put/call selling seem to make sense so far as of now.

....good advice....

 

How is this a problem? so you get your stock called away. How do I lose my shirt?

Also why would I sell a put on a stock I do not want to buy anyhow.

 

Noob, there's a big difference between covered option writing and uncovered. I guarantee there's at least one person that sold naked calls on POT and is now waking up from a 2 day drunken stupor, looking in the yellow pages for a lawyer.

Just be careful when you think in absolutes. There are always multiple ways to make money in any market. There are also risks to every method.

 

Well my post was about covered put and call selling VS just buying and holding stock.

 

I was responding to trefoil on loosing your shirt. I don't have a problem in loosing every once in a while , it is part of doing business. What I am saying is that you should not be wiped out ever. You should never jeopardize all of you working capital ever. If you are loosing more than you are winning, you need to stop trading way before you loose all of your working capital or even come close to delepting your capital. You would re-evaluate your strategy. Sorry if I confused anyone but no one should loose their shirt in this business. However many are loosing their shirts especially in this volatile market but it can be avoided by implementing strick risk management rules. If you trade loosely without strict adherence to risk you will loose your shirt. Enough said on this topic I will move on.

 

I do not like the idea of NAKED Puts & Calls for sale; but I am
in favor of Deep OTM CREDIT SPREADS placed about 45-60 days
prior to expiration in order to receive PREMIUM INCOME......

Tradert Kip

 

This is all you need to know.

Make sure the underlying is good and your leverage wont get you liquidated if the market sneezes.. I have been doing this for a while, find it to be much less stressful and doesnt require a lot of time.

1) pick the companies you want to invest in long term and believe undervalued
2) sell cash covered(<--- important) naked puts, put a gtc buy order for $0.15, $0.10 15 days till expiration, $0.05 5days till expiration
3) if position moves against you, take delivery at expiration, then sell covered calls against it, until it's called away. rinse/repeat

Of course as with everything, it all depends on the underlying. I am doing it on nvda, imax, and etfc currently.

 

Or even worse this one...right into expiration with no chance of recovery or ability to hedge.

 

HEH funny how the timed the announcement.

Well hopefully the seller had a spread position.

 

If I am not mistaken in your handle, I read that you used to sell premium on index/futures/etc using candors/straddles etc.

You seem to have changed business. What happened?