Selling Naked

Discussion in 'Options' started by nugya, Sep 27, 2002.

  1. That's exactly it. If you sell 100 naked MSFT puts in a $100,000 account, don't expect to survive, but if you sell 50 different naked calls and 50 different naked puts (in an IB account of course) there is not much that can happen to you and you'll make 20% or so every month.
     
    #41     Nov 16, 2002
  2. Great, so now you expose yourself to both a rally tail and a bear run.

    A naked call isn't going to reduce the risk of your naked put by all that much -- you're getting twice the premium but now you're opening yourself to a bear AND bull run. What happens if I sell a lot of 60 Jan calls on MSFT and a lot of 50 jan puts on MSFT and MSFT rallies to 75 or word gets out that Bill is a transexual and the stock plummets?

    Where is Metooxx? Unusually quiet since this is your bread a butter -- let's hear it from the expert!
     
    #42     Nov 16, 2002
  3. There is always risk to naked positions or they wouldn't be naked ...
     
    #43     Nov 16, 2002
  4. Agree; sort of ...
     
    #44     Nov 16, 2002
  5. The idea is not to do them on the same underlying or correlated group ...
     
    #45     Nov 16, 2002
  6. nitro

    nitro

    not really...

    nitro :confused:
     
    #46     Nov 16, 2002
  7. nitro

    nitro

    If you did it on the same underlying, you would be synthetically short [depending on strike of course, but the delta would approximate the short...]

    nitro
     
    #47     Nov 16, 2002
  8. About 90%.

    The other 10% can be ugly ...
     
    #48     Nov 16, 2002
  9. Not doing them on a correlated group is important ...
     
    #49     Nov 16, 2002
  10. I thought he was getting @ a strangle; but I am not very sharp tonight ...
     
    #50     Nov 16, 2002