ERD50
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
After a quick count it looks like I'm overdue! So far I've placed 37 of the recommended trades, 2-4 contracts each, none have gone ITM or required a buy-back.
and a bit later...
Reminds me of the roulette table gain. I was always surprised how many times black or red could be hit in a row.
I think you answered your own question.
Now, one for haha and FIRE'd@51:
haha - what do you think of FIRE'd@51's analysis of an ~2.8% annual return on option selling? It makes sense to me, the option seller is putting up cash and has to make some money to do that, so some return should be expected. But "excess" returns would get arbitraged away, I would think.
FIRE'd@51 - well, two questions now.
1) Do you think that the calculation is very sensitive to slight changes in those numbers - would you expect an average of 10 'snapshots' to be pretty close to the 2.8% number?
2) After typing my note to haha, it occurred to me that if you reverse-engineered the Black-Scholes model, would everything wash out, and that 2.8% (or thereabouts), just represents the expected return on a "risk free" investment? Maybe with a bit of "alpha" thrown in for good measure?
Not that selling options is risk-free of course, but the long term average return should start to approximate something closer to that (plus "alpha"?), I would think. No free lunch and all.
-ERD50