Wiped out selling naked puts with no stop loss or credit spread

Discussion in 'Options' started by R3LZX, Feb 24, 2018.

  1. There is no safe way unless you are going to limit the loss with spreads. To be blunt, you got greedy. There is a reason someone is buying those puts and those that bought them just earned enough to cover their insurance till the next time this comes around - especially with vols at such historic levels. If selling a put, think what is the worst case - war, natural disaster, company fraud, etc. and decide if you can take a loss if the markets move drastically. You also need to keep in mind you don't need the markets to move through your strikes as a significant spike in volatility can do just as much damage. The markets are hot but these are crazy times - I'm not sure when the next spoke in vol will come or what will provoke the markets but I would make sure you are willing and able to accept a significant loss and forced cover when shorting.
     
    #11     Feb 24, 2018
  2. How much of your buying power were you using? I sell strangles and I was down about 10% on this down move. I’ve now recovered all my losses and my account was no where near getting blown out.
     
    #12     Feb 24, 2018
  3. Let me guess.. you trade with interactive brokers
     
    #13     Feb 24, 2018
    Chubbly and lawrence-lugar like this.
  4. You look for to buy tail risk.. not stand on it.. it's like dynamite. 1 spark has an exponentializing effect...
     
    #14     Feb 24, 2018
    samuel11 and i960 like this.
  5. R3LZX

    R3LZX


    Bottom line this is absolute truth, I took the boring movements of late with the S&P and did not treat it like the sleeping dragon that is, I should have had my stop in at my 20% and followed my rules. Livermore 101. Thanks for the response
     
    #15     Feb 24, 2018
  6. R3LZX

    R3LZX


    This account was with TD Ameritrade, I don't like IB because they have insane margins requirements
     
    #16     Feb 24, 2018
  7. R3LZX

    R3LZX


    I was in the 1800 ESH8 its now 20 days out, it went from 1.00 and change to 3 or 4.00 instantly, I think on this particular contract it moved exponentially more than the others for an unknown reason and thats what caused the liquidation. I never even saw how much it moved as I was traveling but only saw the aftermath. If anyone has a bloom term i sure would like to know what it did.
     
    #17     Feb 24, 2018
  8. R1234

    R1234

    Even the pros got creamed this month. This is the NAV for the LJMIX mutual fund.
    The short vola trade became too crowded with professional money.
    Next few weeks will be interesting as Feb numbers start to roll in, a few casualties perhaps.
    upload_2018-2-24_23-38-17.png
     
    #18     Feb 24, 2018
    MattZ likes this.
  9. "Pro's" a lot of us saw this coming that aren't pros
     
    #19     Feb 25, 2018
    jys78 likes this.
  10. Sprout

    Sprout


    The marriage to your strategy has already caused the effects of a sudden and harsh divorce.

    May you pick yourself up, dust yourself off and wisely choose a different partner to dance with.

    There are plenty of fish in the sea.

    The previous one you should just let go of and not try to make it something that it is not.

    A steamroller is a steamroller and will always be a steamroller no matter what shade of lipstick.
     
    #20     Feb 25, 2018
    iprome and Xela like this.