LTNS BlueWater. Nice to see you back in the saddle a bit here, and as per usual, you come up with something that took me aback. I am way behind on mathematical operand symbols, and when I saw this... All I could think of was the aiming reticle from "Predator". What operation does that symbol represent in maths?
Risk for CC is InitialUnderlyingStockPrice - PremiumReceived Risk for CSP is Strike - PremiumReceived
Isiah Pacheco just fumbled...triple dot Predator thingy that he fucked up the Chiefs this quarter. Yes, I can see the operand now.
"BuTcOvErEdCaLLsArEsAfE" The key part that new traders don't get is that structure has, at best, ZERO expected value (less friction.) Screwing it up, whether on entry, execution, or risk management, turns that EV negative - possibly catastrophically so. If any "strategy" (structure) had higher returns than any other one, then that's what everyone in the market would be doing - which would arbitrage that advantage out of existence. If you don't have something that produces alpha, no structure will produce a return higher than the market - and given that most people aren't skilled, the outcome will usually be much lower than the market. Sticking their money into SPY and leaving it there would be the best thing that most "traders" could do. But hey, if people think the market is just a big slot machine, and it's "exciting" to pull that lever - I'm sure not going to stop them...
Nobody said that covered calls are safe on this thread. Just you mocking it. Still waiting for an answer to a simple question, how are you managing your risk?
Your question was directed to someone else. I can tell about my risk managing method: just do nothing! Here the details and the rationale behind "The Do-Nothing Risk Management Method™" of mine: My intention is to keep the position till the expiration date, not planning to close earlier. Before opening the trade one of course did a through risk analysis for the expiration date (ie. of the most probable worst outcome at expiry), and has accepted it and decided to make the trade. Then one has to stick to the plan and not think about closing earlier. The risk is known in advance (ie. limited to a certain value, is contained), and has been accepted. That's all. Just accept the risk. Of course also some correct money management methods have to be applied together with that: don't risk more than 5% of account value in any trade (ideally even not more than 1%; ie. spread your capital into 20 to 100 "mostly independent" trades; it depends on account size). I'm of course not using any strategy that has unlimited risk (like NakedCall or NakedPut or ShortStock).