Thanks for all the constructive responses. In James Cordier's case, it seems that position sizing and risk concentration (on 2 assets, Nat Gas and Oil) -aka "all in betting the ranch"-is what got him. I guess selling puts on stocks you'd like to own -for a notional you can afford if exercised- seems boring enough to keep you safe in normal circumstances. You'll only blow up in tail events. But then again that day everybody would so that's OK. And if you restrict yourself to liquid big caps, you might even survive to fight another day.
This is always the reason. "on stocks you'd like to own" is a portfolio management mistake. If you want to own a stock, buy it. If you "wouldn't mind owning it" then skip it and buy a different stock that you want to own. Yeah. You sell tail insurance, you gonna lose money if the tail event hits. Its nice to be making money when everyone else is losing money. You can monetize dislocations instead of licking wounds. You can also lose money by underperforming on the upside. And that's more dangerous overtime than losing on the tail event.
Objective is not to own the stocks I sell puts on. I already own the stocks I like. Selling puts is just a side game. I just restrict my puts to stocks I wouldn't mind being assigned on. Risk control is what it is. I don't own GOOG, I don't own JPM but I'd be OK been assigned on them,
I think NWM's point is that after the tail event you may not feel the same way about the stock. OTOH, if you want, and can afford to keep the stock under any circumstances and for a long time... then, well, you may as well buy it.
I mean there's no Holy Grail. I think every strategy should ~ breakeven - fees if applied everytime / everywhere. The trick is to know when / where we have an edge or not.
first of all never sell puts unless your ok with accepting what your buying at a lower price. use puts to dare the market to give you a deal and then sell calls if exercised and roll when you need to just keep that envelope going. if you have never actually seen someone do it then how will you ever learn? seek out someone that is real - they are not on youtube - find a local trading group you should have bought your stocks with naked puts then sell your future earnings
Would you want to be assigned goog at 150 if their search shrank by 40percent to OpenAI? Or if Google is broken up by the ftc what if Jamie dimon got hit by a bus tomorrow? Or trump caps the amount of profit banks can earn.