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I guess the one question I have (that is not easily found anywhere on the web), is one of the points you make in your post: how to find a broker with favorable margin requirements when selling options!
I've been selling options for years but have always needed to maintain pretty high margin excess to avoid margin calls. I'd love to see a list of which brokers are the best in providing traders more margin room!
To make things worse, I'm Canadian so we have far fewer options than Americans. I've been with Questrade for years, but have recently moved to Interactive Brokers. Unfortunately, we are NOT allowed to use Portfolio Margin and are restricted to Reg-T accounts (I'm assuming Portfolio Margin is better for selling options?)
Any info around this area would be highly appreciated. For the time being, I'm going to keep using IB and keeping a careful eye on my Liquidity Excess.
I `ve been writing options on equity and stock index futures (european exp.style) for quite some time - and survived despite of some black swans crossing my way. Ron99 mentioned that he doesn`t use indices anymore as underlyings, but other futures like CL for better ROI.
My question, which underlyings (neither equity nor indices) would be rewarding and comfortable for an experienced beginner?
I still use indices. Their ROI is lower now. So I would not use as many.
It just depends if I can find other things with better ROIs and sufficient volumes or not how much of my portfolio includes indices. But indices always offer the best volume.
CL would be the first choice. Others have some risk but what doesn't? NG, KC, SB, Grains. Metals (GC, SI) have been low ROI but they just lowered margin.
For those of you who sold the Aug Milk (DA) 18.75 puts, they are trading at 0.01 now. I traded out of mine and made 8.3% monthly ROI on them.
If your costs aren't too high you may want to consider buying them back at 0.01 instead of waiting 52 more days for expiration. But if you want to ride to expiration that is OK because Aug futures will expire far higher than 18.75.
I like FOTM credit spreads. I signed up at this website a while back and have done well so far. www.myweeklyoptiontrades.com
I'm looking at a few other low risk spread strategies as well to diversify, maybe looking at monthlies as well.
I like the indexes as opposed to stocks. Just doing some testing myself, stocks have more price spikes whereas the indexes seem to have less chance of spiking into the money at expiration. Margin requirements are relatively high, but at least you know your risk upfront. Stops are not practical on options so you really have to rely on good trade management to get yourself out of loser.
Overall though, I like the credit spreads. Have to look at some different indexes too.
