how do you know its of no value? speaking up (asking questions per se) is not such a bad thing......in other words even the most off topic, valueless (in perhaps your opinion), inane questions can produce (from responses) nuggets of info of value to at least one audience participant.
caveat: take everyones opinion with a pinch of salt
Last edited by rosho01; December 29th, 2013 at 09:57 PM.
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>Where did I mention coffee 135s? I can't find it.
sorry it was kevindog he is short the call 135 (kch) see chart in post #2717
By the way thanks for that kevindog, always nice to see what others have going.
> if you sell options that close to ITM with that little cash excess you will get burned badly. I can guarantee it.
Do you refer to both call & put kc & NG options I suggested or only the put KC?
>Farmers don't burn their crops.
Well they do (rarely) but the point is more that there comes a point where demand is so low that a farmer out of pure frustration prefers to burn his crop than to sell it for less than the production cost. Yes very irrational but I guess at that point its more emotion.
Itís also more a saying than that it happens. Bottom line, I was wondering if anybody knows the production costs of coffee so we know a hard bottom.
>A 100 put in KC is too risky especially using 50% of your money.
I guess you understand but just to clarify, I donít use 50% of my money for this position alone. I have portfolio of shorted options where this was just one candidate I looked at. I have been selling future options for 5 years with success. Iím excited I found some people that do the same, happy to share ideas. And I guess 50% on IB may as well be 33% on your platform. (only read till page 34 now but if not done yet we may want to do a few test setups on the margin differences, seen the differences mentioned by other in different countries on IB)
>I always use IM for ROI calculations because that is what is required to put on the option. I also use the cash excess in the calculation.
ok just a matter of different opinions but good to know. Initial Margin is as you say only needed to start the position and since we all keep enough excess money that is never a problem. Personally I find the maintenance margin more important since that is what you have to keep (at minimum) in the bank to keep the position in the air. And so I think its more fair to calculate the roi based on MM iso IM. But if you purely look at the numbers, IM is slightly higher so it builds in more safety. Even more fair but an administrative nightmare would be to keep track of the MM during the trade and use the highest value to calculate the % made on the trade (afterwards).
Now we discuss margin anyway, do you think that Karen (video) may have lower margin requirements because of higher net worth? This referring to how she starts looking at the position at 0.3delta/30%. But again she didnít start with millionsÖ
Alternatively she could do something totally different but didnít want to tell about that so, as they say send us into the bush ;-)
I can say with out a doubt that when my option writes have gone against me. it was a combination or the sum of these things.
Never trust the models probabilities. Just because it says you have a 100% probability and a delta of 0.00 doesn't mean you won't have to adjust or that it won't bite you in the tail Time is a big factor here, you can find a number of trades that look great but they have way too much time to bite you.
Getting greedy: experience says $30.00 is a lot better than $40.00 in premium when you have a lot more room for the instrument to trade.
Not being disciplined, this is the only game where you HAVE to use a mental stop. As soon your position hits 50%, 100% or 200% you have to follow the plan! Not doing so will loose more money.
This is probably the only game in town where you get buyers remorse, you have to learn to deal with emotions. Selling options is a lot like Poker, you have to make decisions based on all the information in hand, and you have to make assumptions on incomplete information. Thus why we employ rule sets, probabilities and does it look good on the chart!
I've come to believe adjusting is an art unto itself! there are more than one way to do it, and no matter what you do, the next day you'll see another (better) way of doing it.
know your market, Selling CL or Natgas (other Markets) in low times of volatility is almost a guaranteed loss.
For me this works, your mileage may vary. Never exit a position immediately after an event that created a spike in volatility. I've lost more money adjusting or closing OTM trades on NatGas on Thursdays. If I would have waited until after lunch I could have adjusted or exited for a much better cost. <-- Buyer's remorse.
As for trades on my radar, sitting on a crude strange put on earlier this month and I'm looking at what the weather is going to do, I'd love to catch another opportunity to sell some 8.00 NatGas calls!
I'm starting to look outside Crude and Natgas for other candidates, trying to find that sweet spot for ROI.
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