The Put Seller's Journal

[earth_imperator]

You've got 1,100 posts worth of trading and you don't know what the best deal looks like by now?

Not all of my postings are about this one case.
There is no guarantee that each trade will be successful. During the holding period the current value of each position will vary (due to changes in IV and the spot of the underlying). And I just mean this very case: if you sort them by their current value then the best and worst positions will be visible. If today a much better new trade candidate is found. then it makes sense to replace the current worst with this new trade candidate... --> I call it "trade optimization"...

 

[Haywood]

Ohhhh....touchy. Someone is a sensitive little boy. You ask for constructive participation, and when you get it, you double down on displays of ignorance.



Go ahead - show me a trade where selling a short OTM put has a greater max profit than max loss.


Good luck with your 'journal'.[/Q
A newbie question? I have been writing cash-secured puts for about a year. I have heard your argument about unlimited loss many times, and I believe that I understand your point. However, it seems to me that I wouldn't have any more significant loss than if the stock was purchased at the strike price. Right? I mostly write weekly puts for a small profit and only sell puts in stocks I want to own. If I'm assigned, I try to sell a covered call, again for a small weekly profit. I have a significant amount of money to trade with, and the small amounts add up. I forgot to mention that I only trade options in stocks that have a long history of paying dividends in case I'm assigned and can't get out rather quickly. I'm getting a little nervous with the recent activity. Okay, you guys tell me where I'm going wrong.

 

[lightninboy]

There is no guarantee that each trade will be successful. During the holding period the current value of each position will vary (due to changes in IV and the spot of the underlying). And I just mean this very case: if you sort them by their current value then the best and worst positions will be visible. If today a much better new trade candidate is found. then it makes sense to replace the current worst with this new trade candidate... --> I call it "trade optimization"...

I don't even care about IV and spot and dividends.

 

[earth_imperator]

I have been writing cash-secured puts for about a year. I have heard your argument about unlimited loss many times, and I believe that I understand your point. However, it seems to me that I wouldn't have any more significant loss than if the stock was purchased at the strike price. Right? I mostly write weekly puts for a small profit and only sell puts in stocks I want to own. If I'm assigned, I try to sell a covered call, again for a small weekly profit. I have a significant amount of money to trade with, and the small amounts add up. I forgot to mention that I only trade options in stocks that have a long history of paying dividends in case I'm assigned and can't get out rather quickly. I'm getting a little nervous with the recent activity. Okay, you guys tell me where I'm going wrong.

Nothing wrong; everybody just do it as you like, as long as it's profitable.
But the saying "Unlimited loss with Puts" is indeed wrong, as was also stated by you. See also this table:

Btw, I too had started with CashSecuredPuts, but now I'm extending it to an options spread by adding a cheap LongPut to the ShortPut (giving a BullPutSpread or BearPutSpread). And recently even including diagonal spreads incl. calendar spreads (ie. where DTE of LongPut > DTE of ShortPut). Some 3 and 4 leg constructs (like LongButterfly and LongCondor) are interesting too, but for the time being I'll stick with just 2 legs only, since this is easier to handle as well easier to automate.

 

[earth_imperator]

I don't even care about IV and spot and dividends.

So then you just care about the current value of the position. That's of course the ultimate thing to care about

 

[earth_imperator]

Today finally finished adding diagonal spreads (this includes calendar spreads) into my options scanner.
Will soon post some example outputs.

 

[lightninboy]

Are you trading, paper trading, learning or what?

 

[earth_imperator]

Are you trading, paper trading, learning or what?

Nope, I can trade manually, but that's too much work in my case, I need automation.
Learning yes, but that too now finishes.

The development (programming) of the trading tools I need has the highest priority.
What I primarily need is an automation tool for handling the many trades my method requires.
Up until now I completed the scanner, now comes the final part, the automation via API.
I'm about 2 months behind schedule, but that's sometimes unavoidable in such complex SW development projects.

 

[lightninboy]

You have actually traded? You realize that what works in theory doesn't always work in real life? Did you make outrageous profits trading manually?

 

[earth_imperator]

You have actually traded? You realize that what works in theory doesn't always work in real life? Did you make outrageous profits trading manually?

Yes, I did. Moreover I can simulate it under realistic constraints.
It works as expected. This all is no problem.
As said I'm still working on the the last missing part: the automation part.

I more than once explained that I need to split my AUM to many different positions,
so that with each position say not more than 1% of the AUM is at risk.
This in practice means 100 positions open at any time. Since I'm using 2-leg spreads
then this makes 200 legs in total.
That many positions can only be managed by program trading, ie. automation...