Dude, where did i say something went wrong? You play these childish games putting words out i never said.. All your defenses of put selling is fine...i say its an inferior trade, you say its not..have fun. You want to learn? Go open trader p/l ..and learn
His post actually does sound more intelligent with your atticus edit. I may throw a few into my future posts too.
My only point was, it's not the strategy that is inferior. It's the trader implimenting the naked put selling strategy who is the problem. The naked put seller has to think about protecting his trade BEFORE he even initiates the trade. Once there is a problem, it may be too late to think about risk management. Hence the issues I listed below: <<< Poor stock picking, poor strike selection, excessive leverage, % return goals that were too high, too volatile a stock and/or sector to be in, over concentration of cash in too few stocks, a refusal to take managed losses..... >>> As the above are some of the reasons naked put sellers often take a bath. Since their potential losses are not controlled, put sellers need to think about controlling their portfolio risk BEFORE those trades are even initiated. And you do that by thinking about the issues that I mentioned. The ones that seemed to really upset you.
Every sane person would look at risk control before initiating the trades, not when the shit hits the fan (see my Nth rant about "adjustments"). Problem is that no matter how good your market intelligence is you can't protect yourself from fraud or a natural disaster. If you where short a put on TEPCO in April 2010, which was a nice low-beta utility, you got fucked big time, even though you probably used your best judgement in selecting that stock.
Wow ........ One obscure stock in 2 1/2 years. That's a good argument FOR naked puts. --------------------- diaoptions has spoken
if you would be short puts on any Japanese stocks in the spring of 2010, you'd be toast. Of course, you would later claim here that the stocks actually where on your "watch list". You are a special kind of idiot, we are truly privileged to interact with you
I want to make it clear that i am NOT trying to encourage investors to sell naked puts over hedged ones. If you don't have the skill, the experience, or have the time, or are not willing to put in the time, to analyze a stock, and be able to weed out the ones considered too risky, then you should NEVER sell puts naked. Throwing darts like that will get you killed faster than any strategy I know. Every strategy has it's advantages, but they all have their disadvantages as well. I'm aware of the risks I put myself in. I'm just not convinced enough hedged traders are aware of the actual risks they are exposed to.