There are some experts out there touting the strategy of selling premium on the weeklies. I don't know much about them...care to elaborate on your experience with them ?
I have both bought and sold the weekly's ...selling has definitely paid better than buying.....so far. Jan-May as a % of total (in my trading acc) I was up over 50% YTD...BUT May has been much tougher since we have ground down steadly. If I don't get caught in a bad cash trade I've found I can roll out of trouble fairly easily because of the liquidity ATM (OTM is much harder so I take the put or call then sell the cash) ...... lately considered closing shop for the rest of the summer since summer has not been kind to me in previous years. As long as I sell the straddle/strangle, not just the put or call and take profits I do OK. I don't set weekly targets or even monthly targets...just try and take what the market gives. There are weeks I can't get a good trade on so I'll just look ahead. I watch my delta's and the vix very carefully. tend to buy when vix is "down" and sell when vix "seems" high.
Nice return Richard !...thanks for that. I'm considering putting on Butterflys or Condors on the short side. I wonder what kind of margin requirement Interactive will require for these positions.
In the past, IB did not quote or accept orders for many of the the exchange-defined and traded spreads like that so you had to go to other brokers or else leg in if you stayed with IB. However, they did start adding them recently. I do not know how far they have gotten recently since I have closed my IB account. Another problem with IB I found regarding spreads is that their options pricing and margining models sometimes gave very inaccurate values intraday when the bid-ask spread widened out, because they would use the bid and ask values that gave the least favorable valuation for each leg. This is not a problem with very liquid strikes but if you start trading less liquid strikes then account value and margin would swing wildly at times just because the bid-ask spread widened out.
sold the May 18 strike puts for .20 on the news that they asked Cody for additional week to make decision on the buyout offer.
you mentioned your stop loss is usually double the premium, given that your option will likely open above $1 tomorrow (5x your premium), does that mean you will close the trade immediately and take the loss? please do not take this question the wrong way, i'm just trying to learn how to manage volatile situations such as this. thanks in advance.
Hi. You won't get any wiseass/sewer talk from me. Don't believe in it! Anyway, after years of Buying/Shorting Stocks & Buying Calls & Puts (with only streaks of success at best), I came across some YouTube videos about Vertical Spreads. I looked into it a bit further, and now all I do is sell Credit Spreads. I don't care for short term Spreads much. Don't like risking $90 to make $10, and if it goes the wrong way early on there's no time to catch up. I tend to go out 6-9 months and risk $65-$45 to make $35-$55 and let the Stock's Trend do the work. At 45-30 days prior to Expiration (before the Rapid Time Decay really gets going) I make a decision whether to close for a loss, adjust the trade, or hang on till the end. Trying to set up monthly income so I can retire in a few years. i.e. Option Selling Income + Social Security = Current Salary! We'll see how it goes. Also, I especially like the concept of making money 24/7/365 off the other guy's Time Decay!
weekly's (IMO only) don't usually give you enough time to set up for a vertical, condor or butterfly. Long is probably better ...short and you can get your ass handed to you very easily. Weekly's are almost a day or two trade and I agree with you I think selling OTM verticals have a very bad risk/reward (on the weeklys). I trade weeklys using 4hr/time and tick charts to try and find entry and exit. I do trade the SPX monthly but not the weekly and haven't done the OEX in years....tried it didn't like it.