Perhaps you misunderstood me--I only want to get assigned on the calls. The puts; I would rather have those expire, but if I get assigned I can ditch the shares commission-free or sell calls on the new position. I sell way more covered calls than naked puts--dividend income is nice to have, and I make sure I'm well-diversified and never have too great a % in a single equity in case something crashes (except the whole market, but that's another story). Spreads carry tail risk of losing the entire investment (as everyone here should know by now), whereas it's rare to see shares of a stock go to zero, though it can obviously happen--yes, I got burned on GE, but I kinda doubt it's going bankrupt anytime soon (this is where fundamental analysis comes in). Maxar, on the other hand, is a different story (which is hurting me at the moment, but I'm not panicking). But that's what diversification and risk management is for. So, in regards to this, I have an account on ToS that I use for the tools and price comparisons. There are situations where I have to deal with nickel-increment options on RH instead of penny-increment options on ToS, but I generally try to avoid those and mostly stay away from any bad spreads under $0.10 (If I'm giving up a cent or two on a 0.15 option, it sucks, but I think the lack of commission offsets it? If I was a spreadsheet guru I could probably figure out the exact % on the spreads I need to be profitable). If I'm dealing with true penny options (WFT is a good example), I make sure I can get the right spreads on RH. In general, I try to get good spreads no matter what (patience and good research is a must for me). Unless what you're referring to is that on a full-service platform like IB, I might be able to sell for the ask and buy for the bid (which I haven't considered, that would obviously change the game for me)? As you said, and I addressed above, obviously there's always a risk of the underlying going to zero. I just try to avoid companies that seem like they're about to bellyflop. Maybe I should mention that I never deal with index (or any macro) options and only touch individual companies. As stated earlier, asymmetrical information is a bitch, but I feel that being well-diversified is (maybe?) a good defense.
short covered call is short a naked put. If your fundamental analysis is good, you will make money anyhow, options just the icing on the cake.
If your fundamental analysis is good and you have halfway human timing,I would strongly advise against selling OTM puts,except in those instances where vol is super jacked .You simply dont get paid enough when you are right,and that was always my biggest trading sin.... William Eckhardt of Market Wizards wrote,and while he wasnt referring to options,its applicable to selling puts.. "The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance." P.S. I know you werent advocating selling cheap puts and were responding to another poster
Hi,Hes definitely not directional but is the best I have seen at hedging ridiculously sized risk.He facilitates flow,one most others wont...TBH,I really do not know how he offsets his risk,but so far so good...
I am pretty sure I have mentioned this a few times. The best way to learn how to trade options in my opinion is to read as much as you can from what @Kevin Schmit, @sle and @atticus/destriero @riskarb have written. They all have a good sense of humor as well which makes reading their posts more enjoyable than a text book. Most people will not read after a few pages because understanding their lingo has a steep learning curve. You also cant learn about pricing without understanding at least 1st or second year college algebra/calculus/stats. So maybe that can be an area for you to work on
Yep, tell me about it, still waiting for my medal of honor though And it all pales with comparison when I sold calls on NG haha. After a big run up in NG I thought well those 7 calls have juicy premiums, lets sell some. I did time it perfectly because it went down after that, but this was pure luck. I then went (yes, afterwards) to check behavior of NG for 20 years back and oh my.. Learn the term widow-maker at the same time As for CL strangles, I made money for a year with them because I sold 0.05 delta or 0.03 delta and just waited a month for both of them to expire worthless. I did took some heat once when CL felt for 10 points, but it quickly reversed back up so it worked out at the end. What killed me was november and going to weeklies for some "quick money" haha. And if would work out fine if I was not so stubborn to take a loss and rolling out. Then my losses compounded.. I should have stick to the plan to buy back sold option once it triples and the loss would be very small. But yeah, it was all stupid now that I look back at 2018 and I think I can count myself lucky to still have 97 % of my money Could have ended like optionsellers.com
Worth remembering that these guys are still around even if performance isn't as sexy as you might hope: http://www.ansbacherusa.com/ I'm sure I remember visiting that site a while back and there being more than 1 fund, possibly maybe 3 of them and 1 of them was some kind of aggressive variant I think. No doubt that/those blew up but he still has the original one going...