all i am saying is that selling puts is a proxy for being long. it is a similar stradegy to dividend investing where you hold long equity for the purpose of an income stream. leverage is what kills not the stradegy itself. i agree discipline is key.
I was short buckets of vol and front skew last Thursday/Friday... it was NASTY!! and I must say it felt decidedly worse than being short the underlying...:eek:
Please, group, do not answer this question. He's functionally illiterate and the answers are obviously in my response.
When selling options you are making a little money most of the times. However, you lose huge amounts once in a while. You could also buy options and bleed every month until you score big and pay for all the previous months losses. Overall, like anything else on the markets short options is just a tool. The secret to success is to know when to use which tool and constantly dynamically adjust your strategy following market conditions. One of the simplest methods is to run the trend following indicator on the corresponding to the chosen security volatility index. If the volatility is on the rise you play long options if it is on the down trend (volatility it self) then you switch to the short options. Technically the best option strategies employ both long and short options and their underlying securities.
Guess so... If, to you, being short puts and being long the underlying looks and feels like the same risk, pls accept my sincere congratulations. Such intestinal fortitude as you possess is something I can only dream of, which is why I am NEVER short gamma.
Whether long or short, you still need to be right on price, volatility, or both (i.e., backspreads, lookback exotics). Choosing to go long/short is a wager on convexity/probability.
Absolutely true dat... Still, I personally have a strong, enduring and all-consuming preference: I would always be a buyer of cheap gamma rather than a seller of expensive gamma. Possibly because I appreciate the value of the implicit unquantifiable liquidity option. No condors, as that's, in most cases, a broker-fest, in my world. I buy flies occasionally, but treat them as lottery tix, i.e. I say goodbye to the premium as soon as it leaves my pocket. I have done some 1x2s and ladders, though, but that must have been during momentary lapses of reason .