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The difference between the two is that the one in post #5101 was at 52 DTE when 8/24 happened and it lost money.
The ones in posts #5021 & #5023 were 88 DTE when 8/24 happened.
In another post I suggested that you exit the spread if you have held 30 days or more because you will not get the same coverage at 60 DTE as you will when they are 70-120 DTE.
The closer to expiration the longs are the lower amount they will react when there is a large movement and thus lower amount of coverage for the short.
I wanted to bring up a topic that hasn't had much focus on this thread, and perhaps rightly so. What is everyone's thought on position sizing? How big, % wise, is any single position that people open relative to portfolio size? How many positions do you have open? Given the extra volatility and real chance of a big downward swoon earlier this year how are the more senior people on this thread working with that?
I risk 3 % of the account value for a regular lot. This determines the account size as a function of the risk in absolute figures.
In my option selling portfolio I usually get out at double the entry price at latest.
There are high risk trades (eg. the current NGH C3), where I enter only half a lot. And there are trades (eg. selling ES puts at times I consider as safe), where I enter 2 lots.
I thought I'd share with you my experience with past week plus trading. Maybe it will give you some ideas for your own trading, and maybe how to prevent a catastrophic blowup like a few people probably had this past week.
I trade a diversified option selling portfolio for many years. Different than other concepts to sell options, I strive for diversification (I strive for holding 8 – 15 options), and, thus, spend a lot of time studying fundamentals of various commodities. …
I am working on a big dairy trade now, so I have on no short options. Getting short Feb milk either by selling futures or buying puts.
Seasonally ES has had many down Januaries but hasn't had a down Feb since 2009.
You raise an interesting side point. A while back on this thread there were several seasoned traders that effectively kept "permanent puts" against the S&P. Do you believe that strategy is no longer a viable option?
ron99, I would like to read this thread of yours to gain some insight into your methodology as I am developing an interest in trading options. The thread unfortunately is more than 500 pages long currently and stated way back in 2011. I am not being lazy or looking for a short-cut, but what I have found many times with very long old threads is that somethings at the the beginning had become modified or discarded as time has gone on, and you realised only too late after spending a huge amount of time reading the thread from the beginning. I would therefore be most grateful if you could give me an idea as to what page to start reading from (or what posts are the gems) for one to quickly grasp what your method is about. Many thanks
In post #2 are some summaries of the info in the thread.
Also in that post is "A summary of the first 204 pages of the thread in a Word doc by Iridium."
If you don't want to read the full thread I suggest you start reading from page 411. That is when I started using earlier exits. Later I get into using spreads to cover risk.
But I would say that most of the stuff early in the thread is still applicable and worth reading.
Looking at the Open Interest in March/April I don't see much of anything at the .6 and .15 deltas. To get anything decent you'd have to get down to 85 days out and that gets risky. Wonder what's going on. Thoughts?
