Dude, vega. You should not be selling options until you know all the inputs which drive the pricing of an option. You were selling tail risk puts with VIX at like 10-11. It went to 50.
I sold naked option efore. It was very painful experience. selling naked option is inherently terrible due to its terrible risk reward ratio. I will never do such thing anymore.
If you're naked you can hedge with ratio backspreads. Take no/very little loss until it dips into the strikes toward expiry while you have high protection during a quick spike in vol. You typically want to go out further in time, strikes further away and more contracts than your shorts for more vega and vomma. I wasn't hedging short vol but rather a speculative position, it went nuts on Feb 5. However it would work almost perfectly with extreme short vol positions like naked strangles. Have a guess what 1.55 premium went to on Feb 5/6..
Selling naked puts is akin to picking up pennies in front of a steamroller. Sooner or later you slip and fall and get crushed. Stop loss isn't going to help either since a big event will trigger a selloff and you are not going to be able to get out in time. Spreads make more sense. You have a predefined risk and reward. BTW, it sounds like you may not have a full understanding of the terminology of the products you are using, which means you likely don't understand the products. Maybe I am misreading it but you ask whats the safest way to do naked puts, then suggest put bull spreads are the safest. A put bull spread by definition is not naked. Also, if you are doing bull spreads why have a stoploss. Just structure the spread such that the max loss for the spread is the most you are willing to risk. The risk/reward is predefined when the spread is entered.
You are correct, a bull spread is straight even, I am referring to back ratios for example: Sell 100 ES 1800's @ 1.00 Buy 10 ES 2300's @ 25.00 where the second trade is 50% of the naked put (these are not real quoted prices) for the most part, this is what has been so un nerving and why I feel the stop loss should be set for the puts to be bought back at a given interval because regardless of the buy side there is unlimited risk
This is exactly what I usually do, and of course did not do. I had the terminology mixed up with bull spread, but its back ratio. as TD Ameritrade defines it. with a highly liquid future like ES do you initiate stop losses in addition to the Back Ratio?
But books, education websites (e.g. tastytrade) and gurus I read, watched and talked to, all touting selling/writing options for profits and the path to riches? They cannot be all wrong. Could OP's case be an exception and OP was just unlucky?
I would have to look at some real numbers but in that case you would build up a lot of profit if it fell below 2300 and didnt go below 1800. Once below 1800 you are getting hammered though. It sounds like you are looking for a strategy to collect premuim. You can do this by selling the puts, just make sure you have a cover at a position that works for you. The key to trading is survival when everything goes against you, because sooner or later it will.
You are doing the opposite of @QuasWexExort is doing. He is long the wings compared to you. You should read the book "Second leg down"
It seems to me a credit or debit spread will limit max losses, is there any scenario and special situations (e.g. liquidity) that a credit or debit spread will incur losses more than what is predefined?