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Reliable broker for a rookie

  #52 (permalink)

Houston, TX
 
 
Posts: 131 since Jun 2018
Thanks: 111 given, 71 received

I have not got to the options yet. Added the book to my reading list.


spoolmak View Post
I really don't use any particular signals as selling options is really very different from day trading. This is where Mark's guidance comes in, as he'll be looking at daily technical indicators to see if there's something that we need to pay attention to prior to executing a trade. However, generally all we're doing is selling premium on options contracts, i.e. shorting them, at positions that are significantly out of the money. The 'signals' if you want to describe them as that, are typically looking at the trading ranges for WTI crude over the past 3 to 6 months, and then we're selling options far enough out of the money that the likelihood of them being in the money at option expiry are extremely small. So far, I've never been stuck with an in the money option at expiry, although we have had to manage risk by buying back a few positions that looked as though they would end up being problematic. Mark has also assisted with making sure there's always been sufficient margin money sitting in the account to defend any positions that are threatened, and to stay on-side with the SPAN margin requirements of the clearing house. There's a really great book by James Cordier and Michael Gross that goes into great detail, and yet is still very readable, explaining this. Reading this book, Selling Options, is the base for my knowledge on this.


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