Realistic option strategies

Discussion in 'Options' started by master718, May 19, 2012.

  1. First, I have to admit I don't have too much options trading experience. I've been in high frequency stock trading for a number of years, but options are somewhat new to me. I am also not overly quantitative.

    I've been looking at some of the options strategies out there. Last month I sold covered calls on volatility ETF and made money, but I realize that I got sort of lucky.

    I am pretty conservative and realistic. I don't like to sell naked calls or puts. I like the idea of credit spreads and there are lots of sites that tout them as steady income makers, however from what I see on most stocks and ETFS is that the spreads between the closer strike price and further strike prices are so small that one would have to create a huge strike spread in order to make any money and the risks become so that you are risking many thousands of dollars to make a few hundred.

    Is there anything I am missing or need to look at, or is the simple reality that one must once in while take a huge lose in order to make a few hundred dollars a months?
  2. If you can find someone who says they've made money in Iron Condors over the past 5 years... I doubt they're telling the truth.

    Now if you want to pick one side or the other then I think you'd be better off.

    Stay small and stick to liquid options.

    There are too many things out there right now that can push the market one way or the other in less then 1 month for me to play ICs.

    I would not recommend credit spreads to anyone who is "new" at trading options ~

    Just my 2 cents

    ps if you can play direction and be right 25% of the time then read my posts in the Bull Call Spread post (on the front page)
  3. MTE


    No, you are not missing anything, you are actually spot on! Mind you that this risk/reward ratio applies to OTM credit spreads.