(04-20-2020, 08:09 AM)NilesMike Wrote:John,(04-20-2020, 07:44 AM)fenders53 Wrote:(04-19-2020, 08:04 PM)john Wrote: I appreciate the insight, thats why I posted the trades I had made. I was hoping for others to critique them for better or worse.
I think you're doing OK. You're learning and seem to be keeping the bets small. Over time you'll find a strategy that suits you. You really need to consider the worst likely scenario. I know the premiums are very tempting now. Some month the market WILL turn on you. Stick yourself with a bunk of junk at once and your capital is now tied up. That encourages selling at a loss just to escape owning companies you aren't actually comfortable with long-term. It's OK to trade F if you like, just don't have most of your positions in similar quality There is almost always something out there with half decent credit you can ride out the storm with if you get stuck. The premium may be a little less of course.
In the same vein, the (risk) premium is what it is. When premiums are overly large, so is the risk you are taking on. That is how options work. Higher risk= more premium=farther away strike prices. One needs to be further away because of the risk/premium involved.
When learning, I visualized it as a marionette with risk pulling the strings. Others like the no free lunch principle.
Stick to liquid, high quality names and you'll be fine. Sometimes eschewing large (risk) premiums is the way to go.
I absolutely agree with Mike. Over time you will learn this game is all about risk management. Success can lead to excessive risk taking. I'm pretty conservative, but I'm not immune. From my personal experience I might go 6 months in a row with very high success. 200 option trades and 90%+ of them go my way. Month seven the market turns on me and I suddenly own 1000+ shares at a less than optimal entry price, (puts). In hindsight I usually forced some trades that should not have happened.
Mike and I probably trade more options than anyone here. We also own a core portfolio of DGI stocks. A few small option errors are a small percentage of our overall port. Otter makes a lot of trades lately. Some of them are high risk. Don't ever copy a trade you see on the forum without understanding the thesis behind it, and the risk or lack thereof.
Maybe for now you take 4-5 positions per month and only one can be higher risk. Discipline is your friend, especially with a new port. You don't want to be forced to start over. You'll have to make your own rules. It's hard to truly appreciate your personal risk tolerance until you get your nose bloodied on too many positions when the market turns suddenly. You seem to mix put and call sales. That is a form of hedging your overall risk. I usually do the same.