North Cascades, I have sold options using IB's TWS with an option account. It didn't seem that hard, took only about half a second, and it cost the same as buying an option. Thank you for sharing your strategy, I really like the idea of taking a partially hedged bet on the QQQ using all that fancy vega and delta stuff. I'd like to learn more about it, and your posts certainly got my eyes wide open. [/B][/QUOTE] -- You have several big disadvantages as a "retail" options seller: 1. Your transaction fees as a percentage of maximum profit are normally relatively high. 2. You have to have sufficient account equity to open a "naked" position (an options market maker is exempt, under the assumption he/she is appropriately hedged). 3. Unless you are dynamically hedging (or overhedging) your position with a delta neutral strategy you expose yourself to losses much larger than your maximum profit. 4. Your competitors in this strategy are standing on a trading floor with extensive training and experience with options pricing models, game theory and probability, and they are backed up with sophisticated risk management technology.
Could you explain why today Friday the Dow is down 136 and the comp is down 16 and the QQQ is down 47 cents??? Is there a ratio of QQQ to anything else? Where do you get these deltas on options that you speak of?
I believe that the qqq's are supposed to trade one pt. for every 40 pts. of the NDX (nasdaq 100). But since they trade after 4pm, and the index closing price stops a 4, often the prices can be out of line the next day to compensate.
"3. Unless you are dynamically hedging (or overhedging) your position with a delta neutral strategy you expose yourself to losses much larger than your maximum profit." That is absolutely true, and even if you are dynamically hedged you are still at risk. LTCM's main strategy was selling options and they were a bunch of phd's and thought they were hedged, then they completely blew out.