No, you are correct. Greg is saying selling puts 20% OTM... As a full time option trader, I can tell you that for all practical purposes you cannot make money selling puts 2 weeks out @ 20% OTM. To be completely fair to Greg...You can take advantage of large (very brief - often lasting only a few minutes) spikes in implied volatility to make a small but fairly certain profit. I will write a post on this showing the math shortly ( https://www.reddit.com/r/VolatilityTrading/ )
I'm looking forward to seeing your post. I couldn't get that link to work. It gives me this, whatever this means: "Our CDN was unable to reach our servers"
Hey Chris, thank you. Excellent article! That has been my viewpoint just from what I've worked out in my head without doing the detailed statistical analysis.
Thanks Jay! Yea, I put that together because I've seen so many people asking the same question over the last few months. I had one guy literally beg me for help as a short put trade went against him...since the strategy pays so little premium he decided to scale up in size and sold 10 contracts. He could afford the initial margin, but didn't understand that the margin requirements could/would increase. He got a margin call and the brokerage closed his positions at massive losses. It was sad.
If there is anyway for me to improve the article then please let me know.
Yw, Chris! That is unfortunate that someone didn't understand what could go wrong before getting hurt. This business teaches painful lessons, but once learned, they're remembered. I much like your article as it is.
I’m a 21 year old trader/investor and I have been options trading since I was 18 years old now, and I’m looking for more methods to make consistent profits. I was wondering if you ever run short term out of the money Put Credit Spreads on SPY. It sounds like a really good idea in my head, but I’m sure I’m looking over something. The play would go like this, Long SPY 344P / Short SPY 345P for a .01 credit. These options are over 20% out of the money and fairly liquid. If one was to do this a couple times a week with DTE 1-2 days out would you not make “guaranteed” returns?? (Market crash aside) Even through a correction SPY historically doesn’t correct more than 8% in a matter of a couple days. Also, from what I understand, SPY has 3 contracts expiring every week, if you ran this on each contract you’d earn 3% return weekly. I have a feeling I’m missing something here, I’m just not sure what…
Thanks for your time,
Michael
P.S. I watch your videos daily, and love your message! Keep up the great work and God bless!
Please let me know if Greg gets back to you. In the meantime, feel free to check out my reddit sub ( https://www.reddit.com/r/VolatilityTrading ). I have touched on similar subjects. I haven't done the math on yours, but if you ask it there I might do a post on it for my members.
Thanks Greg
It is impossible to select a strike in a PUT that is a 20% OTM, maybe you meant 20% ITM instead
this is what confuses me.
No, you are correct. Greg is saying selling puts 20% OTM... As a full time option trader, I can tell you that for all practical purposes you cannot make money selling puts 2 weeks out @ 20% OTM. To be completely fair to Greg...You can take advantage of large (very brief - often lasting only a few minutes) spikes in implied volatility to make a small but fairly certain profit. I will write a post on this showing the math shortly ( https://www.reddit.com/r/VolatilityTrading/ )
I'm looking forward to seeing your post. I couldn't get that link to work. It gives me this, whatever this means: "Our CDN was unable to reach our servers"
Hey Jay, Try this direct link to the post. https://www.reddit.com/r/VolatilityTrading/comments/pp2ihj/selling_20_otm_puts_two_weeks_outis_this_a_good/?utm_source=share&utm_medium=web2x&context=3 Hopefully that works for you.
Hey Chris, thank you. Excellent article! That has been my viewpoint just from what I've worked out in my head without doing the detailed statistical analysis.
Thanks Jay! Yea, I put that together because I've seen so many people asking the same question over the last few months. I had one guy literally beg me for help as a short put trade went against him...since the strategy pays so little premium he decided to scale up in size and sold 10 contracts. He could afford the initial margin, but didn't understand that the margin requirements could/would increase. He got a margin call and the brokerage closed his positions at massive losses. It was sad.
If there is anyway for me to improve the article then please let me know.
Thanks,
-Chris
Yw, Chris! That is unfortunate that someone didn't understand what could go wrong before getting hurt. This business teaches painful lessons, but once learned, they're remembered. I much like your article as it is.
-Jay
Hey Greg,
I’m a 21 year old trader/investor and I have been options trading since I was 18 years old now, and I’m looking for more methods to make consistent profits. I was wondering if you ever run short term out of the money Put Credit Spreads on SPY. It sounds like a really good idea in my head, but I’m sure I’m looking over something. The play would go like this, Long SPY 344P / Short SPY 345P for a .01 credit. These options are over 20% out of the money and fairly liquid. If one was to do this a couple times a week with DTE 1-2 days out would you not make “guaranteed” returns?? (Market crash aside) Even through a correction SPY historically doesn’t correct more than 8% in a matter of a couple days. Also, from what I understand, SPY has 3 contracts expiring every week, if you ran this on each contract you’d earn 3% return weekly. I have a feeling I’m missing something here, I’m just not sure what…
Thanks for your time,
Michael
P.S. I watch your videos daily, and love your message! Keep up the great work and God bless!
Please let me know if Greg gets back to you. In the meantime, feel free to check out my reddit sub ( https://www.reddit.com/r/VolatilityTrading ). I have touched on similar subjects. I haven't done the math on yours, but if you ask it there I might do a post on it for my members.
Thanks
-Chris