My thoughts exactly. Selling option premium is scary precisely because it's misleading. Historical results really differs from future performance. Every day is a new day on the distribution function. I'd be interested in learning what you were doing as well. What's your perception of your edge? Is your *model* wrong, or was it an execution problem?
There's something very wrong with this picture. You lost 27% in one day and you work full time as IT consultant, travel M-Th and juggle the investment? Look, I'm sympathetic to your situation but you have no business selling premium and doing the circus act (juggling). Your new model won't help you in the future if you're not going to be hands on or buy protection. Don't waste your time building the new rocket until you can fly right. Good luck.
Good advice, Mark.... Also, it may be worth it to buy FOTM ratio protection. Invariably, it's best to know the exit/loss threshold before the short trade is made. A moderate stop loss level, with room to breathe & room to avoid a big loss, s/b considered... Walt
What they said Selling premium is only for deep-pocketed institutions. There is no advantage (especially after slippage, commissions and other costs) in the long run, UNLESS you have a serious outperformance edge and good money management skills. Your story is that of everyone who in the very longterm sells options.
From a quick thought, I think you need to reduce your risk by position sizing more then trying to do the other things to make sure each trade seems safer (they may not work anyways). Also, I was wondering a few things about your post - why would you be in "deep shit" if you lost 27% after 11 consecutive winning months? Even if you had never gained, 27% shouldn't destroy you (even though admittedly in one day it's bad), but after 11 straight winning months? You must still be up overall, unless your gains were under 2% or so each month. Did you close the positions, thus taking a 27% loss, or is it still unrealized and could still grow or what? If you try to reduce your risk too much by collecting smaller premium or something of that nature, you might really end up with tiny gains. I think this is partly the nature of selling premium - good months until the blowup. You can always reduce by buying protection, but then you reduce the gains in the good months as well. I guess one more question I would have that I think we would all be interested in is this: While you were making money every month, did you think "selling premium is easy" or did you fully understand and appreciate the potential risks? JJacksET4