Comments on: Diversify Your Portfolio By Selling Options

By: Jerry Jones

Jerry Jones — Sun, 04 Dec 2011 23:02:14 +0000

I love selling weekly options and I have had very good success! I sell calls every week on FAS and FAZ. I sell way out of the money calls on these etf’s. FAS and FAZ have very high implied volatility, so I get very good premium each week selling calls on these 2 etf’s. Last week I made $172.05 selling 2 FAZ calls and I made $25.43 selling 1 FAS call for a total of $197.48.

By: Genius

Genius — Mon, 22 Aug 2011 15:27:48 +0000

Both of the strategies you mentioned are selling option stategies. We do neither. Covered calls take up a lot of capital, and naked options are very dangerous. We mainly use spreads for our selling. To trade my way, you need a Level 4 account.

By: Merdy

Merdy — Sun, 21 Aug 2011 01:28:02 +0000

Please explain what you mean by selling options. Are you reffering to owning the stock and selling options or are you selling naked ( not owning the stock), and what kind of account do I need to set up with my broker? Thanks.

By: Anil

Anil — Sat, 02 Oct 2010 04:08:47 +0000

Genius,
As Indian markets are volatile , I don`t trade in stocks . I trade only in Index Options which are European Style.There may be huge moves of up in stocks but not in index.
Thanks
Anil

By: Genius

Genius — Fri, 01 Oct 2010 18:17:43 +0000

Anil,

I have no experience in Indian markets. What would scare me about them is that they are much more volatile than American markets. There could be huge moves up or down. That said, I will look into it.
Thanks

By: Anil

Anil — Fri, 01 Oct 2010 13:00:04 +0000

Genius. I really agree with you that you are Genius. I am making reasonable amount of money in trading in Iron Condor in “NIFTY” Nifty Index Option of Indian Market. I want to improve my skill. Please do something for Indian Markets.
U can see the charrt in icharts
http://www.icharts.in/charts.html

I am using OptionsOracle for analysing my probablities

http://www.samoasky.com/

By: Genius

Genius — Wed, 22 Sep 2010 15:46:16 +0000

Don,

Weekly options are the hotest thing right now. And the option traders i know are still trying to figure out the best ways to profit from it. Yes, the returns can be better than on monthly options, sometimes better than double, but as with everything, there are drawbacks.

1. You have to be really good at adjustments when you deal with weeklys. a single days move can screw up your trade and unless you know when and how to adjust and do it quickly you will get killed.

2. You have to be able to watch the markets all day each day of the trade. A reversal could happen at any time.

3. Since the time value is low, these trades are more commission intensive. So some types of trades may not work.

4. These trades, even though they are the same concepts come with huge amounts of stress. Trade in size, and they will keep you up at night.

I myself have been testing the weeklys and have made money each time I have done so. Was the 2-5% worth the intense stress? Not sure yet. I have done condors, butterflies, and calendars and they all work. But the condors worked best for me. but even then, it is long term game so you could make money several weeks in a row, but one major move will wipe it out.

If you are new to options, stick with monthly trades until you can consistently make money on them. Weekly options are more towards gambling than trading.

By: Don Davis

Don Davis — Wed, 22 Sep 2010 13:51:28 +0000

I am brand new to options, but I understand that selling weekly options is best as some claim to making double those trading monthly option. Cannot wait for your response.

By: Genius

Genius — Fri, 02 Jul 2010 16:57:00 +0000

Every strategy has pros and cons. There is no one perfect startegy that works in all markets, all the time. But as traders, we continue to look for it. Credit spreads are good in trending markets, condors and butterflies are good in high volatility markets, calendars are good in low volatility markets, covered calls are good in stable markets in stable stocks.

If you have a stock like Wal-Mart, you can do any of these strategies on it. Any DOW component stock can be a good candidate for option selling.
Make sure though that there is enough liquidity in the options you are trading and that there is enough premium.

For example, I own a stock in my retirement account called PBT – this is an oil and gas trust that pays out nice dividends, but the option premium is so low that it is not worth selling calls against my stock. Wal-Mart, McDonalds, IBM, Coke and other large companies are much better candidates.

By: Gerald Wenzel

Gerald Wenzel — Fri, 02 Jul 2010 12:31:58 +0000

I like Mr. Genius, I think He paved the way for us, and I,m listening and learning from His wisdom. Im not trading yet ,I don,t understand all the lingo but I would like to be a millionaire soon and help those that can,t help themselves.Gerald Wenz. Mendota