Writing puts on indexes

Windlesham1 said:
naked put writing is not advisable -anyone get smashed to bits this week and crying as they read this? The peanuts you collect from selling will get wiped out in a heartbeat. I've been trading options for 19 years
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You have to take the Winners with the losers..Smashed this week not really...all in all over time much better than it's cracked up to be. Options are a game of timing..too short expiration not far enough out of the money, your in trouble..not selling when the time is correct..not good.

I've been writing heavy Put options for only three years now...never made so much money..been trading for well over 12 years. If you can call $21,700 peanuts for one weekly position....I'll take all of those peanuts I can get:))

Try shorting the market in general over time tell me how well you do at that.

Notice this position looks like I'm going to lose but wait..I've got 5 more trading days with this trade, and notice how well I entered to position, in @ $10.86 each. I love selling puts when everyone else is running from the market, that is the time to strike.

We will see how this works out... I don't believe I'll have to be exercised or roll out the worst that can happen! Exercising 10.86 out is not likely.

Yep I'm bullish over time it has worked very well. Of course I'll hold the Raw AAPL until profit is just right..

Timing and Options.jpg
 
silver182 said:
Simply put, hedging is defined as protecting yourself in the case of an unforeseen event is it not?

Selling OTM late in the week.. Weekly Puts are a great hedge. Example: your holding 3000 shares of AAPL, you might like more shares... but only if your entry price is considerably lower than AAPL is trading. Sell OTM Puts today for AAPL trading @ 229.50... sell 50 units Oct-5th 225.00 strike @.53...I just hedged my 3000 shares purchased today slightly above 226.550. Gained 2,750 at the sale to hedge my 3000 share purchased @ 226.50. A short term hedge with a cash bonus...I know..I know your going to tell me AAPL is not an indice..just giving a perspective..
You fellows are really into semantics...I on the other hand just trade to make money.
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It's not "semantics", you're just not "hedging". You defined hedging then described something else.

Hedge would reduce loss at adverse price movement. So when apple goes down, your 'hedge' would be profiting to offset your loss on your long shares. Not burn money double time. So selling a call would make more sense as a "hedge". Or BUYING the put would be the hedge as both of these would reduce delta risk (or heck, use both. It's called a collar. It's how Mark Cuban kept his shirt)

But in this case you ADDED delta. Along with risk multipliers (gamma, vega). So if apple spikes down, you're paying for someone's lotto ticket. You didn't "hedge your position and now you have cash", you added to your bullish position and are now more complexly bullish with cash.

Yeah it's probably going to turn around from here and then make you profit. Then you come back and say "see guys, told you!" but you can't call this a hedge. People might follow you and blow up. Heck, you might blow up some day if you think you're adding "safety".
 
Dude is down over $5K on his Texas hedge. F*cking brilliant.

Timing and Options.jpg


Loss to shares? $1K
Loss to "hedge"? >$4K
 
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There are infinite levels of stupidity.

You have discrete cases of greed overwhelming common sense. Not egregious. As in Madoff and the "fenced" shares. He was posting 1% monthly gains in his "fund" with the market dropping. Long shares + short risk-reversal = bull vertical.

Were investors dumb to not question the performance of a bullish strategy in light of a falling market? Most people don't want to get into the weeds.

SYNTHETICS!

This guy is literally doomed. He's "hedged" by virtue of shorting OTM options. Forget moneyness; forget dgamma. He just bought AAPL and shorted the D1 put... 5:1.
 
Yosemite Sam. Ask yourself about your leverage to delta when shorting *one* 90D put vs. selling *nine* 10D puts. (Hint: they have the same initial gamma(individually)).
 
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