tinaturner 

Hello Ron, Myrrdin ... I am looking for a strategy that allows me to be in the market in any situation without having to worry too much about suffering great losses, even if this means giving up part of profitability. The basis of the strategy that I am thinking about is the -2 + 3PUT of which so much has been spoken in this thread. I have thought to add to the strategy a purchased PUT of expiration to a month approximately by 0.8-1 as anti crash insurance. Each month this insurance protection is renewed. Meanwhile, the original strategy is managed as usual. With this I limit the losses very much in case of big falls and this security allows me to operate month by month without worrying too much about the market. I think Ron has stopped the strategy for more than 6 months because of the current economic and political uncertainty. Adding the proposed insurance would have been able to continue operating the strategy normally, sacrificing, yes, a bit of profitability. The protective PUT purchased, according to my checks, limits the loss of a lot (-2PUT + 3PUT + 1PUT) to $ 2500 approx. We could reserve for guarantees for each lot that amount that would undoubtedly be less than 7xIM. I would appreciate comments on this

There is only one way to sleep well when holding short options: Sound Money Management. Keep your positions small so that your account is save even after a severe drop in the indices over the weekend.

In case you place a wide stop according to the considerations of Ron it is essential to backtest intensively. You absolutely have to make sure that you are not stopped out, as losses in this case will be severe. Even in case your account survives you will have to make many successful trades to compensate for the loss.

I prefer placing relatively close (mental) stops at important support levels. The disadvantage is that I am stopped out once in a while. Each time being stopped out means a small loss.

Both Ron and myself agree that there are times when it is better not to sell ES puts. This is part of our money management.

The choice of options decides on your profits. Money management decides on the survival of your account.

Best regards, Myrrdin

Hi guys, I have posted my introduction message in the dedicated topic and just to let you know that you can count on a new member very interested in this topic and indeed very active in it since November 2018. I will read all the pages...so talk to you later.

Sagal 

Hi guys, I have posted my introduction message in the dedicated topic and just to let you know that you can count on a new member very interested in this topic and indeed very active in it since November 2018. I will read all the pages...so talk to you later.

Thanks for the welcome words ron99

I have to say after reading approx. 200 pages of this file (beginning – middle and last ones) that my way of selling options (only 5 months of experience there) is old school:
- Only physical commodities (maybe Forex, but probably not Indexes): Brent, Coffee C, Robusta, Cocoa, Cotton, Soybeans, Gold, Silver, HG Copper, Lean Hogs but as well in the coming months if there are opportunities Orange Juice, Live cattle, Wheat, Corn, Platinum, Sugar 11
- At least 75% of vertical spread and maximum 25% of naked or quote ratio more as a corrective/continuation strategy
- Targeting 3 to 4 months in advance, minimum 350$ per contract around 20% for the ratio max profit/max loss
- Objective is to go up to the expiry date (or a couple of days before) for the spreads
- 4 to 6 contracts expiring each month
- Selling options is occupying one minority part of my capital (objective around 10-15%)

Therefore I feel more close to the way of trading of myrddin and I will also follow his file...

PS I was probably lucky but I managed to make some profits on NG in December, January and February as well as on Brent in January, March and probably April at the same time than Cordier'company was in disarray after dealing with the same commodities more or less at the same time. A reminder that things go very fast in this field... You have my respect for having succeeded for so long in this business...

Sagal 

Thanks for the welcome words ron99 I have to say after reading approx. 200 pages of this file (beginning – middle and last ones) that my way of selling options (only 5 months of experience there) is old school: - Only physical commodities (maybe Forex, but probably not Indexes): Brent, Coffee C, Robusta, Cocoa, Cotton, Soybeans, Gold, Silver, HG Copper, Lean Hogs but as well in the coming months if there are opportunities Orange Juice, Live cattle, Wheat, Corn, Platinum, Sugar 11 - At least 75% of vertical spread and maximum 25% of naked or quote ratio more as a corrective/continuation strategy - Targeting 3 to 4 months in advance, minimum 350$ per contract around 20% for the ratio max profit/max loss - Objective is to go up to the expiry date (or a couple of days before) for the spreads - 4 to 6 contracts expiring each month - Selling options is occupying one minority part of my capital (objective around 10-15%) Therefore I feel more close to the way of trading of myrddin and I will also follow his file... PS I was probably lucky but I managed to make some profits on NG in December, January and February as well as on Brent in January, March and probably April at the same time than Cordier'company was in disarray after dealing with the same commodities more or less at the same time. A reminder that things go very fast in this field... You have my respect for having succeeded for so long in this business...

Sagal, I like a lot of what you are doing.

A couple of suggestions. There is almost no volume in copper options. I would never trade them.

What is your reasoning for holding spreads till almost expiration? The first 50% drop in net premium happens far faster than the last 50%. Waiting for last 50% could lead to a winning position turning into a losing position. There are some posts in thread showing my research on timing of exit.
Ron

Sagal 

Thanks for the welcome words ron99 I have to say after reading approx. 200 pages of this file (beginning – middle and last ones) that my way of selling options (only 5 months of experience there) is old school: - Only physical commodities (maybe Forex, but probably not Indexes): Brent, Coffee C, Robusta, Cocoa, Cotton, Soybeans, Gold, Silver, HG Copper, Lean Hogs but as well in the coming months if there are opportunities Orange Juice, Live cattle, Wheat, Corn, Platinum, Sugar 11 - At least 75% of vertical spread and maximum 25% of naked or quote ratio more as a corrective/continuation strategy - Targeting 3 to 4 months in advance, minimum 350$ per contract around 20% for the ratio max profit/max loss - Objective is to go up to the expiry date (or a couple of days before) for the spreads - 4 to 6 contracts expiring each month - Selling options is occupying one minority part of my capital (objective around 10-15%) Therefore I feel more close to the way of trading of myrddin and I will also follow his file... PS I was probably lucky but I managed to make some profits on NG in December, January and February as well as on Brent in January, March and probably April at the same time than Cordier'company was in disarray after dealing with the same commodities more or less at the same time. A reminder that things go very fast in this field... You have my respect for having succeeded for so long in this business...

Good to see someone from good old Europe trading options.

A lot of things you are doing I am doing for many years.

I avoid selling options in commodities eg. orange juice, copper, platinum because of the low volume. ( I do not think there are options for platinum.) I avoid selling NG calls in the Z, F, G, and H contracts, it is simply to risky. I avoid selling options for growing commodities in weather markets, it is to risky as well. I avoid selling options for currencies, as it does not work for me. I avoid clump risk. I avoid selling ES puts in "dangerous times" (eg. elections).

Selling options is similar to an insurance business. You should sell insurances for low risk issues. It is tempting to sell options when volatility is extremely high. But usually there is a good reason for high volatilities.

Please feel free to ask your questions.

Best regards from Austria, Myrrdin

I was to do something like post my thread here to increase knowledgeable viewers.

Please see my question here:

Selling Cash Covered Puts I know almost nothing beyond the basics of Options trading. If there is a security that I would like to own, I understand that selling cash covered puts might be the best way to go about acquiring it because I can collect the premium and the risk is not …

and answer if you can.

Thank you so much.

YGRYGR 

I was to do something like post my thread here to increase knowledgeable viewers. Please see my question here: Selling Cash Covered Puts I know almost nothing beyond the basics of Options trading. If there is a security that I would like to own, I understand that selling cash covered puts might be the best way to go about acquiring it because I can collect the premium and the risk is not … and answer if you can. Thank you so much.

1. Traders in this thread sell options on futures, whereas your question is directed toward options on securities.

2. No, there is no such formula. Trading is more than applying standard formulas and earning tons of money.

Best regards, Myrrdin

Why wouldn't it be a similar thing? If I wouldn't mind owning a future, how would I chose to sell the put that would increase my premium and how do I know how to work out what premium I would collect based on the strike price and date?

YGRYGR 

Why wouldn't it be a similar thing? If I wouldn't mind owning a future, how would I chose to sell the put that would increase my premium and how do I know how to work out what premium I collect based on the strike price and date?

I am afraid there is no simple answer.

If you read through my thread "Diversified Option Selling Portfolio" you will find out that I use different deltas, depending on fundamentals. I sell OTM, ATM, and sometimes even ITM.

Ron has developped an excellent system for ES puts, selling FOTM options.

And there are many others.

Best regards, Myrrdin