Call sellers have been getting killed in this market

Discussion in 'Trading' started by garfangle, Apr 11, 2010.

  1. One has to appreciate the amount of pain that call option sellers have endured during this most recent bullish run. Not only have they been getting killed (unlimited risk), but the premiums they are collecting are pathetic compared w/ a year ago.
  2. just21


    Bad news if you are new to the business, a cost of doing business for those that have been doing it a while.
  3. Blotto


    Not so. Skilled call option writers are still doing very well.

    Remember, writing calls is no more risky than shorting the equivalent of the underlying stock. If you get assigned, you either cover on a pullback or liquidate (usually for a loss smaller than the premium received) if you are doing it properly.

    Skilled traders of all flavours understand the market condition we are in. They are not likely writing calls that are going to finish substantially in the money. There are enough suckers buying DOTM lottery tickets in all markets.

    Finally, a lot of skilled options traders are trading vol, not direction, and those who take a directional bias tend to get it right much more than they get it wrong.
  4. There hasn't been much of a pullback for call option sellers to cover. From the Feb 8th low, a call seller has been basically in the red the whole period to the present day.
  5. charts


    Obviously you wonder on a Sunday afternoon about something you have no idea ... Not a good place to be ... :)
  6. NoDoji


    If you're selling calls at pullbacks in an up trend, you either enjoy pain or deserve it :p
  7. FYI, I am not a call seller, never have been. I'm just wondering who these folks are and why they are enduring the pain.
  8. charts


    This is evidently just CHIT-CHAT ... :)
  9. You seem confused in your post. First you state call sellers and then drop the qualifier and state generically, "skilled option traders". I don't know of any skilled option/call writers who simply short naked calls, or puts for that matter. The guys who know what they're doing tend to trade volatility spreads. It seems to me that part of what makes them skilled is avoidance of the unlimited risk.
  10. Totally ridiculous. I sell calls every month, and i'm up (albeit only a small amount) this year. But i'm still up.

    If you know what you're doing and are honest with yourself about your position and are not ever married to your positions, you can always do well selling calls.
    #10     Apr 11, 2010