Suckers who like premiums!I want the daily decay , it is too tempting to not get sucked into.I want to take option premium when market is stuck in a range on a daily basis. The best I get into skimming the spread at I G is -2 per leg, so I am still paying 2 *10 = 20 pips on a butterfly middle 4.I skim the spread by waiting for a move towards higher prices , before selling call or puts .On buying the spread is skimmed by waiting for lower prices , sometimes I get caught if I buy first , so I always sell first . The daily options have big decay and 80 % of the time the market ranges, so I look for ranging opportunities ,or directional days , but I get clobbered with sudden unexpected moves. If I moved to interactive , how much more spread can I skim on the weekly options?
The issue is not how much you make during the 80% of the time when the market stays in a range but how much you lose the other 20% of the time.
A writer has to understand the instrument on which one trades options.A well defined strategy has to be formulated where risk does not exceed the rewards .Covered or longer expiry puts and calls otm have to be in place for limiting risk , just in case price moves 50 % on the the short options , in situations like 9/11. With options risk can be limited ,if you are prepared to pay the spread and put on limited risk strategies.How much you lose with limited risk strategies is the spread. Here is some data of daily range from 9 am to 19 hours close , almost 75 % of the time the price closes within 70 pips .Depending on the strategy or combination of strategies it can be consistently profitable , that is what I am trying to figure out here.
This is the easiest trade I ever done. 3 minutes before nfp daily straddle was 82 instead of normal 35 premium .