Selling Naked Options

Discussion in 'Options' started by OptionsTrader, Apr 15, 2004.

  1. Hello I'm posting from Italy, after several months of wasting money buying options on our italian MIB30 (a low volatility, financial/telecom and energy index), I'm finally undestanding the old time secret of tranding options SELLING THEM.
    I'm really interested on yours personal experiences and opinions about that, am I wrong?........Do you sell just OTM..... and how do you manage the battle Theta vs volatiliy growth?
    Thanks you know a specialized website on selling naked options? :)
  2. Bob111


    yeah! let sell them! if you know old time secret, you should know about risks you are heading on?
  3. I just buy them when the underline price get close to the strike price.......too simple?
  4. abogdan


    If I may suggest. Selling naked options especially when you are stretching your account with no abilities to take a delivery of stocks is extremely risky exercise. My partner lost $250,000 last year on one bad trade that started as a very innocent mistake! If you want to play this game you should look into more complex constructions like covered calls and puts, butterflies, condors etc. I would not suggest you sell naked options with no experience in this game. You are going to get heart.
  5. When you buy, "they" sell. When you sell, "they" buy. No secret.
  6. vega


    It would be very difficult (ok, impossible) for both parties to either buy or sell in the same transaction. Someone has to sell to the buyer, and someone has to buy from the seller. Just a few tips so that hopefully you can figure out how this "trading" thing works.

  7. Lucrum


    "I'm really interested on yours personal experiences and opinions"

    I lost virtually my entire account being short a naked futures options position about 15 years ago. Now obviously it's my fault for hanging on to a loosing position much longer than I should have but the point is that your potential return is limited and your risk with a naked short is almost unlimited. Not a good risk/reward.
    If you want to be net short premium you might want to consider a diversified position of credit spreads, probably looking mostly at Daily charts to aid in when and at what strikes to enter into.
  8. I wonder if the quote vendors could track NMO's option orders... like the little"r" you see on quote screens for restricted shorts. How about a little red "nmo" in the upper-right corner of the bid/offer quote cell.
  9. bzod99


    Options Trader:
    Volatility = All-time lows
    Naked = Unlimited pain
    Your Strategy = Non-existent
    Whether You've "Figured it out" : Clueless and hubristic, at best.

    Website =
  10. vega


    That would be interesting to see. But then again "they" would probably find a way to cheat him, and none of the MMs would dare sell NMO that 5 lot if they knew it was him:p Then again, they probably would:eek:


    Can't believe I'm across the country and still I can't escape NMO
    #10     Apr 15, 2004