Kbg wrote: ↑
Thu Apr 14, 2022 2:56 pm
Cortopassi wrote: ↑
Fri Apr 08, 2022 7:22 pm
There definitely is a mental attitude shift going on with me and this put selling. I really am liking not holding anything long term, and the puts I am holding can be rolled if they go against me, for credit, not like buy and hold where you are pretty much limited to watching the ups and downs and reallocating at times.
If you are continuously selling puts you are long even if you don't think you are. If you keep it up for several years consistently you will find that out. If you do it well with very low costs you will find you are very close to market returns with slightly less risk. The odds are highly stacked against you that you will even be able to do this due to things that will prevent you from being ultra-efficient in execution (i.e. life). The only exception to this is if you are timing the market and if you time well you will be rewarded. If you time poorly you will do worse than the market.
I sell hundreds of options every year and my goal is to add 2-3% to whatever the market returns...and it's really hard to do.
Having noted this...I very much like this thread and hope you will keep posting on it. (And seriously...good luck, may you prosper)
Thanks. I know I am technically long, but only 30 delta generally. It will be interesting to see if I can keep this going.
I'm not sure I yet agree with needing to be ultra efficient. The only timing I try to do is sell puts on a down day, but even that ends up being a crapshoot, it could be the start of many down days, or could be the sign it is reversing. So I am not really trying to time.
I see tons of people getting burned by selling puts on individual stocks, then an announcement or earnings come out and the stock moves down so fast there's no chance to adjust. I will not do this on individual stocks only ETFs.
While I see that can happen (with TLT for example), specifically with that one since I still own shares and am writing calls, after today, I have captured at least 55% of the drop from 143 to 122 with call writing. And this was totally not being efficient, i.e. I was mentally hoping TLT would at some point reverse for at least a little bit and did not write calls aggressively.
What I am seeing so far, is with 30-45DTE 30 delta puts, right now for example would be a strike of $179 on GLD where it is $184 currently. I start out with a 3.7% ($5 plus ~$1.80 premium) downside buffer. If it gaps down 3.7% to $177.00, I should absolutely be able to buy back the 30-45DTE put for a loss, and sell the next month out for an effective credit. If GLD continues down, there will be a point where I run out of option months to do this with, but I will have captured a lot of premium along the way, while I otherwise would have shrugged and watched it drop. And all I need is some snapback rally to exit with a scratch or small profit.
No intention of beating a huge year on the S&P, none at all. But if I can pull 10-15% consistently as a withdrawal rate, I am set for retirement.