Writing options for a living

Long stock $42.00// short 40C

 

With apologies to joecgoodman... Not trying to be condescending, but I'll just say this, these guys (riskarb and maverick) are so advanced in options. I'm not gonna add-on that subject. I once tried to discuss the whole covered-call, naked-puts with a coworker and never got anywhere. It takes more reading and perhaps more experience to realize why covered-calls/naked puts are not the superior strategy that has been presented by people like wade crook, er, cook.

oh, and as a little exercise: you have 100 shares of ebay at $42/share and you sell the aug 45 for .3, next week, walmart says it's buying ebay for 100/share. you limited your profits, though... or... next week, they find out that ebay were cooking the books ala enron, stock drops by 20 points, your premium didn't protect you too much. covered-calls = limited upside, possible big downside.

 

Yes, selling the Aug 40 call and being long stock is EXACTLY the same as being short the Aug 40 put.

 

riskarb, you got through to me. thanks for the education, you and the Mav.

 

So Mav or Risk what is your answer to the original post that started this thread.

Can you make a living selling options?

 

I think you are asking the wrong question, or at least the starter of this thread was. The better way to phrase the question would be, can people make a living trading options? The answer is yes.

It does not matter if you are buying them or selling them. Your chances of success are the same. BTW, that percentage is pretty low.

 

ktrader, if you can lose your account buying options, you can make a living selling options. You can certainly lose your account selling options, it's just harder to do.

 

Ughhhhhhhhh! (Mav starts banging his head against the wall.)

 

Mav is right, and my prior posting regarding it being easier to lose your account buying options is technically and mathematically just flat wrong. The way people tend to approach trading options is more conservative on the selling side, in my opinion. In my system, a critical factor is only selling puts on companies that are good buys exactly where they sit. Yes, I could do the same with covered calls (I now know, thanks to mav and riskarb). But either way, I'm selling premium, not buying it.

 

Mav...my question was more direct to you. You seem to have a good understanding options and must trade them for a living.

Overtime have you been a net seller or net buyer of premium?