klutz, that's fine, you have your opinion too. I wonder though, where did you get your information to make an educated judgement as to who is right or wrong in terms of determining the profitability of an option strategy? Seems to me that I have posted nothing but facts when pertaining to the specifics of how these positions work. I didn't post anything here to compete, especially with someone who does not understand the actual risk scenarios involved with trading options vs. buying stocks.
Com'on guys, simmer donw. It's great to have different opinions or point of view. You don't have to 'win' your arguments on this board. Beside, if we had this discussion face to face, I am sure the mood is much less sour. In a forum board, with just a few lines and without facial expression nor tone of voice, one could easily mistaken the others' benign argument for a personal attack. We're all friends here, and let's keep it that way. Maybe a few smilies will help? as for naked put, I like them for my own reasons, other may not like it for their own reasons or past experiences, that is it. Cheers!! Spring is here !!!
If you are a good solid trader there is nothing wrong with, and no reason to be scared of selling volatility.
TP..........my response was directed at beginners and the guy who started this thread seems to be one. I am not making any judgements about strategies, merely attempting to steer the beginners away from what is a very difficult and dangerous way to make a dollar.
Thanks Klutz...I appreciate your concern. I used to trade options about 12 years ago. I used to trade what they call "Combos" on the OEX. Basically, your naked calls and puts at the same time. Later, I gravitated to the S&P's, and am still trading them, today. (except, I trade the ES now...much faster than calling my broker on the phone) I don't know why, but I just never had thought about selling puts, usually I waited for price to pullback to a support level, and then bought.
Amen. Covered calls, or writing puts with full cash backing: low risk, slow and steady cash producers if you are a good trader. You need to have everything mapped out beforehand: what happens if it closes at certain prices-- do you close the options, dump the stock, take the loss, etc. etc. The risk should be a small % of your stake. Etc. Etc. I made a decent amount from covered calls for a few years (luck, in retrospect), and then I rode QQQ down from $40 to $22 over six months. I didn't have such a decline mapped out as to what I would do, so I just kept writing calls each month. I gave up around last summer's lows. Anyway I had most of my eggs in this basket, so it hurt more than it had to. With a proper bet size, having a complete strategy, and sticking with it, it would have worked out.