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Old 06-26-2013, 05:20 PM   #41
Dryer sheet wannabe
 
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Originally Posted by Texas Proud View Post
Take a look back at the post... nobody said you could not make money over the past few years on a system.... we just question that you can do it consistently over the long term.... IIRC, (not looking it up), you stated you had a system that 'reliably' returned 10% to 15% per year... now that you posted your system, you claim is BS... (which, BTW is what people have said)....

Not that you have not had gains the last few years, but it is not a reliable system...

But, good luck to you anyhow....
Err...okay. Thanks.
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Old 06-26-2013, 07:12 PM   #42
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Snoopy,I don't know how naked options on ES would be a system, how do you risk manage but keep upside? Is it a side bet with a portion of your funds or does this represent the entire portfolio management system. Congrats on success so far and good luck in future
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Old 06-26-2013, 08:13 PM   #43
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Snoopy,I don't know how naked options on ES would be a system, how do you risk manage but keep upside? Is it a side bet with a portion of your funds or does this represent the entire portfolio management system. Congrats on success so far and good luck in future
Hi Rothman,

When selling naked I leave a lot of margin as 'dry powder', this enables me to adjust and fix positions to changing market conditions. As long as I am not over-leveraged (using excessive margin) I can control my risk. Of course, I will have to give up some of my profit if too many adjustments are made.

In the beginning I was averse to selling naked and used to sell vertical spreads as a way of managing risk. This is the only thing I do, i've tried other forms of trading/investing but no cigar. Hope this helps.
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Old 06-26-2013, 08:22 PM   #44
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Selling Naked Options on Futures?

Doesn't that have the potential for unlimited/unbounded losses , when the day finally comes around?

Sure you broker will try to liquidate all your positions before you run negative, but legally you are still on the hook if that doesn't happen.

Watch out for the future Flash Crashes.

Hopefully you only have a small fraction of your Net Worth in this particular brokerage account.

-gauss
(former dabbler in Futures & Options)

p.s. have you ever read about Martingale Casino betting systems?
I learned about those the hard way!
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Old 06-26-2013, 08:51 PM   #45
Dryer sheet wannabe
 
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Originally Posted by gauss View Post
Selling Naked Options on Futures?

Doesn't that have the potential for unlimited/unbounded losses , when the day finally comes around?

Sure you broker will try to liquidate all your positions before you run negative, but legally you are still on the hook if that doesn't happen.

Watch out for the future Flash Crashes.

Hopefully you only have a small fraction of your Net Worth in this particular brokerage account.

-gauss
(former dabbler in Futures & Options)

p.s. have you ever read about Martingale Casino betting systems?
I learned about those the hard way!
Yes Gauss you are right, the flash crash is always a possibility. In this regard all systems are at risk of massive losses, selling naked doesn't inherently have greater risk (assuming you are not over-leveraged).

When selling naked I give up high returns for consistency, therefore I only use a fraction of my margin to get to my goal of around 10-15% annual return. This has allowed me to survive the downturn in 2008 and the flash crash of 2010. I did take a loss during the flash crash on my ES position, but the other positions were fine and once the market 'normalized' I was back in an ES position and ended the year positive. I suppose I gave back a chunk of the profit for the year, but my point is that if you are looking for a steady, dependable 'lower' rate of return than traders usually expect, then selling naked isn't as bad as it is usually portrayed.

Yes, I have heard of the martingale betting system, but I don't use it. The market can only be heading in one direction at a point in time, it is my job to get out of the way with the least damage possible. So, doubling down is not something I do.

Sincerely.
Snoopy80.
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Old 06-26-2013, 09:45 PM   #46
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Ok then in this strategy are you sitting watching the market throughout the trading day in case you need to adjust or can you set trade rules and live the passive investor life?
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Old 06-27-2013, 11:36 AM   #47
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Ok then in this strategy are you sitting watching the market throughout the trading day in case you need to adjust or can you set trade rules and live the passive investor life?
Yes Rothman, it's passive for the most part. I check the positions a couple of times a day. I execute the trades manually, gives me more of a feeling of control...I guess I am not comfortable with automated trading rules.
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