what am I missing about writing options?

[Bekim]

You sell an option at a set up point where you would like to get long the stock. You get paid to wait for your setup. That’s how I see it

 

[qlai]

You sell an option at a set up point where you would like to get long the stock. You get paid to wait for your setup. That’s how I see it

That’s exactly how I think about as well. But this no-pullback market got me to the point where I jus say - F it, I will sell close to ATM put to start initial position and then add if stock dumps hard. Desperate times call for desperate measures

 

[Bekim]

That’s exactly how I think about as well. But this no-pullback market got me to the point where I jus say - F it, I will sell close to ATM put to start initial position and then add if stock dumps hard. Desperate times call for desperate measures

You gotta have a big enough list of stock their is always a pull back somewhere

 

[qlai]

You gotta have a big enough list of stock their is always a pull back somewhere

Well, most stocks are correlated to the market. Some just not volatile enough to bother with. Some are too volatile. Some are too expensive for my account size. So that leaves me with pretty short list of stocks. But I actually prefer to deal with a few stocks that I think I have a "feel" for. Selling premium is just a way to get some "income" while the market is dull.

 

[caroy]

You sell an option at a set up point where you would like to get long the stock. You get paid to wait for your setup. That’s how I see it

A question I have for those who sell premium for a living...... It seems with cash covered puts you know your risk it isn't really infinite. The danger more seems to be in selling naked calls. You can roll up and back but you're really just keeping a loser open if it doesn't revert to the mean. Does anyone who sells options for a living just set a buy stop on the stock for the option strike + the premium received. If it keeps going parabolic you have no more risk provided you had the capital to buy a hundred shares. Granted there is whipsaw risk that it comes back and forth at the strike but you could just keep taking the hedge on and taking it off. What am I missing?

 

[ph1l]

What happened to super trader karen after all? she survived the investigation or what?

She's super-retired.
https://investormint.com/investing/how-karen-the-supertrader-blew-up

Latest News On Karen the Supertrader
Karen the Supertrader has tried to keep a low profile over the last several years. Hope Advisors settled with the SEC for $1.5 million to avoid the fraud charges. Regulators also blocked Bruton and her colleague Dawn Roberts from accessing $7 million in Hope Advisors’ account.

As part of the judgment, Bruton is temporarily forbidden from working as an accountant or giving advice to investors.

Bruton turned 70 in 2019, so she may not mind the forced retirement. She had to pay a considerable amount of money to the SEC, but she may well have plenty of cash to enjoy the next couple of decades.

 

[Saltynuts]

Does your data go farther back than 2018? SPY has been a bumpy road since 1993.

Spaghetti Code, interesting statement when you say SPY has been a bumpy road since 1993. Obviously, its gone way up. What do you mean exactly by that statement? Just more volatile than previously generally? Bigger pullbacks? Or what?

Thanks.

 

[Bekim]

A question I have for those who sell premium for a living...... It seems with cash covered puts you know your risk it isn't really infinite. The danger more seems to be in selling naked calls. You can roll up and back but you're really just keeping a loser open if it doesn't revert to the mean. Does anyone who sells options for a living just set a buy stop on the stock for the option strike + the premium received. If it keeps going parabolic you have no more risk provided you had the capital to buy a hundred shares. Granted there is whipsaw risk that it comes back and forth at the strike but you could just keep taking the hedge on and taking it off. What am I missing?

 

[Bekim]

I don’t short naked calls mine are always covered. If you were going too, you would need to have some type of stop loss %. But honestly it’s just a bad idea to do it on any type of company (GME). You would be better off doing it on indexes.

 

[systematictrader]

I've spent a fair amount of time backtesting put/call writing. On individual names, it is not as clear cut. But on SPY (or SPX), volatility always mean reverts and rarely stays elevated for long periods of time. You can calculate the variance premium using the EWMA of ATM IV. You can see the results attached - basically 100% profitable, but the drawdowns can be significant while you wait.

the draw downs are guaranteed or semi that you recover in the long run

buy and hold works