Brokerage options for selling naked puts?

[JJ10]

I use interactive brokers

But soon will be using tastyworks

Are you trading US Stocks only or ASX as well?
I have just started selling covered put options (call options sometime) on ASX market but want to learn more about Put Credit Spread and Call Credit Spreads in ASX.
I am currently using commsec and soon open account with Halifax which uses IB as account opening procedure is very quick compared to IB.
How many contracts should you write for credit spreads for stocks like STO or MTS to get decent premium?

 

[Virge666]

I do BHP, CBA and AP here in Australia - they are the only markets liquid enough to trade in without getting your arse handed to you in slippage.

STO and MTS are a no go - you just cant sell enough premium to balance the risk you are at.

think about it...

You own 200 shares of STO, and you sell 2x30 delta option contracts against your holding for 21 cents a contract, you receive $42, of which $6 goes in brokerage and you will lose another 15% in the bid-ask spread. then lose another $6 when you buy them back . . .

You just cant make money this way. MTS is worse...

Do a couple of spreadsheets to work out your risk vs profit, then you will see the ASX is a very hard trade.

Instead of STO - just buy an OIL ETF and sell ETF options against that, penny wide spreads and is basically the same trade without the risk

The ASX sucks, always has.

 

[JJ10]

I do BHP, CBA and AP here in Australia - they are the only markets liquid enough to trade in without getting your arse handed to you in slippage.

STO and MTS are a no go - you just cant sell enough premium to balance the risk you are at.

think about it...

You own 200 shares of STO, and you sell 2x30 delta option contracts against your holding for 21 cents a contract, you receive $42, of which $6 goes in brokerage and you will lose another 15% in the bid-ask spread. then lose another $6 when you buy them back . . .

You just cant make money this way. MTS is worse...

Do a couple of spreadsheets to work out your risk vs profit, then you will see the ASX is a very hard trade.

Instead of STO - just buy an OIL ETF and sell ETF options against that, penny wide spreads and is basically the same trade without the risk

The ASX sucks, always has.

what options do you use for BHP, CBA and AMP?

 

[JJ10]

I mean which option strategy do you use for ASX stocks for consistent profits?

 

[Virge666]

Not AMP, AP, the ASX 200 future.

I sell puts in the three stocks until I am assigned stock. I then sell covered strangles against them, covering them and rolling them as a 50% winners.

Rinse and repeat...

 

[aza2k]

Not AMP, AP, the ASX 200 future.

I sell puts in the three stocks until I am assigned stock. I then sell covered strangles against them, covering them and rolling them as a 50% winners.

Rinse and repeat...

Hi again
So far I haven't had or exercised any options - just simply buy/sell back and roll to next month if stock has gone against me. Currently up about 24k inc expenses after 9mths with margin peaking a while back at 55k. Returns are about 9% - brokerage is painful eating up about 30% I reckon.

 

[JJ10]

I do BHP, CBA and AP here in Australia - they are the only markets liquid enough to trade in without getting your arse handed to you in slippage.

STO and MTS are a no go - you just cant sell enough premium to balance the risk you are at.

think about it...

You own 200 shares of STO, and you sell 2x30 delta option contracts against your holding for 21 cents a contract, you receive $42, of which $6 goes in brokerage and you will lose another 15% in the bid-ask spread. then lose another $6 when you buy them back . . .

You just cant make money this way. MTS is worse...

Do a couple of spreadsheets to work out your risk vs profit, then you will see the ASX is a very hard trade.

Instead of STO - just buy an OIL ETF and sell ETF options against that, penny wide spreads and is basically the same trade without the risk

The ASX sucks, always has.

Hi Virge666,
What is your strategy if you own BHP for $25.40 and now it is $24? Would wait for price to rise or sell another call option to cut the loses?

 

[Virge666]

Hi again
So far I haven't had or exercised any options - just simply buy/sell back and roll to next month if stock has gone against me. Currently up about 24k inc expenses after 9mths with margin peaking a while back at 55k. Returns are about 9% - brokerage is painful eating up about 30% I reckon.

That is a nice return - Well done.

Now I use to do the same thing... but then i realized that brokerage was too high. So i just moved markets to the USA. Now my brokerage and slippage is about 3-4%.

Easy.

 

[Virge666]

Hi Virge666,
What is your strategy if you own BHP for $25.40 and now it is $24? Would wait for price to rise or sell another call option to cut the loses?

So i am long bhp @ 25.40 with the stock @ $24. lets assume 200 shares...

So i would sell 2 x the 20 delta puts and 2 x the 20 delta calls. Colect some premium and see what happens. one of the sides will expire worthless and i can just manage the options on either side as they become profitable or tested. I can also rollout to give me more time and collect some extra cash... but about 40-50 days is the sweet spot.

Make sense ?