Strategy: Selling Put Options: The Best Income Method?

samuel11 said:
Please don’t tell him, we need liquidity!
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Hi, hi, an egoist and "greed is good" type... ;-)

In this short selling game, time is the friend of the trader... because one still can try to fix the situation in the remaining time by initiating some hedging trades...
If done right, then one could get out of the situation w/o any loss (excluding the credit).
 
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botpro said:
No, reacting as late as possible, but immediatly before any loss in account happens (excluding the credit rcvd) is better and cheaper...
Just play the situation with an options calculator or in a simulator...
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Reacting immediately means that you are hedging at inception, or it moved in your favor, in which case you would not need a hedge. You make no sense at all.
 
destriero said:
Reacting immediately means that you are hedging at inception, or it moved in your favor, in which case you would not need a hedge. You make no sense at all.
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I was talking of the 30 day example: 29 days it went good and then it begins slowly to go against the trader...
 
drcha said:
Guru, my point is simply that you may have no chance to hedge after the trade is opened. A black swan may appear suddenly or overnight.
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I disagree. One has a chance, and the remaining time is the helper here... It's up to the ratio of the hedge...

The challenge is: develop a profitable credit system where under normal market situations you never can lose your own money (excluding credit rcvd).
 
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There are two types of hedging:
- one time hedge, and
- continously hedging
The second one is very interesting... and that one can even be started from the beginning on, ie. it is IMO the safest and also the most profitable...
It works like a rachet device... I'm gonna to study it...
 
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drcha said:
Guru, my point is simply that you may have no chance to hedge after the trade is opened. A black swan may appear suddenly or overnight.
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Yes drcha aka Captain Obvious that is correct.
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That's why I suggested to botpro a few days ago to try a PEP Put 90/85 Credit Spread instead of selling the July 15, 2016 PEP 90.00 Puts naked.



:)
 
botpro said:
There are two types of hedging:
- one time hedge and
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As in Credit Spreads or Covered Calls instead of being short naked?

botpro said:
- continously hedging
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As in micro-managing by selling and/or buying options to adjust the trade as it progresses?

botpro said:
The second one is very interesting... and that one can even be started from the beginning on, ie. it is IMO the safest and also the most profitable...
It works like a rachet device... I'm gonna to study it...
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The first choice is the safest and it will define your risk from the open. Closing the trade at a loss or profit is better then micro-managing the trade with additional "legs".


:)
 
botpro said:
I disagree. One has a chance, and the remaining time is the helper here... It's up to the ratio of the hedge...

The challenge is: develop a profitable credit system where under normal market situations you never can lose your own money (excluding credit rcvd).
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This is not a matter of agreeing or disagreeing. It's a matter of facts and mathematics. There is no such system.
 
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