Is a strategy of selling put spreads worthwhile?

[mid range]

I know fenders or one of the rest of you guys can save me the pain of trying this if it's a bad idea. Leaving a dollar spread between the puts. Would this work better with a 30 day expiration than a 7 day expiration for example? Thinking of trying this with lower volatility ETF's.

[NilesMike]

(05-13-2022, 05:43 PM)mid range Wrote: I know fenders or one of the rest of you guys can save me the pain of trying this if it's a bad idea. Leaving a dollar spread between the puts. Would this work better with a 30 day expiration than a 7 day expiration for example? Thinking of trying this with lower volatility ETF's.

It CAN be profitable.
The wider your spread or even naked-gasp- the more successful you will be.
Lower volatility, lower priced underlying, shorter DTE and narrow spread will be quite limiting.

Think HIGH priced underlying, elevated volatility and 30-45 DTE. Why? To collect significantly higher premium and increasing your probability of success. I sell spreads on Indices only to avoid single name risk.

Timing, sell puts (spreads) on down moves, buy them back on up moves. As Fenders agrees now, don't be greedy. Just keep ringing the register.

[fenders53]

I don't do many spreads lately but agree with Mike. You can't stack the odds too far in your favor or the weak premiums will make it not worth doing. The good news is the VIX is high right now. You can get a little more without resorting to an extremely slow ticker.

And yes ring the register. I suspect I still hold out for more profit than Mike, but freeing up the capital in this market is good. You may only have to wait a day or two for a great opportunity. I actually have a couple tickers I have been able to recycle the exact same option trade on several times in a month. Close it and two days later there it is again asking me if I'd like more premium.

[mid range]

Mike and fenders, I really appreciate you guys sharing your expertise with me. I've been selling naked puts for a little less than a year and a half now with a 20 delta. The advice you gave me is spot on. Some things I will take to heart. Days like Thursday I was in a spot with puts to Indices that felt pretty tight. I took a bigger loss than i liked rather than gambling what Friday would bring. I rolled half and bought half back.

[fenders53]

I had an incredible MAR and APR but MAY has been challenging. Coming into Thursday I had about 8 plays in trouble or barely profitable. The strikes were conservative but this downdraft. I did not want to roll HD and LOW contracts into earnings. Friday solved about everything. Only easy this month has been oil, again.

I am probably on pace for only 60% of income for May. I really don't wish to add 1500 long shares right now so I am going to pick my spots carefully.