In the attachment, there are two snips: One with your trade plugged into a a simple calculator for yesterday and one from a week ago. With a relatively long-dated option at a very low delta, one week's passage of time doesn't help much when IV pops and the futures make an adverse move.
Happens to all of us. I typically do not sell very low delta options to start with, but if my trade goes right, I'm often short some of them ... and then a week like last week happens. Keep in mind, compared to what can and has happened, last week wasn't even that bad. Selling OTM nat gas calls in Dec/Jan/Feb of last year and then getting hosed by a huge pop in volatility and futures prices ... now THAT caused people some serious pain.
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Greetings from ATL, a new member of the forum here, finally, after spending many hours over the last 3 weeks reading this entire tread, I would like to introduce myself. Like many here I got into selling options on futures after reading Cordier's book 5 years ago and started selling 4 years ago. One of my 1st trades was ES puts during the flash crash of May 2010, what a start that was! This is the 1st time I have been able to find folks to interact with who also are also selling commodity options and it has been a great experience for me reading the great info ya'll have been kindly willing to share. Over the last 4 years my trading style has evolved into generally selling 1 lot options with around 8 to 10 delta's looking for opportunities for when IV has jumped and when the fundamentals are right. About 50-60% of the time they have been strangles. It has generally worked well, but years such as this year with low vol have made it difficult to find the right trading set up and show the value of Ron's system. I made around 30-40 % year 1 and 2, while I was figuring things out, last year I lost about all my years of profits in 2 days on a massive drop in gold prices, then took 2 months off to regroup proceeded to get it all back plus some over the last year and a half or so.
It was quite interesting while reading the thread to relive the NG market last spring, when calls spiked up to 5.5 - I remember selling 3 - $7 calls and had sweat it out until the market peaked around 6.5 and the insanity was over with. I wish had the guts to buy puts at that time but its hard for me to switch gears sometimes and be a option buyer.
I have been with TOS up until now mainly because of their inexpensive trading costs and pretty amazing platform but after reading the thread, will probably switch over to DeCarley. My bread and butter has been selling CL and 30 year bonds with a few ags and NG, but as my account is starting to grow, I realize the need to diversify more. I am seeking the steady return that Ron's trading style offers and plan to incorporate many of the trading principals. It frankly sounds scary to me to be selling 10 to 50 contracts at a time in 1 market but I am sure many of you would probably never sell a 10 delta contract on anything. JC.
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Before finding this forum, I really did not know of option selling strategies used by others besides Cordier's book. I have since been enlightened and see some of benefits of selling lower delta options. One of the best benefits I see so far is that a 1 or 2 delta option is not going to get whacked when IV takes off in the way a larger delta option does which permits more selling opportunities even when IV is at historically lower levels. From what I can remember Ron saying, he pays little attention to current IV when starting positions which seems contrary to most option selling strategies I know.
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Interesting question..George Soros will say it always was and still is fundamental product and Ed Seykota will say it always was and still is a technical product.
Then on the fundamentalist side you will get people saying it's going be rally because it's India wedding gold buying season and you will have people saying it is overvalued because Middle East war threat is under control.
And on the technicalist side you will get people saying it's making a triple bottom at a support that's been held since 2010 and there will be people saying it's in a descending wedge about to break down.
Just curious on what you will do with people's different opinion as I am sure if a lot of people responded you will get many different ones ?