What is the safest way to add income to your commodity account with options? Would you say it's through spreads. I looking to add a small amount of income each month through options while trading futures. I have a good amount of experience trading futures...but practically none with options.
You cannot say like that, come one options have strike prices, near strikes have higher chances of doubling. Options on volatile market also have higher chances of doubling.
Would you recommend writing options with under a month of expiration or longer two- three months of expiration.
Don't suppose you've been reading James Cordiers' articles or books by any chance? He's always advocating this method to beginners... Firstly forget this whole notion of generating income, as if selling naked is like some harmless way to make some dough on the side... Maybe look into incorporating options to your futures trading... understand synthetics, how to hedge etc; then see what you think... I personally think there's nothing wrong with selling naked, so long as you know what your outs are...
No I've never read his book....I've looked into hedging with options but I like the idea of adding income. Naked seemed good...but the exit strategy is what I'm getting caught up on. I was thinking if the option doubles then exit. That seems to work O.K. for options that have 3-4 months of expiration left....seems too risky for anything closer say under a month.
I use elliott to trade....I will pick markets that are trading according to elliott. Like I said I'm completely new to trading options. I sold naked options in the past for about a month. Almost all options will expire worthless but you have to time your exit when it goes against you. Trying to exit it when the value of the option doubles just doesn't seem to fruitful I guess I'll try spreads....like I said I want to add income