Depends how you define mechanically ... Depending on ones model/forecasts,there is certainly "theoretical edge".. That doesnt imply one should abandon prudent money management What do MM's have to do with anything??
so you sell a 1 DTE put and lose 9 minus the premium you took in.Keep in mind thats a 5% drop,not 20%..Stock is now at 190.. It appears that you are selling 1 day call for .65..Stock at 190,what strike are those calls you are selling?
I am selling 1 contract $1 OTM strike every day. I am taking all assignments. I am realizing all losses. I am collecting all premium. Had I launched this strategy starting Dec.22 2022 I would had the following results on Dec22 2023 (incl all fees, spread loss, realized losses, realized gains): Annual Income: $24,025.00 Monthly income: $1,974.66 What you are seeing is the benefit of taking shares and making premium off them constantly, versus taking permanent losses when you close the contract. You guys over complicate things with all your arbs and vol etc..because you are trying to avoid losses...losses are a part of the game. The more you hedge the more profits you are just giving back for no reason. Would you freak out and sell your rental property if it drops 100K? No you keep turning over rent. Sometimes I think you guys are too clever to ever make money in stocks. Bottom line without risk there is no reward...this is a universal truth of the market. The trick is to find a way to take on "unlimited risk" short term for zero risk long term. I said once that I wish all options were cash settled, I take that back. The reason they aren't is ultimately one would prefer take the assignment over closing for a loss if they can cover. The closing of contracts for losses is typically a retail phenomenon.
Whatever the ATM or $1 OTM price is...flexible. The point is, in this framework, selling a put isn't a bullish strategy, or a bearish one...same with selling the calls. I could tweak for directional probability if I want to but typically I don't care if assigned or not...it is inconsequential because eventually the assignment losses + the called out gains will mean revert to zero over time. I think over the year 2022 in my example I was $-1200 at the end. This doesn't work if you can't take the shares...PMCC will not perform the same. This will perform more like a dividend position but more dynamic, less static.