What is this option selling hedge fund's edge??

Discussion in 'Options' started by short&naked, Apr 11, 2011.

  1. Nope wasnt joking, just never had much exp. with options. Always thought it might be something I could try out one day.

    I am in the business of doing this on futures, and you are right about being the buyer in selloffs and vise versa... But the edge is 3 things
    1. Knowing when to do it and when not to do it
    2. Knowing which market to do it on at a partiular time
    3. Correct risk management (escape plans and positon sizing!)

    I would have been wiped out long ago if I hadnt of got these 3 things right.

    Maybe this hedge fund has the same edges as me...
     
    #41     Apr 14, 2011
  2. sle

    sle

    It's pretty easy to prove to yourself that index options are systematically overpriced, any historical simulation would show that. The real question is when (does the strategy actually lock-in additional volatility edge) and what (is the strike sold provides you good risk/return ratio). Personally, I never get the whole idea of selling naked options and would much rather sell short-dated straddles/strangles and delta hedge.
     
    #42     Apr 15, 2011
  3. Toronto TSE has ZWA and ZWB ETF, ZWA - hedge Can/US $ and cover call on S&P. ZWB is Canadian bank ETF. Both pay monthly dividend and allows DRIP.
     
    #43     Mar 26, 2016
  4. To bad they don't acquire stock by short OTM puts and see if stock price drop to strike for assignment.
     
    #44     Mar 26, 2016