Writing puts on indexes

[silver182]

https://www.gurufocus.com/news/256254/naked-short-put-options--warren-buffetts-little-secret

Naked Put options are a great tool..a money making tool. Entry is key to be sure, especially weekly's....Leaping.. Naked Puts on the other hand are money in the bank. The image of "Leaping" Naked Puts has just got to be a winner..it is in my mind & my portfolio's.

 

[silver182]

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".

Keep in mind I "never risk" any more than I can afford to lose....just like going to Vegas..which I do regularly, whatever happened to those good old $1,000 dollar bills( I remember the Baccarat tables) stacked with $1,000 bills...those were the days.

 

[destriero]

Keep in mind I "never risk" any more than I can afford to lose....just like going to Vegas..which I do regularly, whatever happened to those good old $1,000 dollar bills( I remember the Baccarat tables) stacked with $1,000 bills...those were the days.

That's BS. There is no way that you're cash secured.

 

[silver182]

and now they're $10 itm and trading for 11.60x12.00 at nearly 1 delta. what part of this is proof of a great entry?

Well that very day entry was offered as low as 5.75 that would have been a poor entry..

 

[destriero]

Alas, poor Yorick... I suspect that we shall not hear from him again:

Loss of $3,000 on shares.
Loss of $16,000 on puts.
($19,000)

Nice hedge, Bro. Excelsior!

 

[FibonacciNinja]

Alas, poor Yorick... I suspect that we shall not hear from him again:

Yorick's Bro: "Nah, bro. Guy's got stacks of Grover Clevelands, James Bond status. This was nothing for him."

 

[destriero]

It's all about the Hamiltons, baby!

 

[Dolemite]

Well if you liked the 235 strike with those short puts you gotta love it at 216. Double down and sell some more puts. Remember it is only a paper loss unless you quit! (or get a margin call)

 

[destriero]

Well if you liked the 235 strike with those short puts you gotta love it at 216. Double down and sell some more puts. Remember it is only a paper loss unless you quit! (or get a margin call)

His trading is quantized. It's not a loss until he observes it.

 

[srinir]

Double down and sell some more puts. (or get a margin call)

You got it wrong. In his terminology more "Hedging"