Writing options for a living

[Profitaker]

Quote from RealProTrader:

I hope you are all starting to see what I am saying here, and it really is as simple as ABC, but for some unknown reason to the majority, but known to the few, the rubbish is still churned out for the masses to lap up, and Boy, do they do it well.

RPT

And you would know all about simple wouldn't you CYOF ? Why do you come here ? What exactly is your mission ?

BTW, to use the title RPT must be the joke of your laughable "career". Now, having wasted several sentences on you, kindly GFY where the sun don't shine.

kind rgds,

PT

 

[atticus]

Bull risk reversals are underpriced into rallies, and overpriced into declines [relative to spot]

 

[rcanfiel]

Quote from nitro:

That is not quite right either. Options have supply and demand just like any other trading instrument.

I think I said that: "The price at this minute reflects expectations, value, and is the momentary prism of supply and demand"

If someone is bidding it out of whack, then (s)he is not a disembodied part of the supply and demand equation. There is really no free lunch.

 

[rcanfiel]

Quote from optioncoach:

The market is not right all the time. If the options were priced perfectly all the time, then no one would buy or sell them really.

Huh? This has little basis in reality. People buy/sell stocks, indices made up of stocks, futures on the stock indices and options on the futures on the stock indices. Their buying/selling is not really based on whether things are priced perfectly or not. Usually they are quite wrong on the pricing, as so many leveraged traders fare poorly over time.

Yes, expectations drive much of the market. But cheap options is still mostly a myth to average Joe Trader. It sells books, but has little relevance to someone with a $3,000 account.

 

[HedgefundTrader2]

Quote from torontoman:

Can this be done? Has anyone tried it? Any comments?

Its done everyday, and money is made every day. That is all I can think of doing, writing options and using leverage to install a way to topple my account numbers into new highs.

 

[HedgefundTrader2]

Does anyone think it is possible to make more than 20%? writing naked options? [/B][/QUOTE]


That is 20% per year or per month? Makes a lot of difference how you phrase it. If its 20% per month its a bit high for most traders, but on a yearly basis its really low. Most put writers should average around 5- 10 % per month, without taking extraordinary risks and flirting with danger.

 

[RealProTrader]

Quote from Profitaker:

And you would know all about simple wouldn't you CYOF ? Why do you come here ? What exactly is your mission ?

BTW, to use the title RPT must be the joke of your laughable "career". Now, having wasted several sentences on you, kindly GFY where the sun don't shine.

kind rgds,

PT

I am not sure as to what your game is young man, but from your abrupt writing it appears that you have a lot to learn.

Profitaker implies that you are profitable. If you are indeed profitable, then maybe you would like to expand on my comments.

If you so called Elite Traders want to show others some tips on trading the markets, then it might be wise to answer the questions that are put. Smoke screens only serve to prove my point, and any person with a head on their shoulders can see this very clearly indeed.

So, as the saying goes, you either put up, or shut up, and let us that know what we are talking about share a little bit with the general public.

Imagine, someone might actually learn something of value that will assist them with their trading. Now, is that not a novel idea !

RPT

 

[just21]

Quote from day7793:

Does anyone think it is possible to make more than 20%? writing naked options?


That is 20% per year or per month? Makes a lot of difference how you phrase it. If its 20% per month its a bit high for most traders, but on a yearly basis its really low. Most put writers should average around 5- 10 % per month, without taking extraordinary risks and flirting with danger.

How do you make 5-10% without taking a lot of risk?

 

[RealProTrader]

Quote from rcanfiel:

Quote from nitro:

That is not quite right either. Options have supply and demand just like any other trading instrument.

I think I said that: "The price at this minute reflects expectations, value, and is the momentary prism of supply and demand"

If someone is bidding it out of whack, then (s)he is not a disembodied part of the supply and demand equation. There is really no free lunch.

This is completely wrong. Options are used as part of an overall strategy to hedge risk, based on the odds and the capital put at risk in the market.

The target is not the Options for the big player, it is the underlying. Those of us that know how it works can take advantage of this and profit from the change in the premiums at the different levels.

You must understand that all is never as it appears to be. If you think that something is of value, then the odds are it is not.

Does this remind you of any other scenarios in life, that have similar tendencies !

Also, there is one fundamental pre-requisite that must be understood before one decides to trade any market, not just Options !

Does anyone here know the answer ?

RPT

 

[RealProTrader]

Quote from day7793:

Does anyone think it is possible to make more than 20%? writing naked options?

That is 20% per year or per month? Makes a lot of difference how you phrase it. If its 20% per month its a bit high for most traders, but on a yearly basis its really low. Most put writers should average around 5- 10 % per month, without taking extraordinary risks and flirting with danger. [/B][/QUOTE]

Yes, it is very possible to make 20% per month, and I would even go as far to say that it is possible to make 30% per month.

However, in order to do it with naked Options, you will need a very large bank account, as the margin required for such trading will, to say the least, be high.

So, as with all walks of life, if you have money, then you can make more money, but, you must of course know how to make it.

Some make a lot of money without actually knowing what they are doing, and most of these people lose it all again, and this is just not in trading.

Look at Mike Tyson, he made a lot of money using his hands, but because he could not use his head, he lost it all again, and actually ended up in prison.

Always think about what you do, and if you are not 1000% sure that you know exactly what you are doing, then odds are you will end up like Mike Tyson, although I hope you will never see the inside of a prison, that was total stupidity !

RPT