Not at all, I have been observing the options market and its like the sports betting market, there are inefficiencies, because of the mood of the investors. At least that is how I observe it. The market makers make the markets not on value but on supply demand.
Selling puts
- Thread starter riccja
- Start date
Not at all, I have been observing the options market and its like the sports betting market, there are inefficiencies, because of the mood of the investors. At least that is how I observe it. The market makers make the markets not on value but on supply demand.
I am using Vanguard brokerage. Although, its not the best out there as the I am paying 1.00 a contract. But it is where my brokerage account is, and I have enough funds there to cover the margin on these trades. Although I always have enough in my account to cover the purchase if exercised. So in that regard I do not trade on margin.
How much (if any) money from your account is being used to maintain stock positions that you have been assigned (if any), and how are those stock positions doing in unrealized PnL?
That's correct....but I do not trade unless there is at least a 15% difference between the price of the stock and the strike price. Ideally at least 20%. Which of course narrows it down. As an example, Thursday I sold 30 INO Puts @.05 with a strike price of 10.00. The stock was trading at 11.78 at the time. .05 on 10.00 is 1/2%. So you have made 1/2% in 2 trading days. That would come to 65% a year annualized on the trade. The other trade I made was 20 ACB 6.50 PUTS @.05 I made 80.00 on the trade. So I made .769% in two trading days. That is almost 100%return annualized. When I made the trade ACB was trading at 7.35. Now the return would be higher if you based it on only the 20% margin. I have subtracted my commission from the gain so that is already in there.
I started in January of this year. I took some time to refine it. But most of my trades have an annualized return of at least 40% up to 400% But again the sample size is very small at now 210 trades. When I started the premiums were much wider and I had from 5 to 12 sales going on. Now I am lucky to find 4. This last week only 2 met my criteria. Both were easy winners. Yes the gain is small, but your making it in a day. Right now as you can see in the chart my avg gain per trade is 143.54.
But I am being very conservative in my position sizing. But lets see where I will be after 500 trades
Did you also have trades in 2nd half of February and in March ? How did your short puts work with the market crashing down because of Corona ?
It is clear that for the rest of the year, in that crazy bull market, a short put strategy brings great performance.
Good, I have been trading in mostly CEF, that are discounted and have a good rate of return right now. Not many non interest bearing trades at the moment because of the election uncertainty.
Yes, I trade every thursday. Have not missed a week since I began. You can see from the chart I had two periods. One was mostly a side ways movement from trade 85 to 105 . The other was my first real drawdown around trade 139 and it took until trade 180 to recover.
That was from one of the trades that gapped down
My screen did not work that one time. Over 210 trades it has missed once so far.