to me.
maglia rosa
Guest
Quote from dreamer:
As I said before, I don't trade the S&P options as they offer an inferior return. I can get double or triple the return on other symbols.
You get higher return for a reason, obviously: higher volatiltity. Or do you spot out 'symbols' where you think vol is mispriced?
That would give you the ultimative edge - if you're right, of course.
Quote from maglia rosa:
You get higher return for a reason, obviously: higher volatiltity. Or do you spot out 'symbols' where you think vol is mispriced?
That would give you the ultimative edge - if you're right, of course.
You haven't done your homework, rosa.
For example, the quote on the S&P 900 call is 26.30/27.50 and the put is 26.10/28.00. For simplicity and discussion purposes, let's say it is 27 on either, that's in the middle.
Selling an option for 27 when the underlying is 900 gives a return of 3% on the strike or symbol price.
Why would I trade the S&P when I can get 10% or more regularly on other symbols??
I apologize. I find I am teaching, or maybe preaching, and I do not want to do either. I will refrain in the future.
Quote from stokhack:
i fail to see any correlation between option price and underlying unless you are long or short the underlying, then the option is not naked.
You don't see any correlation between the time premium earned and the margin required to put the position on and the costs in protecting the position in the event the market turns against you?