How Profitable Is Writing Options

Sell calendar spreads below major supports.

Or those who know their major supports , which rarely get broken permanently.

 

Yeah, obviously, it goes w/o saying that you need to compare total returns...

 

Here is my take on buy-writes. I don't like them for myself. It requires me to pick a stock that I like enough to buy, above all others, that I expect to outperform other stocks and the indexes, yet be willing to cap my potential gains with selling calls that provide very little protection if I'm wrong,and the stock falls.

bob

 

Ever thought of writing out of the money calls longer period and lower put?This will give you good profit on upside.

 

I would agree if you add direction. You should have an opinion on the direction of the stock or the index and have a view on volatility to profit over the long run.

 

I disagree with this statement unless you're including opportunity costs on every trade.

 

drcha,

After running my own numbers last night, you are correct on both unless the return is cum return or annualized return instead of average.

If there is a draw down, regular withdrawal, volatility in the outcome is very bad for my wealth. I just ran a calculation and with drawdown a highly volatile situation will do a lot of damage to the outcome.

In a way, it says trading as a profession such that one needs to withdraw for living expenses is very hard to do whereas trading as a means to grow one's asset is a lot easier.

Thanks for the insights.

Regards,

 

Sure. With CC you don't have to sweat it, when the stock starts to move up.

 

You should read Maverick74's posts on this. It is a very dangerous game: Shorting OTM calls/puts can go bad on you fast due to the non linearity of gamma. It was what caused my losses on writing OTM BAC calls.

 

Should I manage a CC different than a naked when the trade goes against me?