Turch, I sleep pretty well. I have been doing strangles $15 either side of the ATM for a few years. Yes there are times when it is difficult. I would say out of 12 months I have a minimum of 9 clear easy wins. The other months have been a great teacher. This experience have taught me to approach protection in a different way. Rather than roll I trade futures or sometime becoming a buyer of options. I don't roll anything anymore. Over the past 12 months I have only had one strangle where I have my sold leg move to ATM but I also had long options and for this month I came out a little ahead once I sold everything out. One of the things that does help me doing this is DTE. I am more a 35 DTE guy so once I get the first 10 days out of the way it is much easier.
All this said I consider myself a perpetual student. I am learning and re-evaluating what I do as a direct result of this forum. And on that note many many thanks to all. Most recently members have helped with with my seasonal study and development and now more so with the CL strangle. I have a list of other issues I wish to seek the forums feedback on but that will come in time.
Being honest I am still struggling with the idea of DOTM and 60 DTE. So rather than comment from the sidelines I am placing small allocation trades using this methodology.
I have this idea (right or wrong) that DOTM and 60 DTE when in the face of a threatening move will have me with 50 lots sold at .02 with 50 lots at .1 and still 30 DTE.
"When in the face of a threatening move", I would rather have 50 lots $30 OTM than 10 lots $11 OTM.
When I sell 50 @ .02 it is usually with less than 40 DTE. If I'm selling 60 DTE I like to get more premium.
There are many ways to skin a cat, this forum is proof of that. We all have the same guidelines, it comes down to interpretation and personality.It's good to bounce different ideas around and get opinions that's what makes this forum great.
The following user says Thank You to turch for this post:
A penny for your thoughts. I have followed Ron's methods fairly closely over the last year for very good results. I guess my main deviation from Ron's trading is where i find it worthwhile to make a trade. From memory Ron is more than willing to sell CL @ 0.02-3, whereas for me, because of our higher commission charges here in Aust i do not see that as worthwhile. I generally look to sell most options at around 0.05-6. Do you guys generally look at slightly higher Premium per option than the guys in the US because of our higher commission charges?
The following user says Thank You to Bakes for this post:
I opened my account in the US, lived there for 6 years.
Before the commission went down to $3.50 from $13.50,yes, I would look at getting more premium.
You are right, $13.50 makes a big difference in choosing trades, can be quite prohibitive, especially when selling 50 plus for .02. I used to sell a lot less for a lot more.
I feel your pain.
I have moved from selling low priced options and riding to expiration to selling a little further out in time and a little higher premium and then buying them back when the price erosion slows down. Especially ES.