Hello you ignorant puss, I monitor delta, vega, and theta. Screw gamma and screw you, asshole. One of us makes money in the markets and the other one is you . . .
Go read the book by Taleb: The Black Swan. He made a fortune (he claimed) buying tails. But I am quite sure he didn't buy them blindly.
Yeah most of us have taken shits worth more than what Sweet Bobby trades. We have the posts to prove it while he has bullshit.
surprisingly with all the answers you got, no one answered your question! The answer is yes and no. To find the answer you are looking for we should visit a well know casino game - roulette. The house has an edge right? A small edge but an edge. If the dealer places small bets and is well capitalized in the long run he will not go bankrupt, however if the casino decides to bet to big and is not well capitalized the casino will eventually go bankrupt. So even tho roulette has a positive advantage to the house, if you do not manage your money right, you will go broke. Conversely if you have a negative edge (the player), your optimal bet is to bet once and bet big! Selling puts has a positive expected value. If you are looking to make 15% a year, it's a reasonable strategy. However, if you bet to big you will eventually go bankrupt (like the OP). On the other hand, if the option buyer has been buying puts for years and then finally hits it big, it is unlikely the big payout will cover all his small loses. But if the option buyer has only bought a few options prior and hit big on his say 3rd option, he will make money (for the time being). The option buyers best bet is to walk away from the table after the big win. So to answer you question, systematically buying d10 puts will not make you very wealthy. If you are lucky enough to get the timing right it could but you would have to of bet big and walk away after your win.
Thanks. This is the kind of answer I was looking for, with specific numbers as to how much margin is more "optimal" to use. Extraordinary returns will not be achievable if I cut back the exposure though. Would you consider selling calls as a (slight) hedge and a return booster?
See post #41. It most certainly does not. Properly priced it is always a zero expected value transaction. You are confusing higher likelihood of winning with expected value. If I roll a die, pick a number, and get paid 6 to 1. I am most likely to lose but the expected value on any individual roll will always remain zero.
We used to have a sign up when you came into the office. It said, "Never have so few, taken so much, from so many." It's nice to finally put names to the 'so many.' Thank you Bobby, Draft, and Dr.