I can precisely tell you the probability of an option hitting my strike price at any given moment. For me selling options it is not a game at all, it is a business, if i wanted to play games I would go to Vegas. Unfortunately this is no easy topic and it is impossible to explain it here. I have a mentor and the first time we met he draw on a blackboard his strategy for option selling. It took me 3 hours to understand the very basic of what he is doing. This year I am up 36% on my account with things/strategies I am doing already and know already because after six months of mentoring I still have not made any money doing what he is doing. The reason it is not because what my mentor does doesn't work, the reason it is because it is hard stuff to understand and to apply. If it were easy everyone would do it, right ? I would not sell options if there was no theta helping the option seller. A lot of times my outlook of the market is plain wrong, and when you are wrong and you are still able not to lose money or even make a little bit of money is very powerful stuff. My mentor has a similar performance to mine but his risk profile is very sophisticated compared to mine, at any given time he is not risking more than 5% of his entire capital he does options spreads though. Again I am NOT saying that selling options is the way to go, but I am saying that it is working for me. Maybe one day I will understand completely everything my mentor is teaching me, but that does not mean that I will be able to have the same perfoemance he is having. Do you see why this is not a black or white thing and it all depends ? I take no offense, however we have a completely different angle to look at the same thing. It is almost as if I invite you out for a nice meal and you think Mc Donald's while I think about a northen Italian restaurant. What makes a nice meal ? It depends on the person eating it. With that I end my comments on this topic, I am not here to convince anyone about anything. Good Luck to you
Are you a net sellers of premium or a net buyer of premimum? According to the logic of your previous posts and the posts of others of your thinking there should be no difference. If you are a net seller of premium (my bet is that you are) then there must exist reasons for why you not a net premimum buyer. It is the reasons you use for your own money that pushes people to favor selling premium. Premimum sellers have more room to maneuver.
I am glad that your investment is paying off. (I recall our exchange of months ago when you were planning to do it) Cheers
Hello Riskfreetrading, how are you ? It is nice to see you, I do remember when we exchanged thoughts 6 months ago, I am glad that at least one person can relate to and understand what I am talking about. I hope you are having a good year as well ( and you were right ! it is possible to sell options with almost no risk )
Thanks and I will PM you to catch on things in private. I do not complain. The market has been good to me. Congrats on your success! Maybe people would be surprised if they knew the investment you have put in your education. I have been very impressed. You deserve your success.
Riskfreetrading, like someone said there is no free lunch I am paying my mentor $ 2000 x month and when I say that people laugh, go explain them why it is worth it for me. I will have soon a personal financial website where I will show my performance on the accounts I manage and all. No worries, it is free and I am not selling anything. It is manly to exchange ideas with like minded people and to compare mistakes so that we can avoid them in the future. I'll give you the link privately when it is ready, about 10 days Thank You !
Hi I'm not here to tell you which strategy is the best or not. But it can be useful sometime to stress people about tools they got to manage their risk. "I can precisely tell you the probability of an option hitting my strike price at any given moment." No you can't. You are able to tell me what a model has defined as a probability of hitting your strike, being in the money. Your model is based on a risk neutral relationship, so you can just tell me the risk neutral probability. But even If you knew the real probability or the right distribution, it doesn't protect you from big gaps and jumps. 1987 crash probability was about one in 10^50 according Mandelbrot calculus. August 1998 collapse is about one in 20 million "as if you daily traded for nearly 100000 years." Probability doesn't help. ... "I take no offense, however we have a completely different angle to look at the same thing. It is almost as if I invite you out for a nice meal and you think Mc Donald's while I think about a northen Italian restaurant. What makes a nice meal ? It depends on the person eating it." You may be surprised "With that I end my comments on this topic, I am not here to convince anyone about anything." I'm here to learn too so if there is a good idea, why not. For the moment I'm not convinced, but things can change. Who knows? I'm sure that you know the saying" a true trader is a human being endowed with the rare gift of a positively sloping learning curve." "Good Luck to you" Same here
ok smartass, why don't you implement this strategy and let us know how it turns out. start a journal please. you'll have a bite of humble pie within 3 months.
That had to be the most horrid misuse of analogy I've seen in a long time. Nothing wrong with selling premium, it's the leverage that will kill Put sellers are avoiding the question What If... Nothing wrong with buying premium, it's the "home run" mentality that'll kill. If your long option has quadrupled halfway to expiry, maybe it wouldn't be prudent to wait for the quintuple or 7 bagger. Never look a gift horse in the mouth.