Hi volga, Thanks first of all for answering my question. 1, Breakeven--I think your examples are those IC's that have short strikes wrapped around the current price of the underlying. I do mostly IC's on indices and I go way OTM, so r/r typically is not pretty--let's say, $.60-$.70 per side (I usu leg in) of a 5 point spread on XEO. Most often they expire worthless and 10-15% return on margin per cycle is not bad. 2, Trade in and out of it. It is taking directional bets, as you said, when you do it. Sometimes I trade SPY against threatened short strike intraday or otherwise to make up some "loss", so it is not exactly hedge, just directional bets, and of course they are often wrong. You suggest adding some teenie puts, which is something I will keep in mind when doing IC on stocks. On indices, my concern is whether it is throwing good money after bad, with vol spiking and indices rarely plunge as a stock would. Again, thanks for your reply. tc
Volga, I have a couple of more questions. 1) I can only trade the first a couple of hours. Will this work? 2) What scanning/analyzing software package(s) you think are adequate or sufficient? (I don't have choice on execution software). Again, thanks.
I would be wary of indicies.. they can dump.. it does happen.. and in fact, with the vix as low as it is.. i would bet on it happening quite soon!
1) In my experience discipline, determination and solid plans of action work. Just tailor it to your schedule. 2) I trade futures and some stocks. I go for single stocks if I think something good could happen in them for the time being. I think best to focus on a couple of markets and learn them inside out.. its an "edge" over the other guys. --volga
Hi Volga, Point taken--I was referring to huge gaps the stocks are more prone to. It just hurt to see that one has to close a bad leg just when vol is spiking for some decent premium selling. Thanks again for your suggestions--much appreciated. tc
A word from the wise: Selling options is a long term loser.... it feels great, but when she comes to get you.. its like a withdrawl u never imagined!!!!!!!
Volga thats hilarious I have consistently made over 15% per year for 15 years with simple writing strategies. I never knew I was a junkie..... lol.
Oh no, Volga, I was not talking about naked short premium, rather the "lose 2 or make 5" kind of "odds" play that you mentioned in your earlier post.