lol! Why the hating? I'm not the guy calling you during dinner to sell you insulation either. I was just trying to pass on my experience with the strategy. My lesson was don't overextend yourself, short puts = leveraged covered calls.
I agree
I wouldnt be suprised if this is the guy i was talking about? You have only posted on this thread?
lol! Why the hating? I'm not the guy calling you during dinner to sell you insulation either. I was just trying to pass on my experience with the strategy. My lesson was don't overextend yourself, short puts = leveraged covered calls.
lol! Why the hating? I'm not the guy calling you during dinner to sell you insulation either. I was just trying to pass on my experience with the strategy. My lesson was don't overextend yourself, short puts = leveraged covered calls.
Naked puts/synthetic equiv has its place as a strategy - its not necessarily an instant loser.
As bilo points out, overextending leverage in terms of margin is the main trouble for retail.
Leverage [margin and convexity] causes a lot of trouble.
Uncovered - it is not necessarily bad, but will be contingent on risk/reward, implied vols, amount of leverage etc.
So how do determine r/r when you are long equities? You don't have a predetermined stop to gauge r/r?
According to your logic the risk for long equities is also limited to zero?
I am presenting an argument that just because one is uncovered, does not instantly imply negative connotations [This isn't restricted to single puts]. Being covered [as with your example: bull put spread] can still lead to huge losses.
When you buy a stock, the risk is also nearly unlimited at least until it worth 0. In fact, the naked put has less risk on a face value basis than stock, because yoe receive a premum.Mazz
How can you put a value on risk reward?
You risk is nearly unlimeted at least until it worth 0.
You cant convince me this is technically sound strategy
Where the perception of risk comes from with naked puts is:
People will sell 5 $95 contracts @ $1.00 and take in $500 premium. But their face value risk is $47,000. (5 x $95 x 100 - premium received)..
They have decided to snatch pennies from the mouth of a shark. Dumb.
It's the leverage that kills, not the strategy
Yes It is due to leverage that your loss is accelerated, which is what i said.
But buying that many options is part of the strategy you have just excersied.
And given my account size, which i mentioned, a poor strategy.
Also take into account you may not receieve dividends so do you really come out in front at all?
But the reality is, if you have 10,000 dollars you are not going to use $100 to trade the option.
The whole idea is to use the leverage, which is why you cover. You now have more buying power. And limited risk.
I understand what you are saying and its true given the concepts, but you are not going to trade like that.
Forgive me if i am being ignorant but i believe no such thing exists for selling options. So i can easily identify my risk, you can't when selling options. This is my whole arguement.
When trading options one should consider the leverage carried by curvature, not only leverage concerned with margin requirements.The whole idea is to use the leverage, which is why you cover. You now have more buying power. And limited risk.
Incorrect. View my youtubes to understand why.
Bull puts, depending on how you leverage and position size, may have greater risk of ruin than naked puts.
Well...in the end everyone should just stay the f**k away from options LOL
jk:
Not bad advice if one doesnt know what they are doing!
Somebody who simply sells/advises to sell naked puts with $100 margain on a $10 000 risk, with a 15k account should not be trading options. AND THIS IS MY POINT
P.S Mazzatelli chuck another girl up, im interested to see the next one
lukeaye,
Can I take some options lessons from you?:
I see where you're coming from lukeaye,
Early on in my option trading journey I was fortunate enough to have a cheap private lesson on the perils of naked puts courtesy of the ASX.
These days I spread only.
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