Put Selling

i just sold puts for the first time ever.......3 contracts qqqq april puts with 44 strike...... 0.31 a piece

i'm well aware of the dangers of put selling....limited reward, unlimited risk, highest potential for blowout, VN blowup, etc, etc.

but i am bullish right now short term (4 weeks) and bearish long term (4 months) so i was going to buy calls instead and realized that buying calls is pretty dumb unless you're expecting a huge move - which i'm not........i think all call/put buying is useless unless expecting a huge move

i have a stop in place at .61

i hope this isn't the begining of the end for me

so how do you guys sell puts for income without ended up like VN?

 

sold 3 april 24 XLF puts

free money!!

 

I generally like to buy some lower strike puts for protection.

 

isn't put buying or call buying useless unless expecting a huge move?

and if expecting a huge move then why not just taking an outright directional position in the underlying....if conviction is that strong?

 

Sell a straddle directionally if you're willing to accept risk on the single. Sell the 47 straddle.

 

i'm an options newbie

my reasoning for the trade is: since the S&P finally cleared resistance at the 50 sma i think the 200 sma is the next test.......downside from there but i'm not going to buy puts, i rather just sell the futures

the reason why i didn't sell a straddle is because i think a possiblily of a large upside move out weighs the possibility of a large downside move - so i rather just sell puts

the only circumstance in which i would buy options would be on a long straddle strategy

why buy options unless you're expecting a huge move? if you're not sure of the direction of the move then buy a straddle. if you are sure of the direction then just by the underlying - why pay a premium?

 

not always true about needing a huge move to make money. If you buy In The Money calls that expire soon and make a Delta of about 1 by buy more calls then your PNL will match the pnl of the underlying pretty closely

 

another thing about selling puts......the risk really isn't unlimited is it?

if you sell puts on a stock that goes to 0 then the most you can lose is strike price - 0

 

Right, and Eurodollars can't trade above par. We can assume we all attended grammar school.

 

chewbacca

Registered: Jul 2005
Posts: 748
04-08-08 07:49 PM
sold 3 april 24 XLF puts

free money!!






chewbacca

Registered: Jul 2005
Posts: 748
04-08-08 08:11 PM
i'm an options newbie




You’re getting repetitive