Writing options for a living
- Thread starter torontoman
- Start date
Writing Options for a Living, this is the point
Someone have in the past made calendar spread with
QQQQ
OEX
SPY
If Yes, did You feel the difference
( for me - writing options against LEAPS - I have received more results with the cubes, not with the spiders )
And You ? please explain..
signé Artes - http://www.dot-circle.net/coveredcall.html - french
Looks like i am late to the party, this questions is mostly aimed at maverick. Are you saying there is no edge in selling option vs buying option? or only if they have the same delta?
I will use LEH (65.44) as example since i am familiar with the stock. Lets say i think the underlying is going up.
1) Sell 1 contract of strike 60 put (.LESML) and credit $75
2) Buy 1 contract of strike 65 call (.LESAM) and debt $260
3) Buy 100 shares of LEH at $65.44 and debt $6544
Would choice 1) be better? basically even if my prediction is wrong and leh stays flat or drops a little, i still pocket the credit at expiration. But with choice 2) or 3) the underlying MUST go up, without any room for error in my prediction.
Of course the risk of choice 1) is the unlimited downside spiral, ie doomsday: Leh bankrupts and drop to $0. 1)-$5925 2)-$260 3)-$6544
So i guess the bottomline question is if one has good confidence in a company that will go up, is it better to buy the call and bet the price will go up before expiration date or sell a otm put and bet the price will either go up or not drop below the otm price (below resistence) level by expiration?
edit: i know there are many alternative combo strategies, but lets assume you only have those 3 choices and you believe the stock is going up which would you rather do? and why?
I will use LEH (65.44) as example since i am familiar with the stock. Lets say i think the underlying is going up.
1) Sell 1 contract of strike 60 put (.LESML) and credit $75
2) Buy 1 contract of strike 65 call (.LESAM) and debt $260
3) Buy 100 shares of LEH at $65.44 and debt $6544
Would choice 1) be better? basically even if my prediction is wrong and leh stays flat or drops a little, i still pocket the credit at expiration. But with choice 2) or 3) the underlying MUST go up, without any room for error in my prediction.
Of course the risk of choice 1) is the unlimited downside spiral, ie doomsday: Leh bankrupts and drop to $0. 1)-$5925 2)-$260 3)-$6544
So i guess the bottomline question is if one has good confidence in a company that will go up, is it better to buy the call and bet the price will go up before expiration date or sell a otm put and bet the price will either go up or not drop below the otm price (below resistence) level by expiration?
edit: i know there are many alternative combo strategies, but lets assume you only have those 3 choices and you believe the stock is going up which would you rather do? and why?
Nobody makes 5-10% a month (>80% annualized) without taking on MASSIVE risk, even if its the rare fat tail risk of completely blowing out the account overnight.
And please stop telling people they have learning to do just because they're not subscribing to risk free profit/free lunch lunacies.
Incidentally, your last post to the board was on 07-25-07, I believe that coincides with a mid-term top in the SP500. Writing naked puts anyone?
Pardon me for jumping in very late..
Let me phrase the question to Mav a bit differently.For argument sake,we are trading a stocks options with no skew.I am considering selling a delta 30 put vs buying a delta 30 call.I look at the options vol,and I see they are trading over historical.Would you still be 100% indifferent to buying the 30 delta call vs selling the 30 delta put??
