Genius idea selling puts on SPX??

Discussion in 'Options' started by iloveksy, Sep 13, 2019.

  1. Can you share some details of what the awful awful thing that actually happens is? Just characterizing it as "selling garbage puts" provides nothing of use to anyone. (I don't disagree with you; I would just like to know why bad stuff happens when you do that. Knowing the details of those failure modes can come in handy elsewhere.)
     
    #11     Sep 15, 2019
  2. qlai

    qlai

    With what spread width?
     
    #12     Sep 15, 2019
  3. taowave

    taowave

    First and foremost,I guaranty you will be a net loser....Those .05 options will go to 5 bucks sooner or later..

    Secondly,whats your return on selling that 5 delta put??

    Im not 100% positive on how much cash you have to put up,but Im guessing you would be lucky to annualise 5% return....Im not taking risk to make a max 5% annualized return...

    Rarely is the premium collected woth the risk of selling tails
     
    #13     Sep 15, 2019
    Wheezooo likes this.
  4. Typically a single strike.
     
    #14     Sep 15, 2019
    qlai likes this.
  5. This is why you have stops to get you out if it goes against you. Again, I'm not arguing against your assertion; I just want to see if there's any reality to it.

    Last time I sold one of those iron condors I've mentioned, it was $700 against the risk of an equal max loss, as I recall.

    So far, you haven't mentioned anything that makes the risk different from any other trade. A 5% chance of ending up ITM against a 5% possible return has the same overall RRR as a 30% chance of ITM for a 30% return and so on. What, according to you, is the additional or different risk factor here? All I'm hearing from you so far is "I've lost a lot of money on it", but that doesn't mean much. My buddy has been doing these 0-day trades for years, and they go against him about as often as delta would lead one to expect (between 1 in 10 and 1 in 20.)
     
    #15     Sep 15, 2019
  6. taowave

    taowave

    And how much money does your buddy make selling garbage options??

    If you are in the business to make .05-.10,then knock yourself out..

    And I mean that literally







     
    #16     Sep 15, 2019
    zghorner likes this.
  7. So you don't actually have one single rational thought about it - just your incompetence, anger, fear, and running your mouth when questioned about it.

    Thanks for playing, and have a nice day.
     
    #17     Sep 15, 2019
  8. iloveksy

    iloveksy

    Actually I agree this is not a good strategy at all. This, in fact, is not my idea, it's from someone I know. The thing is, you can't really argue with 2X stop will provide some protection.

    Yes yes I know stop may not work well, but still possibility of blowing up an account is very low (but again, almost blowing up can certainly happen, when S&P down almost 5% in a few seconds or something).
     
    #18     Sep 15, 2019
  9. The genius idea is actually selling puts approximately 60 DTE, delta 5-10, and managing them early. I try to keep negative deltas at all time and have established target ratios of theta, delta and Vega. To accomplish this, I also sell calls about 45 DTE at 10 delta.

    The genius members of this forum have been forecasting my demise for years, but I’m still here and thriving.
     
    #19     Sep 15, 2019
  10. taowave

    taowave

    You really believe selling garbage options is an efficient use of capital??

    Show us the numbers..

    What kind of returns can you put up??

    Trade direction,trade vol,but for the love of money don't sell garbage options...There is no upside..













     
    #20     Sep 15, 2019