What are some low risk to reward ratio strategies?

[rabbitsfoot]

I've been selling spreads, naked puts and iron condors for a steady stream of income. I was enjoying it until some of them blew past through the strikes and wiped off all my gains (Disney last week, LULU last month and QCOM yesterday).

All of these short options were 82-85% probability OTM still. Not sure how can I play any safer?

I'm fine taking small losses but these kind of aforementioned losses just wipe out my weeks of earnings via premiums and hard work.

Any suggestions are appreciated.

 

[Robert Morse]

All of these short options were 82-85% probability OTM still. Not sure how can I play any safer?

Maybe you should use another process to calculate this as it seems like it was wrong 82-85% of the time.

 

[smallfil]

I've been selling spreads, naked puts and iron condors for a steady stream of income. I was enjoying it until some of them blew past through the strikes and wiped off all my gains (Disney last week, LULU last month and QCOM yesterday).

All of these short options were 82-85% probability OTM still. Not sure how can I play any safer?

I'm fine taking small losses but these kind of aforementioned losses just wipe out my weeks of earnings via premiums and hard work.

Any suggestions are appreciated.

Traded options spreads before and lost thousands. Why risk a lot to win very little in turn? Never understood the logic of that! People love the 70%-80% win rates don't they? However, how much return do you get 2-4%. When you lose and it is guaranteed that you will, you lose several multiples of your gains all at once! No, thanks. I will take options directional trades which I feel are way better! I will take 40% win rates, huge rewards instead for the risk I am taking.

 

[cdcaveman]

Low risk high reward....spend time educating yourself.....best investment I have made yet

 

[Nobert]

With all due respect,

when it comes to QCOM,

buy some books on technicals, basics like support and ressistance,

then look at QCOM weekly/monthly chart since 2015.

I've been selling....naked puts... for a steady stream of income....
...... I was enjoying it......

;D

just funny,

nothing personal,

- best of luck

 

[ironchef]

I've been selling spreads, naked puts and iron condors for a steady stream of income. I was enjoying it until some of them blew past through the strikes and wiped off all my gains (Disney last week, LULU last month and QCOM yesterday).

All of these short options were 82-85% probability OTM still. Not sure how can I play any safer?

I'm fine taking small losses but these kind of aforementioned losses just wipe out my weeks of earnings via premiums and hard work.

Any suggestions are appreciated.

I suggest you read this thread, especially posts by Maverick74.

https://www.elitetrader.com/et/threads/writing-options-for-a-living.53037/

There is no edge buying or selling any options. Almost all probabilities are factored in by your counter parties. Otherwise, why would they trade with you if knowing they are going to lose? In general, if there is an advantage buy/sell, it will be arbitraged away quickly.

To be profitable we retails really need to have a correct opinion of what we are trading. For example, those, either because of luck or skills, bet on the bull market from 2009 to now will net a good profit. When this bull market ends, the same strategy will likely incur a big loss.

And my suggestion is don't go naked until you have a winning strategy.

Best wishes to you.

 

[padutrader]

long ago I found the best risk versus reward strategy is.....sit down with a glass of beer

cheers

I must point out you did not ask for the best risk reward trading strategies

 

[murray t turtle]

Maybe you should use another process to calculate this as it seems like it was wrong 82-85% of the time.

%%
He could do the option of dollar cost/cash average on DIA; + could find some thing better than that. NOT all options are derivatives.

 

[destriero]

I've been selling spreads, naked puts and iron condors for a steady stream of income. I was enjoying it until some of them blew past through the strikes and wiped off all my gains (Disney last week, LULU last month and QCOM yesterday).

All of these short options were 82-85% probability OTM still. Not sure how can I play any safer?

I'm fine taking small losses but these kind of aforementioned losses just wipe out my weeks of earnings via premiums and hard work.

Any suggestions are appreciated.

What hard work?

The easiest way to think about shorting condors, etc., is to use the delimited (digital) payout where probability equals the outlay. An 85/100 digital reflects a $15 profit. One loss results in the loss of six payouts on similar trade expectancies.

Prob of profit is inversely proportional to payout, Bro. That's the fvcking problem, eh?

 

[murray t turtle]

Traded options spreads before and lost thousands. Why risk a lot to win very little in turn? Never understood the logic of that! People love the 70%-80% win rates don't they? However, how much return do you get 2-4%. When you lose and it is guaranteed that you will, you lose several multiples of your gains all at once!
No, thanks. I will take options directional trades which I feel are way better! I will take 40% win rates, huge rewards instead for the risk I am taking.

%%
Well i usually hate to risk a lot to make a little/save a little.
One exception, i skipped title insurance, on raw land for many years.But i bought title insurance on my home property-lost money,on premium, but that is exspected for insurance.

And i may never self insure on title insurance again even though we did real well @ it.And much it was bank financed so if we had a title loss, we would have lost about 10%[downpayment], bank would have lost 90%................................................................................
Dave Ramsey SAYS ''ALWAYS BUY TITLE INSURANCE ''=GOOD WISE WORDS.,,