This is basically the answer. I did credit spreads for a maximum loss amount I was willing to lose in the absolute worst case scenerio in exchange for the profits I was making. I did maybe 50 to 60% max of my total portfolio so never a blowout could happen. The best way to control risk in selling naked options is to simple control how much of your portfolio you put at risk. Even with naked options this can be controlled to a certain extent.
Even tastytrade doesn't like a 50-60% drawdown. https://tastytrade.com/tt/shows/tasty-bites/episodes/drawdown-effect-08-14-2013
One trade today. I sold the 5 Aug 16 220/196.5 strangle for $1.79. The account is up around $900 for the day and $2,400 since April 5. Happy trading! Bobby
I probably should have listened to some of the warnings! Would anyone care to guess on how much the account has lost so far?
I'll take a stab. I doubt it's "that" bad all things considered. We've had the vix spike to 90 before and in 2008 ES dropped 60% vs the 5% last night. I'll say you gave back all your gains plus some more. Let's say you dropped 4k today and your net overall is down 1500.
I show the strangle at around 3.10 or so right now. Don't know what it was at the open - but the lack of market freak out on cash open surely helped save some of your ass. If it went the other way with a continual sell off after - or worse, ES hammering the 1999 limit down all night and then blowing out to the downside it definitely would have been worse.