# Selling Put Options



## justgjt (21 August 2013)

Does anyone know about selling put option using John Thompson's method. Is it worth the cost of the course to learn his "tweaked" strategy and money management method.

Thanks


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## omad (21 August 2013)

Don't know the cost but it's not worth it.


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## So_Cynical (21 August 2013)

If someone (anyone) is selling it its probably not worth it.


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## justgjt (22 August 2013)

Thanks for the replies. Its north of $6k and it marketing material states he is pulling around $40k pm on an account of $350k if I remember correctly, but of course I cannot find out much more than that. I was hoping to find out if anyone has had some experience and history with it.


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## burglar (22 August 2013)

justgjt said:


> Thanks for the replies. Its north of $6k and it marketing material states he is pulling around $40k pm on an account of $350k if I remember correctly, but of course I cannot find out much more than that. I was hoping to find out if anyone has had some experience and history with it.



A cautionary note:
https://www.aussiestockforums.com/forums/showthread.php?t=13721&highlight=bill+stacy


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## wayneL (22 August 2013)

justgjt said:


> Thanks for the replies. Its north of $6k and it marketing material states he is pulling around $40k pm on an account of $350k if I remember correctly, but of course I cannot find out much more than that. I was hoping to find out if anyone has had some experience and history with it.




>10% per month selling premium 

Just go and buy it, and find out for yourself.


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## ROE (22 August 2013)

justgjt said:


> Thanks for the replies. Its north of $6k and it marketing material states he is pulling around $40k pm on an account of $350k if I remember correctly, but of course I cannot find out much more than that. I was hoping to find out if anyone has had some experience and history with it.




Thats 130% return a year ... Gold mine why don't I know anything about this?
Do this for 5 years on 500k you can retire - Too easy


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## minwa (24 August 2013)

wayneL said:


> >10% per month selling premium
> 
> Just go and buy it, and find out for yourself.






ROE said:


> Thats 130% return a year ... Gold mine why don't I know anything about this?
> Do this for 5 years on 500k you can retire - Too easy




10% per month credit trading is very doable if you are a little aggressive and have a directional bias(which may destroy the point of premium selling but whatever, better return for me than debit trading)..







August is shaping up to be the same if nothing majors happens and all expires next week.

You can certainly go for higher returns if you want to risk more, I used about 70% of margins, you can probably go all up to 90% margin.

However DOABLE does not mean SUSTAINABLE, so we will see. Expecting 5-10% drawdown when I start hitting string of losses.


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## minwa (24 August 2013)

By the name, never heard of John Thompson..so do your own research.

James Cordier a fund manager purely selling options achieves high double digit returns for a few years I think one year also did 100%+. Also has negative return years. He does futures options though which I don't know much about. 

Again no personal experience with any of those guys, I say find your own method if you can.


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## justgjt (25 August 2013)

wayneL said:


> Just go and buy it, and find out for yourself.




Thanks for the +ve feedback . . .


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## justgjt (25 August 2013)

minwa said:


> . . . do your own research.
> 
> James Cordier a fund manager purely selling options achieves high double digit returns for a few years I think one year also did 100%+. Also has negative return years. He does futures options though which I don't know much about.




I am trying to do my own research WRT J.T's method and its a dead end street..... there you go !

I have read Mr Cordier's book and the recommendation is $100K minimum ( preferably $250K )
with a $1M account having the best survivability.


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## burglar (25 August 2013)

justgjt said:


> ... with a $1M account having the best survivability.




If I had $1M, I would put it in a term deposit and live on the interest.


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## ROE (25 August 2013)

minwa said:


> However DOABLE does not mean SUSTAINABLE, so we will see. Expecting 5-10% drawdown when I start hitting string of losses.




That the thing, doable and sustainable, sustainable are what made people rich not doable 
all these course are telling people what is doable and possible not sustainable 

everything is possible in finance but to sustain it so you can earn large capital gain and retire
is not that easy.

if it is sustainable to obtain 100% gain or even 30% gain year in year out on your capital no one would
show you how they do it.... I certainly wouldn't tell a soul if I find a way to make 30% compound a year from the market even if you paid me money 

Market is full of doable and not sustainable .... ABC, Centro show you it doable to earn big bucks in a short time...not sustainable on that model....Woolies show you what is sustainable and people who invest in Woolie are rich  and the doable goes broke


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## wayneL (25 August 2013)

ROE said:


> That the thing, doable and sustainable, sustainable are what made people rich not doable
> all these course are telling people what is doable and possible not sustainable
> 
> everything is possible in finance but to sustain it so you can earn large capital gain and retire
> ...




Exactly. A 10% per month return requires extremely high IV stocks or lots of leverage.. or both.

Bearing in mind short puts are +delta and -gamma, it doesn't take a rocket scientist to work out that drawdowns will be at times vicious, even with defense strategies.

Again, nothing wrong with short puts as a strategy, many option traders, including myself, use them to a greater or lesser extent, but they are what they are and no investing panacea.

Know thy basics.


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## minwa (26 August 2013)

Write covered spreads. Most of what I write is 1:1 or 1:2.

Only on the rare occassion when I have a strong directional bias then I write naked.

Works for some dosn't work for most.


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## wayneL (26 August 2013)

minwa said:


> Write covered spreads. Most of what I write is 1:1 or 1:2.
> 
> Only on the rare occassion when I have a strong directional bias then I write naked.
> 
> Works for some dosn't work for most.




Hmmmmf.

If I have a strong directional bias I don't want no steeeenking short gamma.

$0.02


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## minwa (26 August 2013)

Many years trading vanilla/diagonals then switched to writing and find it much easier to trade. I may have strong directional bias but in the still highly probable event that I am wrong and it goes sideways or even against me a little, I still want to make a profit. Going for small more consistent returns and compound it works for me better over going for a few home runs.

Theta works well for me, happy to take on gamma risk for it.


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## wayneL (26 August 2013)

minwa said:


> Many years trading vanilla/diagonals then switched to writing and find it much easier to trade. I may have strong directional bias but in the still highly probable event that I am wrong and it goes sideways or even against me a little, I still want to make a profit. Going for small more consistent returns and compound it works for me better over going for a few home runs.
> 
> Theta works well for me, happy to take on gamma risk for it.




All good.

There is some psychological positives in trading high probability strategies, until the big hit comes along. Folks should be prepared for that, because that same psychology can suck some people into big losses.

The Dimitri put spread acolytes poohooed the cautions of experienced traders for a long time... until they all got ripped a new one.

I dare say that this Thompson clown is the most recent incarnation of the McIntyre school of sucking in noooooobs.

My concern is that unverified representations of steady x% monthly returns over the long term (which seem to be increasing and increasingly unbelievable as the years go by) is a fraud perpetuated on the unsuspecting, either innocently or intentionally.

Creative accounting abounds.


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## minwa (26 August 2013)

Yeah they are using 78 year old John Thompson to try to appeal to retirees with saved up capital..Imagine when some retiree writes naked with nest egg and then gets crushed..not a happy retirement.


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## burglar (26 August 2013)

minwa said:


> ... Imagine when some retiree writes naked with nest egg and then gets crushed ...




OLD WRINKLY CRUSHED NAKED


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