Hi guys. Sorry if my first post seems a bit of a silly one but hear me out. I’ve been trading naked options on indexes since pre-2008. I typically trade really far out of the money and tend to write both calls and puts in the short term. Some key points before I continue is I trade based on the IIROC margin rates (I’m not subject to house rates) and I am also not in a position where I am electronically forced out of positions if there is option expansion. I often have 24/48 hours to settle up anything that is under water should that be the case. (I have a sizeable account and manage two other accounts that are also on the larger end, at least by Canadian standards) I have had a few issues over the years but I have never been in a position that I wasn’t able to repair. That said, most of the times I got burned was on the calls not the puts. As more options became available, weekly, every other day etc, my stress level has been slightly reduced and returns are unaffected. I’ve earned every year since 2004 with my worst year being 25% and the best was 270%. I have never had a losing year. I learned this strategy from a very wealthy friend of mine that had worked as a trader way back in the 80s 90s. I am aware of the obvious black swan events however in my years of doing this, I’ve found that there are times to trade and times to wait. I also take advantage of weird events and deploy cash reserves in such cases. Take the recent vix spike earlier this year. I was in a trade but it made sense to deploy a massive amount of capital to write options 3 months out at 800 points out of the money. In less than a week it was a 40% bump. I do a few of these every year and it helps a lot. Unfortunately it’s only scaleable to a point and that point was reached long ago. My question to all of you is how? I’m fully aware of the risks and the pitfalls and yet i seem like a bit of an anomaly. By everyone else standards, I should have been killed at least a dozen times by now. I’d be curious as to if anyone else has had legitimate long term success in trading any sort of market neutral strategy where vix doesn’t matter so much. In fact in all the years I’ve traded. I’ve never even signed up to a message board. Thanks again for reading and thanks again for any comments or insight. Thanks!
When all the indicators say buy I write a otm naked put options for assignment. When the indicators say sell, I write a otm call option..
It's the same old story - risk vs reward vs probability. Here is an article about a very talented and experienced writer of way OTM ops. There are plenty of others... https://www.newyorker.com/magazine/2007/10/15/the-blow-up-artist Good trading to all.
Best way to learn to trade... have someone who's been successful teach* you. Not many of those around. *Lots around who say they will teach you.... for the right price.
Writing a naked put option is safer than buying stock. Actually it's cash covered but you knew that ...
"Is naked option writing really that bad?" You tell us, you seem to be the expert. Not that we believe you Mr. One Post Wonder, but why don't you teach us? Apparently you have been doing much better than anybody here...