Fine. Just keep in mind that your ultimate success will require a change in strategy when the market peaks and we get into a recession and a bear market. How prescient you are in foreseeing changes in market trend, and how nimble in adjusting, are going to determine your long term net. Your strategy is by no means foolproof. At least by cash securing your trades you won't be forced to sell the Picasso's when things go badly wrong.
What if I sell a credit where max loss is 5% of my liquidity and when I am right I make 1% to 1.5% So I have 70% chances to be right and make 1.5% or 30% chances to be wrong and lose 5%.
So risking 500 dollars to make a 150, with probabilities of 30% and 70%, your excpected value for profit would be as much as forty-five dolla loss. If you still think you invented the money printing machine, after commissions and all, be my guest..
Shit I sell short calls short puts ITM DITM ATM slightly OTM I entered a naked short call on SPY yesterday at the 288 strike price. Long puts and calls also. I jump in with both feet none of this pennies in front of steamroller bs. More like getting in the steamrollers and taking wallets
That’s a great question. The short answer is: similar returns with the benchmark with lower beta and lower drawdowns. There are a bunch of ETFs selling puts in a similar fashion and their returns are in line with the indexes but less volatile. https://etfdb.com/etfs/investment-style/buywrite/ I’ve personally done a lot of research on the subject and traded similar strategies for a while with good results.
I'm a smallish / newish / intermediate experienced options seller. Currently focused on selling /ES options (mostly Ron Bertino's STT OTM BWB). Even after getting stopped out in Aug. 2019 (if I count my chickens) I will end up positive in 2019 and this will be my first profitable year since seriously starting my trading business in early 2017. Current strategy direction is neutral to bullish (risk is to the downside and is vega negative) As far as I can tell the trader’s edge is the market goes up 53% over time and IV usually overstates actual. It’s not perfect but I backtest using ONE and I try to be as mechanical and unbiased as possible (maintaining fixed rules as much possible). Also, it seems like during times like the Financial Crisis of Aug. 2011, Brexit of Aug. 2015, Vol-mageddon of Feb. 2018 there's enough time to get out of the losing position before the big down move. Theoretical losses are 1x to 2x the premium collected. Going by market down move averages: - 10% once every 11 months. - 15% once every 2 years. - 20% once every 4 years. - 30% once every 10 years. Isn’t money management the key to survival - you have to closeout the losing position. Plus none of these down moves happen in a single day even if you count 2008 (which I haven't backtested yet). During bear markets you shouldn't be putting on bullish positions anyway (sometimes the best trade is the one you are not in, isn't it?). Am I totally screwed up in my thinking?