quick options question re: selling puts

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Jan 29, 2017
8
0
11
#1
hi,

newbie question if you don't mind.

Just started playing around with
options. Using trade ideas to find "low of the day" alerts and "entering
to sell" put options on high sentiment bullish stocks. (entering at their
low points).

i sold about 10 puts in 10 contract lots and collected about 7k in premium.

within 24 hours all of the stocks were showing above my breakeven point
using TC2000 platform. In TC2000 it shows a positve number on the strike
price line.

a couple were above strike price showing green and every stock moved up
above intial entry.

so to test i started closing the trades by buying back.

and my 7k quickly evaporated and put me back to where i started.

now if every trade was showing that i was above my break even point
why am i losing on every trade? (i understand about bid-ask spread but
the spreads were not that wide in all cases, i was closing the trades at market)

thanks for your response.
 
Oct 6, 2014
37
6
18
#3
hi,

newbie question if you don't mind.

Just started playing around with
options. Using trade ideas to find "low of the day" alerts and "entering
to sell" put options on high sentiment bullish stocks. (entering at their
low points).

i sold about 10 puts in 10 contract lots and collected about 7k in premium.

within 24 hours all of the stocks were showing above my breakeven point
using TC2000 platform. In TC2000 it shows a positve number on the strike
price line.

a couple were above strike price showing green and every stock moved up
above intial entry.

so to test i started closing the trades by buying back.

and my 7k quickly evaporated and put me back to where i started.

now if every trade was showing that i was above my break even point
why am i losing on every trade? (i understand about bid-ask spread but
the spreads were not that wide in all cases, i was closing the trades at market)

thanks for your response.


what expiry were the puts and where was volatility when you entered and exited your positions?

Also, how do you hedge these short puts?
 
Nov 20, 2017
6
0
11
#4
Check the IV First.

Hi,

Before Selling Puts check the IV first.

You want the IV to be HIGH prior to selling and you want it to lower, prior to expiration.

I'd say you initially sold the puts with a low IV and as time went bye,the IV increased.

You also may want to consider placing a contingent stop loss above your short strike price, to avoid assignment.

Hope this helps.

Giddy Up.

hi,

newbie question if you don't mind.

Just started playing around with
options. Using trade ideas to find "low of the day" alerts and "entering
to sell" put options on high sentiment bullish stocks. (entering at their
low points).

i sold about 10 puts in 10 contract lots and collected about 7k in premium.

within 24 hours all of the stocks were showing above my breakeven point
using TC2000 platform. In TC2000 it shows a positve number on the strike
price line.

a couple were above strike price showing green and every stock moved up
above intial entry.

so to test i started closing the trades by buying back.

and my 7k quickly evaporated and put me back to where i started.

now if every trade was showing that i was above my break even point
why am i losing on every trade? (i understand about bid-ask spread but
the spreads were not that wide in all cases, i was closing the trades at market)

thanks for your response.