Many traders don't sell options for less than $0.50. Bellow this level your expectancy is dramatically lowered by your costs (slippage and commissions). Do you practice money management to control your risk? I know that many tarders don't trade options for less than 0.5. Some traders can not do it. Just imagine that you have an Ameritrade account and you sell 2 contracts each 10 cents. You get $20 and you have to pay about $14 commission!!!!. I just pay $0.75 for a contract. Thats it. For 5 cents options , I pay $0.5. I will sell that 10 cent one in my BBY example as a gravy to my trade. Gas money . The juice is in that 60 cent call. I say why not get another 10 cent from PUT while I am waiting for CALL to expire. You might get tempted and sell PUT for $45 and that will be the mistake that one might make. It should be very in the money PUT.
Do you practice money management to control your risk? Like not trading GOOG or shit.otc!! is a kind of risk management. I also take the profit out and don't play with big money. My broker also liquidates my position(s) right away if market goes against me when I get margin call and does not let the problem grow. Other brokers used to send me margin call letters after problem was beyond my control.
When I was asking about your money management practices I was asking about how you size your trades. This is an excerpt about options trading money management from another forum.
Rob, sorry I was not clear. Amazing how statements can be easily construed. I was referring to his using that expression in general. Cramer changes his direction weekly sometimes. VLO is a winner. It split 2:1 about a year ago and made new all-time highs. I believe it will split 2:1 before the end of the year and climb back to new highs over the next year again. VLO acquired Premcor making it the largest refinery in the USA. Because of all the spinning and babbling of our so-called leaders, environmentalists, etc. etc, there will probably never be another refinery built in our lifetime in this country. That means we will have to rely on our existing refineries for crude oil. It seems like the energy sector is like a ping pong ball depending on what CNBC garbage spins out that day. But once the weather gets cold and stays cold you are going to see a huge rotation back into energy. But I could be all wrong.
That's OK, Hank! I just mentioned that in passing, throwing in a comment I wasn't sure you knew of but might want to hear from "the man" you might be following. I SO agree with you on the yo-yo dance energy is doing - tightly following the crude and gas prices - and that we are headed for inevitable rises in both soon. SWN is up this a.m., took a chance on a Dec.40 call, in @$0.65 (yes, I am scraping the bottom of the barrel).