What to make of this strategy?

Interesting. Thanks!.

 

I think juicy is when the near month premium bumps up nicely due to pending news. Looking at a historical high IV UL isn't "juicy" to me since pemium is a reflection of IV so

 

When you say "dirty" you mean that it isn't a fully hedged trade, but that you are speculating (on volatility or skew or something or other, depending on market conditions) and taking/laying off risk mainly on discretion/outlook/etc. It isn't a stationary trade. Is this mostly correct?.

And the dirtier you get (the less hedged/more risk taken at certain opportunities) the more money you make.

 

Along the same lines as the original post, I found this book to be a pretty sound strategy if you are looking to sell premium and reduce risk:

Put Options : How to Use This Powerful Financial Tool for Profit & Protection

It was written by Jeff Cohen and it has been a while since I read it but I believe he actually actively trades the strategy. The key is hedging with index options to try and reduce exposure.

 

He says later that he takes the shares and sells covered calls.

 

Yeah, on timing, vol-spread ("box" line on the dispersion), correlation, net greeks, etc.

 

And will convert to a synthetic short straddle on occasion. I go further OTM when doing so.

 

I will sell LEAPS straddles on occasion into earnings or as play on vol+rates (short yield/curve). Barring that, there is never a good argument for shorting naked.

 

+1

Thks for tips on your OPM approach. Very discretionary, as I suspected. Nothing wrong with that, except that you must be at the helm.

Do you use IB for OPM as well as personal broker?. Negotiated a good deal in comms with them?

 

Yes to IB. No to commissions. I pay the standard rate and unbundled on futures. I deal with a prime as well. Only family trades IB F&F.