Using a Stop Loss on a Short PUT (SPY)

Hilcrest_trader

Hilcrest_trader

I have been trading Options on the IBKR platform for about 4 years now. I have "evolved" to trading mostly SPY and Short PUTs.
I haven't used a Stop in the past - I haven't felt the need until now.
  1. The market is pretty volatile and subject to a sudden drop.
  2. I live in Australia and trade in the afternoon slot (morning here) for about 2 hours.
I can wake up and find SPY has dropped suddenly and most of my positions are in trouble. So my response is to use a Stop. However, I haven't been very successful.
I have been getting stopped out early only to find the dip was short-term. I end up losing some - not a good thing.

I'm obviously doing something wrong or I shouldn't bother with Stops and just roll my positions as I have done in the past. Your advice is appreciated!
Thanks.
 
I have been getting stopped out early only to find the dip was short-term. I end up losing some - not a good thing.
More...

That's what volatility does. I don't think you should sell puts on SPY unless you are fine taking assignment. Rolling might work in a calm market, but in a volatile market that we have really never seen before, selling puts naked is too risky IMHO. Good environment for spreads.
 
if i did anything it would be sells calls with deep pockets and roll it's hard to understand and execute the picking up nickles in front of a steam roller method, but i have seen it personally make billions.

if you trade with 10mm have a reserve of 100mm to always be ahead of the margin call.
 
Surely you jest :)


MarkBrown said:
if i did anything it would be sells calls with deep pockets and roll it's hard to understand and execute the picking up nickles in front of a steam roller method, but i have seen it personally make billions.

if you trade with 10mm have a reserve of 100mm to always be ahead of the margin call.
More...
 
taowave said:
Surely you jest :)
More...


if its doesn't make sense, seems far to risky and just feels bad it makes gobs of money.

mortgage your house to gain a bicycle... why does one do that if they think they will lose?
 
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