How to get juicy premiums?

Discussion in 'Options' started by failed_trad3r, May 5, 2010.

  1. I just wrote a few puts i am short puts now. But the premium isnt so juicy. How do I get juicy premiums? I looked at optionstrader and the indicators. One is called option implied volatility. When implied volatility is high, does that mean premiums are more juicy? Also if the volume change is high, does that mean the premiums are better?
    When GS puts premiums got juicier, what was the cause of that? Was there some kind of indicator to gauge more juicyness?:confused:
  2. Please make sure you have a full understanding of the underlying of what you are writing and have done the "math" with respect to leverage. Today, your margin requirement to maintain that position might seem small. But with a strong move against you, that margin requirement amount can sky rocket fast.

    Good rule of thumb in writing puts is to do so in a "buy limit order fashion" for an amount of shares that your buying power can support outright and you would want to purchase anyways.

    Also Higher beta moving stocks like BIDU, AAPL, GOOG, PCLN have "juicier" premiums. And if you are looking for the most IV time of the month, its generally right before earnings announcements or milestone/significant corp event/FDA decision, etc.
  3. highseas


    Higher premiums also tend to mean higher risks, so just know what you're getting into. Learn from my mistake: I sold some very juicy premiums on DNDN before FDA news and made money. Then I did the same with ITMN, and I gave back all my profits when the stock was down 75% in one day! Before the news the options market was only pricing a $20 move up or down. The move was actually more like $35 down on a $47 stock.

    There is still money to be made, but make sure you don't "load up" on these premiums because when time comes to pay up if you're wrong, it can be painful.

    Diversify, and keep the positions small enough that you can stomach some bad calls.
  4. charts


    I mean it nicely: read an "options basics" book! ... :)
  5. MTE


    Until you read at least a basic book on options the only juice you should be worried about is the one you have for breakfast.
  6. ptrjon


    failed trader- you seem excited and maybe a little greedy. I think you'd benefit a lot from searching this forum and reading some discussions others have had- many have been repeated conversations on the same topics.

    Remember, if you don't say anything, you look smart. When you open your mouth- that can change. happy trading, and watch that you're not the one getting juiced.
  7. Thanks people for advice, but I think reading books is waste of time. I don't think learning about macro-economics will make me rich. If that was so, why aren't the writers of these books billionaires?

    By the way, if the VIX is high do premiums get juicier?

    I noticed the market is falling and the premiums I wrote is getting juicier. But I guess thats a bad thing :(

    Highseas, im actually thinking of buying calls on ITMN. I think the selling is overdone.
  8. MTE


    The reason you should read a book on options (not macroeconomics) is that based on your posts it is clear that you lack the basic understanding of options. So if you read one then you wouldn't ask the questions you do now.
  9. ptrjon


    If you don't want to learn what other people want to teach you, and you only want answers to your own questions- you'll continue to get juiced. I'd suggest hitting the books.
  10. lindq


    You would do very well to listen to the advice that's been given to you.

    If you're shorting puts without INDEPTH knowledge of options pricing and your exposure to risk, then you're asking for a very, very expensive lesson.
    #10     May 6, 2010