Naked Options Yields Calculator

Discussion in 'Options' started by MegaDeth, May 3, 2009.

  1. MegaDeth

    MegaDeth

    Hi,

    I have developed a software application that computes the yield for OTM options contract along with the associated risk (change in underlying price). It can run on any list of stock symbols. This way you can identify the best investment choices for selling out of the money naked options while managing your risk. The software gets real time contract prices from TWS running locally.

    I currently have it run on all the NASDAQ, NYSE, DOW and AMEX optionable equities. If there is interest, I can share my results. If you would like to get a copy of my application, PM me.

    Let me know.
    Megadeth
     
  2. gody3

    gody3

    The yield of an option contract doesn't make it the best choice for selling naked. What the underlying does is what's important.
     
  3. Agreeing with gody, this application is dangerous.

    People who have no clue will assume best ROI means best investment.

    You are setting yourself up for lawsuits. I suggest to keep this software for private use - and avoid using it.

    Mark
     
  4. MegaDeth, you do not have PM enabled & email is blocked...However I am interested in your application.
     
  5. MegaDeth

    MegaDeth

    I agree with your point although not your conclusions. This tool may be dangerous for the naive. For example, a slightly OTM put option would have very high yield, albeit at a high risk of closing ITM.

    But if you are careful using it, my tool is valuable. It can help identify OTM option contracts with the highest yield within your risk range. If INTC and GOOG contracts offer yields of 45% and 60% resp. for the underlying change in price of 20%, which one would you rather invest in.

    Investing in naked options is risky but if your doing it, why not maximize the yield? How much risk you would like to take depends on your individual risk appetite.

    And yes, my PM is now enabled.
     
  6. gkishot

    gkishot

    The one that is mispriced.
     
  7. Because maximum yield should not be your objective.

    An intelligent way to invest is to consider both risk and reward at the same time. If you have an opinion of the market, consider that also.

    You admit that your tool may be dangerous to the naive - but no one else would want to use it?

    Mark
     
  8. MegaDeth

    MegaDeth

    You are taking my comment out of context to rationalize your conclusion that "maximizing the yield should not be the objective". :confused:
    Maximizing the yield within your risk range, which is what I said, seems appropriate to me.

    Good luck with your "intelligent" way of investing.
     
  9. Why do you believe that to be true?

    How about minimizing both risk and yield - withing your risk range? Isn't that appropriate for conservative investors? I know you recognize that higher reward goes along with higher risk.

    So I ask - why do think it's a good idea to maximize both?

    Just because a position falls within your risk range does not suggest (at least to me) that there's ay good reason for taking the maximum risk to target the maximum reward.

    Mark
     
  10. MegaDeth

    MegaDeth

    True, conservative investors may intend to minimize their risk and consequently the yield.

    This tool does not promote risky trades if that was implied. The tool only calculates the yields and the corresponding risk for a list of stocks. An investor, conservative or aggressive, may use the information to help identify trades that fit their risk appetite.

    Let me know if you have any suggestions. Thanks.
     
    #10     May 4, 2009