Smart Money Sells Straddles!

[Kevin Schmit]

Quote from nilro:

If you are good at selling premium, fortunes can be made. What is needed is an edge when getting in/out. The slippage otherwise can become expensive

What you really need is the ability to avoid the occasional disaster. To know when the meltdown is coming and get out of the way. I'm not that smart to be able to predict that, so I learned early on to always buy the wings.

Most of the one-or-two-day blowouts I have witnessed have been guys who were short gamma. Selling premium can be very dangerous.

 

[sle]

Quote from Kevin Schmit:
What you really need is the ability to avoid the occasional disaster. To know when the meltdown is coming and get out of the way. I'm not that smart to be able to predict that, so I learned early on to always buy the wings.

So smart money actually sells flys or calendarized flys

 

[jones247]

What scares me is the potential "overnight black swan" event. Adjustments with options and/or underlying can be made during RTH; however, after hours becomes a horse of a different color... a stop order for the underlying (or futures equivalent) would be my best bet at guarding against the "overnight black swan" event.

Bottom line... There's no free lunch... It all comes down to risk/reward/probability...

Quote from nilro:

If you are good at selling premium, fortunes can be made. What is needed is an edge when getting in/out. The slippage otherwise can become expensive

 

[spindr0]

Quote from jones247:

What scares me is the potential "overnight black swan" event. Adjustments with options and/or underlying can be made during RTH; however, after hours becomes a horse of a different color... a stop order for the underlying (or futures equivalent) would be my best bet at guarding against the "overnight black swan" event.

A stop loss order in the underlying may be meaningless if there's a huge gap down in a swaaaaaan diiiiiive. Only long puts will protect against that.

 

[heech]

Quote from spindr0:

A stop loss order in the underlying may be meaningless if there's a huge gap down in a swaaaaaan diiiiiive. Only long puts will protect against that.

And how many times will your stop order be hit by the random, meaningless spike.. like the 10-pt one move in ES at 17:26 EST yesterday.