I disagree. You <i>think</i> you know what you are doing. Selling 2000 naked puts is not the path to success. I'm sure you've made money with such trades again and again. And you should expect to make those profits because these are high probability bets. But, long-shots do come home and the problem with winning is that it leads to overconfidence - and the inability to measure risk. I've been trading options for more than 32 years. Not that's it's relevant to this discussion. Mark
Number one is LIMITED risk. No naked short options. I sell credit spreads. I trade iron condors. Sometimes I buy extra options for protection. I'm not suggesting this is for everyone, but it suits my comfort zone. Mark
I suppose that might have some relevance if you're dealing with $2.50 and $5.00 stocks since zero isn't far away. But in the real world (say the likes of AMZN, ISRG, GOOG, etc.), it's not relevant since the stock is never going to rise by the amount of its current price... at least not before anyone with a modicum of money management deals with it. AFAIK, shorting is the better bet since markets don't melt up. I'd rather trade a bear than a bull, any day.
Risking ~$1MM for $50k.. He's playing Russian Roulette. I truly don't wish anything bad upon anyone. I am happy for others who have found success. I hope his success continues. Sorry, I lied, I had to post one last time.
OP probably was confused and meant selling 20contracts for 2000 shares, not 2000 contracts. But was too embarrassed to admit his mistake/understanding. Every few months there's a thread about naked short selling with the same discussion from the same people. I guess this is it for March. See you in may?
don't forget the commissions. ps my prediction your account will get wiped out if u continue on this path.