Quote from Extractor:
Rdemyan, I dont want to get off topic too much, but started out in options , trading covered calls on stocks I had accumulated in a good siize IRA. Selling calls worked well for me in the 90's, since I didnt have a love affair with any of the stocks I owned. As you know there is little downside protection for this selling strategy, so it was no longer profitable durring the decline of the bubble.Also selling options was not allowed by the old line brokerage houses. When discount brokerage houses became an entity , and rules changed, I started selling deep out of the money credit spreads on equities. Found this to be too volatile and got whipsawed around a great deal. Too much reaction to news events and anylysts. I then switched to selling credit spreads on SPX using some historical guidelines that I have mentioned. Also sold credit spreads and Iron condors on the XEO, using 50 wide between the sold options. I do 10 lots , but still didnt like risk to reward ratio, but I was profitable, although nothing to rave about. To reduce margin and increase chance of larger reward, I began entering with a butterfly, 10 points between the buys and sells, and hoped not to adjust if possible, but with close to a 3 to 1 risk to reward , I could easily convert to a condor , either up or down , with now a 1 to 1 risk to reward . Didnt have to tie up the huge amounts of margin and it works pretty well but alot of time having to take it off in expiration week, when it gets pretty dicey. I now trade a short term proprietary system on the SPY a couple of times a week for smaller gains , but at the end of the month , a nice tidy sum, and on most days I go home flat with no position too worry about. If I see good premium in the SPX and its trending up , I still do bull put spreads , or if it is trending down bear calls , but I am more likely to take my profit as quickly as I can, as theta allows. If I sold for .50 and it quickly loses premium to .25, I'm gone. I love strong trends. I keep it pretty simple, using some very simple TA, and news events to help monitor the markets. However my expectations are low. I am happy to supplement my income by $2000 a month. Not trying to hit the jack pot.
