Yes Cordier says a 0.2000 delta. But that doesn't match the 400-700 premium. Or how he traded.
For example, a Sep CL 82 put is $520 but the delta is 0.0610. A 0.2000 delta would be a Sep 95 put. I know that Liberty never put something like that on in my account when I had one there. He wasn't that crazy.
Yes I have lowered my delta and increased my cash excess over the years. After getting brokers calling you and telling you to immediately send money (I don't know why they don't suggest bailing on positions first) you don't want to go through that again.
And yes I have had sleepless nights because of my positions. And then you almost don't want to turn on the computer in the morning to see what happened.
After I lowered my delta and raised my cash excess I found that when you have 85-90% winners your account balance at the end of the year is higher than when you traded higher delta and only had 60% winners. And that is mainly because when you are trading higher delta, the losers are usually very big losers.
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You definitely need to look at strikes further out of the money (OTM). A 19 is far too risky. I sold 16s.
If you feel you need to make ~$500 for each trade, then sell more put options at lower strike price. But you shouldn't limit yourself to a certain dollar amount per option. In many cases those will be too risky. Good returns can be made at lower strikes.
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I thought i would share my chart of Oct Sugar. I was wary of the downward movement but now it seems to be making a bottom and the Cummulative Volume Delta (lower pane) is showing bullish divergence. Today there was strong buying evident.
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I can't believe I came across this thread. I've been unbeknownstly following in Ron's foot steps but I am a few years behind. I also read Cordier's book and have been selling options in two different optionXpress accounts. From reading this whole thread I can tell you I am currently learning some lessons that Ron learned a while back. I have a regular account that is doing really well but I have a self-directed IRA account in which I have made some mistakes mainly from being too impatient on entry and too stubborn before exiting. I currently have open positions in CL, LH, LC, NG, C, W, CC, SB and GC. I also plan for my wife and I to quit our jobs and get that house in the woods so we can watch the deer and turkeys while I trade.
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Yep, the house in the woods is a good goal and then to enjoy when the trading day is over.
I too have self-directed IRAs (one for my wife and one for me through Millenium Trust) at OX. I trade those even more cautious than I do my regular account because if you blow that one up you just can't add unlimited money back into them. I usually do deltas of < 0.0100 on the options I sell in those accounts.
You have a nice diversity of commodities in your account.
Did you know that OX is switching from pit traded soft options to electronic traded options for the softs this summer? Sugar was switched last year but the rest are in the works.
Welcome to our small group.
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