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Why isn't everybody selling options?
- Thread starter jr07
- Start date
Am I missing something or is there something missing from the question??
What delta options are we talking about? The 80% expiring out of the money may just give an indication as to what the average delta of the option being sold in the market is???
Sell 1 delta options and I promise you that a lot more than 80% will expire out of the money.
What delta options are we talking about? The 80% expiring out of the money may just give an indication as to what the average delta of the option being sold in the market is???
Sell 1 delta options and I promise you that a lot more than 80% will expire out of the money.
Here are a few sites that show CTA performance - you can usually register for free:Quote from Free Thinker:
where can you see past performance on these funds. i used to follow ansbacher but he stopped reporting on the site i used after the crash of 2008.
autumngold.com
managedfutures.com
CTA-info.com
+1Quote from dmo:
Even if that statistic is true, it is meaningless.
Had you sold hurricane insurance policies in New Orleans for the years leading up to Katrina, they all would have expired worthless. But Katrina would have wiped out all your profits in a day, and then quite a bit more. Same for oil disaster insurance policies in the Gulf - you would have made lotsa money until a few weeks ago. Today you'd be wiped out.
Same is true of selling options, which are also insurance policies.
its not quite the same selling puts. in a hurricane you are required to exchange cash for making the other party whole. you get nothing in exchange but the premium you recieved.Quote from dmo:
Even if that statistic is true, it is meaningless.
Had you sold hurricane insurance policies in New Orleans for the years leading up to Katrina, they all would have expired worthless. But Katrina would have wiped out all your profits in a day, and then quite a bit more. Same for oil disaster insurance policies in the Gulf - you would have made lotsa money until a few weeks ago. Today you'd be wiped out.
Same is true of selling options, which are also insurance policies.
if you sell a put you are required purchase a depreciated asset from the other party at a price that you would like to own it at. you recieve premium plus an asset that you intend to hold for a period of time until you can sell it at a higher price.
it all depends on how you invest. shorting puts isn't for everybody, just like trading hog futures isn't for everybody.
If I like GE, the company- the business, and I want to be an owner, I'll short an OTM put. Scenario 1, GE stays up and I get some cash. Scenario 2, I buy GE for a lower price than when I placed the initial trade. Sure I would have been buying lower without the put- but we do what we can with the information we have. Shorting puts, without leverage, isn't necessarily the same as selling insurance.
If I like GE, the company- the business, and I want to be an owner, I'll short an OTM put. Scenario 1, GE stays up and I get some cash. Scenario 2, I buy GE for a lower price than when I placed the initial trade. Sure I would have been buying lower without the put- but we do what we can with the information we have. Shorting puts, without leverage, isn't necessarily the same as selling insurance.
Quote from Free Thinker:
... you recieve premium plus an asset that you intend to hold for a period of time until you can sell it at a higher price.
or a lower price. that last statement is ridiculous.
without going into the intricacies of cash v stock settled, indices v stock options etc... it is exactly the same as selling hurricaine insurance and this is a good way to conceptualise it.
this is the easiest options question to answer...BECAUSE IT TAKES HUGE AMOUNT OF CASH $$$ TO SELL/WRITE NAKED OR EVEN COVERED OPTIONS OR SPREADS TO MAKE ANY REAL MONEY!!...go ahead and ask your broker the margin requirements on these type trades...makes one wnat to run and trade emini futures with daytrade margins...
Quote from Free Thinker:
no its not.
Well I am the first to admit I have very little experience in trading options on single stocks (compared with indices) so I would love to hear the example. I am sure one exists.
Is there a difference in me buying a $100,000 house from for $1,000,000; or me just giving you $900,000??