LOL Selling Calls, looks great, 90% of the time they expire if out of the money worthless awesome. Ofcourse 10% of the time they the stock has a huge move and that $100 per contract you was going to make, turns into a $1000 loss.
Everything looks easy till you do it, you still have to pick direction and when you are wrong, you have to pay more quicker and when you make money it is less than you think you going to make. And let's talk about volume, often times the underlying has more volume to get in and out and spreads on options always seems wider when I have to get out. Everything has it's place depending on your back testing.
Have you traded short options during 2008-09, the May 6, 2010, Flash Crash, and/or Aug 2015 market crash? I am just asking to see whether you know the risk associated with premium selling when things don't go in your favor and the markets are extremely volatile.
He is an option writer for last 35 years.The premium temptations can be sucker's nightmare. 9/11 lost 20 years income from trading. So I say write options , with calculated risks and a well thought out trading plan.The important thing is risk management . I write options using 1% risk to my account , using a well thought out strategy .
Many brokers won't let you sell naked options.... that's where the real money is... levered and correct. That's also where the risk lies. If you're required to own the stock and write "covered", then your capital is tied up. If you're writing options naked and leveraged/highly leveraged, you can get hurt really badly in short order when the market turns against you.
Yes ofcourse, just need a fully working cyrstal ball, simples. Suppose if you short Puts then that limits your downside, ofcourse if its a $60 stock then going to $30 would still kill you. Best way, monday before options expiry, short high value out of the money calls 50% of account and 50% shorting puts, gives you some market rally or crash protection, wouldnt bother till the last week, why expose yourself to more news than you have to. Spread it out over 10 stocks aswell. Commisions to close to costly on these low price options, got to leave them on, let them expire worthless no comms then, ofcourse exiting any that show signs of getting back in the money. But if stock value 17 say, short call at $1, still got to expire $21+ to take a loss. Go all in, likely clear 90% profit per month, allowing for comms, put 10k at risk if you can survive 7months your a millionaire. 1 bad pick and 500k account could flip to -500k and screwed for life over night mind