Are writing options profitable?

Discussion in 'Options' started by TraderTactics, Apr 7, 2010.

  1. #21     Apr 8, 2010
  2. MTE


    Well, if you can make 20c at a time for the next 10 years you can get very rich indeed.

    Besides, where does it say it has to be 20c?
    #22     Apr 9, 2010
  3. houstak


    Writing options is profitable when they are expensive. Buying them is profitable when they are cheap. If you're looking for a few magic words, here they are: "implied volatility"

    This post says it all very nicely:

    #23     Apr 9, 2010
  4. #24     Apr 9, 2010
  5. Haven't you already flamed VN and Surf on several other threads? "Asked and answered, counselor..."... Sheesh, get a life already.
    #25     Apr 9, 2010
  6. spindr0


    If anyone could achieve such profits, why would they waste time running an advisory group?

    Or as someone else in the chain aptly put it, why would anyone ever buy a long option if one could achieve 40 per month short ??????????????????????????
    #26     Apr 9, 2010
  7. spindr0


    Account size has nothing to do with the success of writing naked.
    #27     Apr 9, 2010
  8. livevol_ophir

    livevol_ophir ET Sponsor

    Most successful professional options trades on the floor sell more premium than they buy, but are long more options than they are short.

    i.e. sell 100 straddles but buy 125 wings on each side...

    The majority of options that are open expire worthless... but, one wrong move short options can wipe out 20 right moves. The strategy above attempts to capture both phenomenon... profit from expiring worthless options and protect against the unforseen event...
    #28     Apr 9, 2010
  9. lindq


    Yes it does, assuming that one wants to engage in a regular program of collecting premium.

    In that case, a trader needs to assume that at some point they are going to be put a stock (or 2 or 3), which will remove capital available for further put selling requirements.

    Thus, one needs a significant account size to safely sell premium at any level that makes the income worthwhile, and the high risk worth any effort.
    #29     Apr 9, 2010
  10. spindr0


    Whatever you can do with 50g you can do 2x as much with 100g and 3x as much with 150g, etc. It's simply arithmetic and the return is the same, percentagewise.
    #30     Apr 9, 2010