Yeah, it's like "risk on", or basically any time it's prudent to sell puts... 60% of the time selling puts works EVERY time.
I see there is some decent credit to be had even until thursday morning for the SPX weekly, thats where most of my live trades have been. I can still sell 20-25 points higher than the market. (bear call spreads) Small and with tight spread. By midday its decaying quickly and friday the decay accelerates even faster. Just sharing my two cents, seeing if anyone is doing something similar. Grey Poopon, lol Ef
The beauty of selling puts is, it does NOT have to work... "everytime". It doesn't even have to work... "on time". Unlike some strategies, it is not neccessarily over when the contract expires. Really no big deal if it works days, weeks or months later. Really no big deal to sell covered calls, and/or collect dividends.... until it works. A drop of 30% or more below ones strike is one thing. But a drop of 20 - 22% below your strike, is generally still managable for most stocks. Thus, if one wants to assume a 10 - 12% otm safety cushion when the trade is initiated, and it then drops an additional 21% below your strike,.... the stock can lose almost 1/3 of it's value from the day the contract was initiated, and still be manageable after it's put to you. Hence the reason I say.... put selling doesn't have to work.... "everytime". It doesn't even have to work.... "on time".
Hello Put Master, Please tell me: 1. Do you sell naked puts or put credit spreads? 2. Do you prefer to sell on monthlys or weeklys? 3. How far out of the money you sell (or right at the money)? 4. Do you hedge them in some way in case of market crash, e.g. buying more longs than shorts? 5. Do you like to sell stocks, etfs or indexes, and which ones?
I sell puts naked most of the time. I only sell put spreads on the occasional stock that is extremely volatile, and/or has no tech support, and/or is extremely over valued and/or over debted, and whose contract runs through an earnings cycle. If I'm not afraid to potentially own the stock at my strike, I'll generally go naked. And I'm generally not afraid of the stocks and prices I invest in. I don't fear temporary stock ownership. I only fear ownership of a stock that may not be "recoverable". I prefer monthly. Why? Because I am picky about the stocks and prices I invest in. Both in terms of it's fundamentals and technical. It takes a lot of time and work to find them, via the tedious process of elimination. If I finally find one that meets my criteria, I'm not going to risk losing it in a week, for some puny weekly premium. The calculated % returns may be super large on the weeklies, but the actual dollars are generally puny. Hence, my trades generally last 1 - 3 months. How far otm I select my strikes, depends mostly on how volatile the stock and sector are, and where I see it's L-T tech support. Strike selection is all about tech support for me. Thus, sometimes I'm 8 - 10% otm and other times 20 - 22% otm. I rarely hedge, because I am picky about the stocks and prices I select, and thus i don't fear ownership of those stocks, at those prices. I'm happy to sell covered calls and collect dividends, while i wait for recovery. There are more ways to manage risk, then simply buying put protection. The fact is, excessive over reliance on basic put protection, can actually wipe out your account pretty quick in a crash. If you can't consider stock ownership, all you can do is close for losses. Perhaps massive losses.
Soild,, completely solid. Do you have many positions on at once.? I am sure you have very good size management . EF
My trades are all posted, beginning on page one. Although, they are not necccessarily all trades for my account, as I also trade for family as well.
Thanks P-M, i will check it out. whats your take on buying a leap and selling calls against it on monthly or weeklys??. I keep on seeing posts and sites talking about that strategy. They are using FAS, QQQ, SPY etc... EF
When I've reached the degree of leverage in my account that I don't want to exceed. Other times, I may place a trade in both. Other times I may place a trade in mine, but not theirs, if i don't want to expose them to as much risk as I'm willing to expose myself to. Depends on the stock, when earnings are due, length of contract, ect....