Re: that\'s just my point
You are correct sir! Also when you sell a naked option you should have a sense of what you will do if you are wrong and when you will do it.This is not always possible however and I have a good example.Last year the price of natural gas ran up from 4 units till over 9 units in a short time.
California was having brown outs and there was talk of storms in the Atlantic near the gas fields.The "analysts" were calling for MUCH
higher prices.I looked at the 20.00 unit call that expired in approx 5 weeks.They were trading for 1,800.00 each.I sold a few and waited to see
what the futures were going to do.A week later
the futures were trading at 10 units and yet those same options were offered at 150.00 each!
There was no way to hedge the options I sold effectively.They were lotto tickets.They had priced in the end of the world!I just thought they were a sale and it takes a lot for me to just sell options naked.
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