I would venture to suggest it's because they don't know the risk involved beyond 2 x SD. If they ran a 3 (or more) SD adverse move together with a 30% IV shift I think they'd no longer be describing their 10% monthly returns as "safe". A 10% per month return is certainly achievable, but it's far from safe.
Some very good posts here. Thanks I normally do credit spreads -both puts and calls. My target is 1% every week. When I have achieved that I stop fot that week, My available funds overnight must never fall less than 60% except in expiry week when I might allow it to go upto 50%. I trade only european style options which give me enough time for adustments. Mainly I trade FTSE1000 (Z) and ES end of month expiry which is european style. I only trade near month and this gives me two expiries to use my full capital I still want to improve by going to some other product which is not co-related. Any suggestion is most welcome and much appreciated.
agreed. there is nothing safe about what i do or the others here. i spend every day trying to build long option positions around my shorts. after the current drop my short puts are 7.5% otm. risk of ruin is large. in my case, i am using a smaller amount of margin compared to those with bigger balls than i, long options above and below in the same month; but a 10% move would still be real bad......
In this case you haven't been in the market long enough to say that 5-10% per month can be made safely and consistently. You probably would have jumped off a bridge if you were selling options on Sept 10, using your "safe" strategy.
All those selling puts....how are you feeling today, folks? Was it worth those few premies you collected?
According to: http://www.kitelife.com/videos/demo/bethell_promo.htm Lakme / "Flower Duet" (unfortunately the Amazon.com sample is too brief)
Long gamma > short gamma this week. Of course if one already was short gamma, better not puke those positions or scalp enough intraday to pay the drawdown....
i'll give you a quick summary. sold long 780's aug(er2) closed 745 shorts. original premium on 745's were 5pts closed at 7.60. 780's were legged into @ 3 pts, sold @ 17.10. very small net loss overall because more short than long. been there before many times. maybe some day it will catch up , but i continue to hedge better imo monthly. to think, i was worried about my short calls (all closed today)....