depending on how large you size it, you face marked to market risk. options have intrinsic and extrinsic value. that extrinsic can blow you out before you reach expiry if you're not careful. check out optionsellers.com, ltcm, the nick leason/barings bank blow up, victor neiderhoffer, Ronin, the list goes on and on. there is risk (known and limited to the buyer of an option) and you take on potentially unlimited in the case of a short equity call. I'm not saying you should never be short options, GME for instance back in the post covid run up had straddles with breakeven stock prices that were negative to the downside, that's probably a good sale. Just a blanket statement selling options >> buying options is a gross simplification for a very complicated security. There is a risk premium there on average but that is there to compensate you for the very real risk you take to sell them.
His issue stems from the fact that he is an options newb and much more of a directional swing trader.. He doesnt beleive in stops, but is smart enough to position size correctly and has no problem being assigned on short puts due to the relatively small size allocated per name.. He needs to be short meaningful gamma
Yes a short put has positive theta is what I meant. As long as you can cover the assignment there is no risk, other than the size you have allotted.
You think? Cause it's very bizarre to say "short gamma, short theta" or something like that. Actually, I don't remember the last time I heard "long" or "short" with regards to theta - it's usually "paying" or "collecting", even though other Greeks are long and short. But I've also heard senior equity derivatives people say "long" DV01 when they are short bonds, so it's possible you're right.
As a side note, the Ronin disaster was a very special case and had nothing to do with being short options. At least not directly. PS. but I generally agree with your sentiment
Well my (2008) Lambo doesn't care what the vernacular is...I literally have a meter on my spreadsheet that progresses to my next car purchase.
Oh it is cheaper than a new fully loaded Expedition now...but that's not the point. A Lambo is purely to say f you, I have more money than you...or debts.
Most people have a better car than me, but also most people have less money. I am very sure of that, statistically speaking. I was gonna say "no f*cking way" but there actually are Lambos in my price range too: https://bringatrailer.com/listing/1964-lamborghini-lamborghini-2r-tractor/! Shocking
wxy's lambo = success analogy is about as relevant as stating that the Getty kid who was kidnapped was a scion of industry. That Lambo tractor is fantastic. He started with tractors.