Strategy: Selling Put Options: The Best Income Method?

[botpro]

People have told you or given you information and you argue against anything even though you have a limited knowledge of options and then you ask us to show you or prove to you like we owe you something more. Stop the verbal diarrhea already here with your thoughts and just go make some trades and let the market teach you rather than guess and ignore people here telling you the facts.

Shit or get off the pot already, just place a trade and work from there.

You guys are incredible! Really.
You think you know it better, but when asked you lack the precise answer.
So, what have "people" given me? NOTHING!
I have asked you both how these f*up greeks you endlessly talk of can be of any help in this situation,
but then you are not able to explain.
So, what do you think should I think of you?

Ok, forget it. I knew from the beginning that no help is to expect.
There are just some talking-heads talking irrelevant things all the time, without any substance.

 

[botpro]

Question: can the greeks be of any help in preventing losses with short puts?
If yes, then just show how they can be of any help, because I think they are absolutely useless in this situation.

 

[destriero]

Question: can the greeks be of any help in preventing losses with short puts?
If yes, then just show how they can be of any help, because I think they are absolutely useless in this situation.

ommfg.

Delta is 20. Delta is the mofo hedge-ratio. You sell one put. You short 20 shares. Delta is a loose approx. for ITM probability. So wow! The historical vol and delta agree that PEP has a 20% prob of trading ITM on the 90P. 40% likelihood of touching!

Back to the mofo hedge-ratio. You are neutral direction if you sell put and short 20 shares. The delta give you the hedge, and your gamma gives you the ROC of that hedge (in deltas). You incur more delta-risk as you're short premium (short gamma). IOW, you're short leveraged delta by being short options.

I am truly done. You are f*cking trolling your own thread.

 

[botpro]

ommfg.

Delta is 20. Delta is the mofo hedge-ratio. You sell one put. You short 20 shares. Delta is a loose approx. for ITM probability. So wow! The historical vol and delta agree that PEP has a 20% prob of trading ITM on the 90P. 40% likelihood of touching!

Back to the mofo hedge-ratio. You are neutral direction if you sell put and short 20 shares. The delta give you the hedge, and your gamma gives you the ROC of that hedge (in deltas). You incur more delta-risk as you're short premium (short gamma). IOW, you're short leveraged delta by being short options.

Nice numbers, very impressive! ;-) But you have forgotten to tell the most important thing:
what does all your numbers practially mean for the open position when the stock price is heading towards the strike? And that is the problem here looking for a solution.
So, what has the trader to do to prevent a loss if the stock is nearing K in the middle of its lifetime?
Are your greeks of any help in this situation???

I already provided these data:
"
Out of the about 61 quarters since 2001 it has lost in 13 quarters and has won in 48 quarters. That means a win-rate of 78.7%.
Lost here means fell more than 8.5% within a quarter relative to the start of the quarter.
"
So, obviously it is about 20% probability that the stock can land below the 90 strike.

But what does your "40% likelihood of touching!" mean?

And: you seem to be talking of a different strategy than pure put selling, as you also short the stock and by this apply some kind of hedging.
I don't think it is the same strategy we are talking about.

So, you seem to mean that if it gets critical then apply hedging by shorting the stock.
Why don't you simply say exactly that, instead of talking irrelevantly about the greeks?
Btw, why not simply buy long puts instead of shorting the stock?
I don't need the greeks to know that.

 

[botpro]

The best solution for this problem is simply this one:
if it gets critical then buy temporarily long puts, and sell them if the situation gets better. Repeat that if necessary.
By this simple and cost-effective strategy one just pays net only for the time value...
Shorting the stock binds too much capital, and it is not that easy to short the stock.

But one has to use 2 accounts for this method...

Update:
instead of long puts or short stocks one can also short calls: and in this case just 1 acct suffices.

 

[botpro]

Todo:
The main problem that remains to be solved is when the stock falls towards close the strike,
or goes even lower, while there is still much time till expiration of the option...
Hmm. what possibilities do I have in such a scenario?...
Ok, selling even more puts would reduce my average...
Or selling a call as a protective measure to lock-in the status-quo (ie. hedging) and wait till the stock rebounds, and then close the short call... or whichever of the two is more promising...
Any other alternative?...

(just thinking aloud... ;-)

The above possibilities were my ideas (cf. prev. postings).
So basically nothing new contributed to that; I've been on the right track myself from the beginning on.

 

[i960]

The best solution for this problem is simply this one:
if it gets critical then buy temporarily long puts, and sell them if the situation gets better. Repeat that if necessary.

For fucks sake, if you can buy long puts then you can just as easily buy your short puts back. And don't say "but it wouldn't be at the same strike" either because that's what you were implying with your "2 accounts" nonsense.

You are going to receive quite the interesting real world education because it's obvious you think you're smarter than the market.

 

[daniel5198]

The best solution for this problem is simply this one:
if it gets critical then buy temporarily long puts, and sell them if the situation gets better. Repeat that if necessary.
By this simple and cost-effective strategy one just pays net only for the time value...
Shorting the stock binds too much capital, and it is not that easy to short the stock.

But one has to use 2 accounts for this method...

Update:
instead of long puts or short stocks one can also short calls: and in this case just 1 acct suffices.

Listen dude. Put down your crack pipe for a sec and listen. You keep asking and answering your own questions in an endless circle that might make some people here pull their hair (or whats left of it in my case). Just put on a trade (and for godsake a paper-trade) and go along it real-time. This will answer your questions. And I'm afraid you will not like Mr Market's answers. Reality will be more harsh then the people here. But atleast, you will listen and learn. 'cause that's your only way.
'nuff said.

 

[samuel11]

And I'm afraid you will not like Mr Market's answers

My name is Mr Market and I demand botpro sell some puts to me RIGHT NAO!

 

[botpro]

Those idiots don't understand a bit of system design!... ;-)
They want and like to see _other_ people jump over the cliff unprepared...
botpro is not your usual victim, you il stupidos el grandes! (btw, how is my spanish? or is it maybe italian? LMAO ;-)

fyi: botpro is a programmer, system designer and auto-trader, not a dinosaur still trading manually... understand that your time is up...
it's about testing the strategy inside a system throughly first, before one can go live! that's simple logic many don't even grasp...