I am an options trader who enjoys selling equity options for income. I know the risks and everything so spare me. I just want to get professional traders opinions and maybe even some traders who have successfully implemented this strategy.
2007-04-03 09:01:51 · 4 answers · asked by nadoracing 1 in Business & Finance ➔ Investing
First, I don't think you will find any professional option traders on Yahoo answers based on what I have seen.
There are some professional traders on the Yahoo message board at
http://messages.yahoo.com/Business_%26_Finance/Investments/forumview?bn=4686677
as well as the usual riff-raff you find on Yahoo message boards.
Second, I don't think you will find any professional traders who usually use naked short option positions.
I have seen many people have good success selling naked options for a period of time, sometime years, but never for decades. I have seen years worth of profits lost in a short time using the strategy.
A lot of traders, including professionals, use spreads that benefit from time decay (theta) so in that respect they sell equity options for income. However, professional traders also look at other risk factors. Traders try to benefit from projected changes in implied volatility as reflected by vega. They also normally control delta and gamma risk by using spreads instead of naked positions and by adjusting positions when any risk factor (particularly delta) gets too large.
If you didn't undersand what I said, you don't really know the risks. If you do understand what I said, and you control the risks, I agree you can sell equity options for income quite successfully.
2007-04-03 09:47:36 · answer #1 · answered by zman492 7 · 1⤊ 0⤋
Just some random thought:
Never be short a naked call.
Utilize spreads - they can give you more efficient usage of capital, although you will probably want a good modeling program to be able to construct payoff diagrams on the fly. There is a good one at hoadley.net, I use it myself.
Pay attention to IV. Alot more goes into an options trade than simply forecasting direction.
2007-04-03 22:00:29 · answer #2 · answered by Anonymous · 0⤊ 0⤋
I think you should read the good book titled options as strategic investment by Lawrence McMillan before you embark on selling equity options. If you are not well equipped, you might have lost all your money.
2007-04-05 10:59:55 · answer #3 · answered by Chris 1 · 1⤊ 0⤋
Covered Calls, a safe wise investment.
Uncovered, risk reward situation, higher the risk, bigger the reward
2007-04-03 16:06:01 · answer #4 · answered by dggodinez 3 · 0⤊ 0⤋