Confused about taking profits on an options sale

Discussion in 'Options' started by spinn, Sep 27, 2022.

  1. I look forward to you analyzing the hell out of it.
     
    #11     Sep 29, 2022
  2. Sorry, atm I got no time for anything else but my own strategy as it's much work & time to study & analyse such a system.
    So, your system, your task :) Since you use it and also "promote" it, then one would expect that you already have tested it. So, you should post your experience with it. Maybe others use it too.
     
    #12     Sep 29, 2022
  3. Did you have time for this strategy?
     
    #13     Sep 29, 2022
  4. I improved/extended it to a 2-leg options spread: the only difference is the addition of a cheap LongPut to the main ShortPut.
    The net effect is that at the loss side the loss gets capped horizontally, as can be studied here: https://optioncreator.com/stqggit
     
    Last edited: Sep 30, 2022
    #14     Sep 30, 2022
  5. Is there a reason to stay away from call spreads? A wider bid-ask spread? More dangerous than put spreads?
     
    #15     Sep 30, 2022
  6. In my case I stick to Puts only b/c it's easier to handle in a CashAcct.
    In a CashAcct you can do only covered trading, ie. covered call, and cash-secured put.
    Covered Call means LongStock + ShortCall, so effectively Call spreads are not possible in CashAcct, so what's left is Put spreads :D

    No, I don't need a MarginAcct. I'm deliberately & willingly limiting myself to CashAcct. Some might think "what a masochist" :D
    It's like saying "If I can make it there, I'll make it anywhere"... :) Ie. I do it my way... :)

    And: using Puts only one can sell even for either direction: bullish as well bearish,
    by chosing an appropriate strike for the LongPut that is either < strike of ShortPut (bullish),
    or > strike of ShortPut (bearish).



    Update:
    also a reason is: the risk with ShortCall is unlimited, not so with ShortPut, cf. the table in this posting:
    https://www.elitetrader.com/et/threads/the-put-sellers-journal.368445/page-9#post-5684359
     
    Last edited: Sep 30, 2022
    #16     Sep 30, 2022
  7. I recall TD Ameritrade allowed lowest-level beginners to sell puts and covered calls (=the wheel) but didn't allow spreads of any type.

    Selling naked calls can be considered having unlimited risk, but you're bragging how put spreads limit your risk, so call spreads won't do the same?

    And when tastytrade says IV is high and I should sell premium, how do I know whether to open a put spread or a call spread?
     
    #17     Sep 30, 2022
  8. That's true. Spread is not recognized, but one can construct a spread if one likes.
    A margin acct is better suited, since then for spreads the collateral (the margin req) gets very low.
    One can say with margin acct the PnL is about twice that of CashAcct. Still, CashAcct is 'nuff for me.

    Hmm. this is indeed a good argument; you could be right. But I haven't studied the Call spreads yet, so can't answer it. Maybe someone else can.

    As said, I only recently discovered spreads, and from them have studied only the Put spreads.
    Maybe others can answer you also this question.
     
    Last edited: Sep 30, 2022
    #18     Sep 30, 2022