Well another couple of months and I thought I'd post another update to this thread, just for kicks and giggles. Of course the last few months has been "interesting" to say the least but nonetheless, here we are!
Very good returns! What is your Sharpe ratio and beta? Would you mind posting the statistics in the IBKR portfolio analyst reports? Overall, put selling seems like one of the best strategies for retail traders.
Oh yeah sure! How did it work in Feb and Mar again? Jeez, I'd suggest you to read the thread first and then come back and tell us how you feel.
The OP posted an example of how he made money selling puts during the crash. PriceJuggler's equity curve doesn't show a huge drawdown either. That's why I'm curious what his Sharpe ratio is. Now, if you were selling puts with a lot of leverage, you would have gotten destroyed during the crash.
robertST, How do you pick the stocks to sell puts on? Do you sell puts on the same stocks every week or do you focus on ones with high IV or something else? What are some stocks you are selling puts on right now?
High implied volatility. Because it generates high premium. E.g. my favorite right now is OXY. I've collected over 3 dollars in premium over the past 8 weeks. I sell fairly close to the money and collect 50, 60, 70 cents. Then when I have to adjust, I can come down 1 strike without losing anything. But expect and be prepared to adjust. OXY is all over the place.
Why OXY over stocks like BA, UBER, or SPCE? They also have very high IV. Anyway, I tried this strategy this week on those stocks I mentioned. Obviously, my timing was terrible, but guess what? My positions are barely red. The huge ATM premium provided a nice cushion. It will be very easy to roll my puts for a credit and go down a strike or two. I can also just roll at the same strike if I expect the stock to rebound. Overall, I think you are right that selling ATM puts is one of the best strategies. I was skeptical at first, but after seeing how you survived the March crash, I began to realize that this strategy is quite robust. A stock would need to tank 40% or more and never recover in order for you to lose a lot of money.
It's true, because options are mainly used for downside protection, not directional bets, so the vast majority of them expire worthless.
@robertSt and @PriceJuggler , I've just re-read the whole thread again today - curious if you two are still using this strategy, and if so, how things have been since March. Have there been any learnings, or changes in the way you trade this now?