again, only profitable at this point in time. i agree that not having to adjust is very important, that is why i trade this way. but, when forced to adjust i do well with only one leg to deal with. i must admit ,(and i trade your way also,ctm.just not as much as my naked trading); it is less un-nerving to close a 2.5 credit for 5 as opposed to closing a .5 credit for 5 or ten points ! much better money management imo.
It is not a strategy that earns you money. It is your money management skill that gives you an edge. I have both RUT DD and RUT IC. The short strikes of call diagonal is still 25 points away, and of call veritcal is 45 points away. I am making good money in the sep and hopefully in oct too while I am taking a long vacation in China. I used to write naked calls and puts before I discovered this forum. I have been switching to verticals and diagonals since July, and they served me well so far. Can I conclude that diagonals and verticals are the best strategies? No!!! It depends on the selection of your strikes (actually the selection of the greeks) and your trading styles even under the current condition. Percy
well sure, if im not mistaken, you trade the rut not the spx, which has lagged behind in this rally and is nowhere near the may highs. Not to spit on your good month but it wasnt your strat per se, but rather your instrument pick. Moot point at best. Had you sold naked FOTM spx calls, you'd be looking at losses 3-4 fold while im currently losing less than 1:1. i am personally not opposed to selling naked premium in those cases where i am willing to take on the gap and whipsaw risk, but if flexibility is important to my signal then i will bound the gamma and get the best r/r possible that matches my signal margin of error. In any case, Steve Cohen himself couldnt sell me on shorting a <40delta strike naked, i would never fall this far to the dark side.
Since Mark has mentioned the notorious beast, I thought I would provide some info on what the thing looks like. This data was compiled a few months ago by a member of this board. It is a tremendous product, extremely informative and I am ashamed to admit that I don't remember who created it ryank perhaps? It shows the montly changes in SPX from 1986 to present (as of a few months ago), including intramonth max moves. Peruse and enjoy.
rally, are you talking about CTM spreads here? My OCT 1335/1350 call spreads are way ITM now. I sold them for an average of 5.9 and can close them for about 11.5, so I'm still within 1:1 r/r. My plan calls for closing when 1:1 is exceeded, so I'll probably close them by tomorrow if we don't get a pullback. But I curious about what kind of adjustements you make for CTM. Would you mind sharing? Thanks