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#1
12-11-2004, 01:34 PM
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selling covered options vs uncoverd options
I see many post on selling covered options but what about selling uncovered options. I know that most option ex at zero. So the seller must make all the money. And a seller can sell options far out of the money with very little time.
What do you all think 
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#2
12-12-2004, 05:53 PM
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Re: selling covered options vs uncoverd options
look up LTCM in google. It WAS a huge hedge fund run by the people that invented the original options pricing model. They followed the strategy that you are considering. They blew up so bad the federal reserve bailed them out to prevent the entire options market from collapsing.
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#3
12-12-2004, 07:07 PM
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Re: selling covered options vs uncoverd options
Excuse me for pointing out the obvious, shorting puts has a lot different risk profile than shorting calls. In fact shorting puts has more or less the same risk profile as doing covered calls. Hypothetical situation, say a stock is trading at $50 a share calls at the $50 strike price are selling for $2 and puts at the $50 strike price are $2. The downside to shorting the puts is $48 a share and the upside is $2 a share. For covered calls the upside is $2 a a share and downside is $48 a share.
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#4
12-12-2004, 08:46 PM
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Re: selling covered options vs uncoverd options
If you look at the oex options you will see that put options have more money in them the call options. This is becouse people that have lots of stocks buy puts and sell calls. So I say sell puts.
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#5
12-12-2004, 09:25 PM
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Re: selling covered options vs uncoverd options
[ QUOTE ]
I see many post on selling covered options but what about selling uncovered options. I know that most option ex at zero. So the seller must make all the money. And a seller can sell options far out of the money with very little time. [/ QUOTE ] I see many people buying car insurance each year. I know that most people do not make a car insurance claim each year. So the people writing insurance must be making all the money. This logic -->> losing money.
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#6
12-12-2004, 09:41 PM
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Re: selling covered options vs uncoverd options
I see many people buying car insurance each year. I know that most people do not make a car insurance claim each year. So the people writing insurance must be making all the money.
This logic -->> losing money. they make lots of money
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#7
12-12-2004, 11:26 PM
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Post deleted by Mat Sklansky
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#8
12-13-2004, 12:17 AM
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Re: selling covered options vs uncoverd options
You are right. I know someone who wanted to see calls on google the stock was 105 at the time. He wanted to see the 115 for 5. The stock went to 200. But the S&P 500 is a great see. You can go far out of the money.
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#9
12-14-2004, 07:07 PM
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Re: selling covered options vs uncoverd options
[ QUOTE ]
I see many post on selling covered options but what about selling uncovered options. I know that most option ex at zero. So the seller must make all the money. And a seller can sell options far out of the money with very little time. What do you all think [/ QUOTE ] If you are interested in this way of playing the market, check this book out The New Options Market by Max Ansbacher [img]/images/graemlins/grin.gif[/img]
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