Yes coach, since I don't have millions of OPM.
Trading Volatility
- Thread starter ironchef
- Start date
This from a guy who calls the Greeks "unreliable"
There is nothing wrong in selling naked options. Just don't trade them too big relative to your account.
I didn't say the Greeks are unreliable I said Vega can often surprise, and should not be taken as an absolute
You do not need millions of dollars of other people's money to sell options if you know when to do it and control your risk exposure. It is not recommended for beginners or most intermediate traders of course.
Selling options is where the fun is , you sell something you dont pay for .. time , naturally naked the risk is unlimited but time/premium gives a buffer of sorts , never forget the most money is made by the writers not the buyers ... they do have an edge
I tend to agree with you Guru, at least from my own experience. When I did buy-write, over several trades (usually about 5 to 6 with the same underlying), though profitable netted worst than buy and hold. That means if I were the counter party, I would do better than buy and hold. Granted this was during 2013-2014.That's just a myth. No facts behind your post at all.
Neither buyers nor sellers have any inherent edge from simply buying or selling an option alone...how you trade and manage it is your "edge". You trade what works for you.
Passage of time = longer exposure to the market
But the "passage of time" is not good for the seller. The market is irrational and the longer the exposure to the market the greater the chance of the unexpected. And the premium collect usually is just peanuts compared to the risk.
EDIT: I used "the" 11 times in the above sentence. I wonder if that is grammatically correct.
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