I'm going to be selling naked options in commodity markets. I'm going to be doing this just to add small amounts of income to my account. If the price of the option doubles I will exit. I was wondering what you guys thought were the best markets to write naked options in commodities.
If you really want to sell options, I recommend bull put spreads instead of pure naked options. The best market I would say are ES futures options, in my opinion.
None. Never ever sell naked options. If you don't know how you're endangering your money maybe you'll have a painful surprise. If you really know how you're endangering your capital you will not endure the emotional threat and the scare will appear and then you will not trade like you had planned. This leads you losing money. To hold emotional threat up when you're exposing your money means, necessarily, controlling your risk. Sugar
I'm not planning on holding on to the options if the trade goes against me. I' m planning on exiting the trade when the price of the option doubles
Oh, yes, of course! What has everyone in the option markets been thinking all this time? You can just get out whenever the price goes against you. Markets never gap, IV never spikes, there is continuous and perfectly linear price movement at all times. My favorite equation of these amateur "traders" is Selling Naked=Income.
Sometimes you cannot get out, what if the market gap downs. Its better to go with put spreads as someone already said above.
the odds of an es option doubling is relatively high. you have to use a 4 or 5 times multiplier to keep from noise knocking you out regularly. then you have to decide which side you are on in the positive expectency debate.
What do you mean a 4 or 5 times multipler ...you mean exit when the option price goes up 4x. It seems like the odds of most options doubling is relatively high