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May 7 2021 02:13pm
I think most retail traders that trade options are buying options. I view these people as gamblers at a casino. Sure, some people are very good gamblers and seem to always win at the casino; but those are the minority. I view the sellers of options as the casino, and the house always wins.

I have been selling options for over 1 year, and the options I sell expire worthless for the buyer over 96% of the time. Even in the 4% of the time that the options didn't expire worthless, I do not sell to close my position for a loss. If it was a call, I let my shares get called away at a profit point because I never sell a call at a strike price that would give me a loss. If it was a put that I sold, I let the shares be put on me for a temporary loss, and within a few weeks I have those shares called away at a profit point. So when you factor in what I have done afterwards with the 4% that get executed, I have never taken a loss selling options.

I only have basic options trading privilege's at this time, and that is fine by me. I don't think I would even want to sell any calls uncovered. If I did, I would have some losses instead of a perfect record. By owning the shares and selling calls at profit points, I never lose on those. The worst that can happen is that I miss out on larger gains. Even then, it may be doing me a favor. For example: speaking of casinos, I have been buying and selling ERI (now CZR) since April 2020. I have had the shares called away from me a half dozen times, and every time I was able to buy them back within a few weeks for less than they were called away for. So by actively selling the options, having them called away at high points, and buying back at low points, I make way more money than someone who just buys low and holds long (which was all I used to do prior to Feb 2020 when I applied for a margin account and options trading).

I am also careful when selling puts. My puts must be cash secured, so I use my margin account as the collateral so I don't have to keep that much cash on hand. I wait until the end of a week, and target stocks that are down big, and that I would not mind owning at these prices. The longest term put I have ever sold was only 3 days away from expiration. A lot can happen over a few weeks, so I don't want to risk more than a few days of dipping. Look at what happened in March 2020. People had sold longer term puts began getting margin calls in March and had to sell their long term holdings in order to cover their losses. All the forced selling from margin calls caused the market to dip even further, causing even more losses and more margin calls. It all came to a head on the 3rd Friday of March 2020, when the monthly options came due. This day was the low point for the pandemic dip as a result of the margin call selling. I have learned from their misfortune and mistakes.
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May 7 2021 02:58pm
thetagang for life
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May 7 2021 04:21pm
Im 90% indexfunds 10% crypto (buy and hold)

This post was edited by DiamondHands on May 7 2021 04:22pm
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May 9 2021 08:00am
Covered calls ftw
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May 9 2021 08:29am
it seems to me that the the market is being completely manipulated by short sellers and hedge funds, at this point in time.
you're not winning, unless you're buying puts or shorting.

This post was edited by Manaburn on May 9 2021 08:30am
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May 10 2021 12:49pm
Quote (Manaburn @ May 9 2021 10:29am)
it seems to me that the the market is being completely manipulated by short sellers and hedge funds, at this point in time.
you're not winning, unless you're buying puts or shorting.


Buy and hold attractively priced companies with strong cash flow and a history of growing EPS / returning value to shareholders.

If the price is artificially low it means you are buying cash flow at a discount. In what world is that a bad thing?
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May 10 2021 01:11pm
Quote (Manaburn @ May 9 2021 08:29am)
it seems to me that the the market is being completely manipulated by short sellers and hedge funds, at this point in time.
you're not winning, unless you're buying puts or shorting.


I mean buy and hold people are winning. SPY is up 26% since pre-COVID highs. Investing currently doesn't get any easier really. Just index away.
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