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Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,049 since Dec 2013
Thanks Given: 4,386
Thanks Received: 10,206
With Equity Index's at all time highs, Volatility at multi-year lows, but still a lot of uncertainty out there (Brexit & Europe in General, ISIS/Middle East, Rate Increases, China etc) I personally think the risk/reward is very skewed the wrong way.
*They're actually up considerably more than that when you consider margin or capital used, but I view my ES/NQ trades more as investments than trades and as such evaluate the return as a function of "my desired notional capital exposure" rather than capital actually used.
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
Frequency: Many times daily
Duration: Never
Posts: 5,049 since Dec 2013
Thanks Given: 4,386
Thanks Received: 10,206
Your right and Vol has gone down even more. So if you sold 12 days ago, and bought back today then you have a great trade.
But with higher prices and lower vol the risk/reward has become even more skewed than it was then.
Well the reward has definitely gone down, whether the risk has gone up is I suppose open to debate.
Often there is a reason for higher volatility, and, thus, selling ES puts at B brings more reward, but at a higher risk of further movement to the wrong direction. According to my experience, it is very difficult to decide when to enter / exit. At least I am unable to make this decision. But for some years it seems to be profitable for me to sell ES puts permanently, keeping the following rules:
Keep lot sizes sufficiently small,
get out when you have to get out (I get out and re-enter with the original (!) lot size, when the position has doubled, and I exit without immediate re-entry, when the S&P index gets under the 200 dma),
exit the trade when there is a foreseeable risk (eg. Brexit vote).
