I was certainly aware of TOS of calls being higher than TOS for puts, though I never verbalized it, and you certainly did that. Kudos. Having said that, why is the market not skewed to yield higher premiums for calls than for puts (say by using the BSM model). Also, I am not always looking to collect premium on either types of options. I sell puts very close to the stock price, since I am interested in buying the stock at a lower price. Similarly, I sell calls to just get rid of a stock (motivation being to reduce the margin, or take a short-term loss). Thanks for your video!
I discovered POT in TOS, noticed it's usually 2x the delta. Generally I hate selling calls, just hate it, I'll sell puts all day though. Thx for confirming my bias.
@@Painfulwhale360 The way I see it is the short put is backed up by the $0 line so there's my max loss, I'm comfortable taking assignment on puts. But with calls, even if I'm covered and stock rockets through my strike, it's like I took all the risk of owning the stock and sold off most of my profits for peanuts. I'm not saying it's a bad strategy, it makes sense for someone with more capital who wants to make smaller safer returns.
@@Reutzel507 and when you dive into the concept you have to assess the risk / reward. When you look at 10 delta options there is virtual no premium. So what does the study say about 20 delta. That is the delta that Tom speaks to a lot in his very useful videos.
I’d rather be long 10d and under options. There’s no point being short. All risk with little reward. I’d definitely be covering shorts when they get under 10d.
What the reality is when the market goes down it goes down so significant that it wipes out everything in its way on the call side it goes up a lot but in smaller increments in comparison to the movements of a downward market example Black swan events. Any trade that you're in during a Black swan event that's on the put side with bullish intentions is 100% going to lose money
Well, the study has been done on high Beta equities ( QQQ, AMZN, etc) in a highly uptrending period, heavily skewing the results. Please conduct again with the 11 sectors: XLE, XLF, XLK, etc. Much more representative.
I find a stock I like with good liquidity in options. Buy a Leap ATM (perhaps 400-800 days out) I then sell 30 delta Calls perhaps 8-25 days out. If price reaches my short strike I will roll it forward to the next 30 delta that will net me a credit. Leaps are good for stocks you may consider to expensive to own 100 shares on. If its a lower priced stock under $30 for example I may buy the stock out right and sell 30 delta calls on it
On the other hand, the down moves are more often sudden or unexpected, so there is less time to react and adjust the position. The up moves are more often steady.
I’ve stopped selling call spreads. Too many touches. I found in my back testing that selling the Put spreads on Monday at market open has a much higher win rate than selling spreads on a Friday at close. Can you do some back testing and make a video about that?
@mineralmax I put a video about the statistics behind covered calls and puts based on 351 trades I placed last year. That would help you with the edge when trading.
Its possible to win in the market but be aware the market maker sees. your position and is there to make money and has advanced AI and has enough money to violate any pattern your relying on. They can also skew volatility legally beyond the standard option models. I was once over 2 points in the money on a put I bought and it was still at break even. If you find your losing more than 50% of the time. Now you know why.
Same strategy as selling PUTs but with more capital tied in the stock. Only dividends can make it better but then you are running the risk of being assigned away on a stock you probably want to own.
@@bobf1174 You are exposed to the same risk by selling a PUT and selling a CALL against a stock position. There's no difference in how much downside risk you're taking.
I was certainly aware of TOS of calls being higher than TOS for puts, though I never verbalized it, and you certainly did that. Kudos. Having said that, why is the market not skewed to yield higher premiums for calls than for puts (say by using the BSM model). Also, I am not always looking to collect premium on either types of options. I sell puts very close to the stock price, since I am interested in buying the stock at a lower price. Similarly, I sell calls to just get rid of a stock (motivation being to reduce the margin, or take a short-term loss). Thanks for your video!
I discovered POT in TOS, noticed it's usually 2x the delta. Generally I hate selling calls, just hate it, I'll sell puts all day though. Thx for confirming my bias.
Why do you you hate selling calls vs puts?
@@Painfulwhale360 The way I see it is the short put is backed up by the $0 line so there's my max loss, I'm comfortable taking assignment on puts. But with calls, even if I'm covered and stock rockets through my strike, it's like I took all the risk of owning the stock and sold off most of my profits for peanuts. I'm not saying it's a bad strategy, it makes sense for someone with more capital who wants to make smaller safer returns.
@@Painfulwhale360 Currently (or in general) mkt is skewed to go up.
Where can I find POT on TOS?
@@johncalvo1743 On Trade tab, where you see the Greeks, customize the column to add POT
"you pedestrian!" LOL
Thank you very much. Testing the probability of touch for other deltas and expiration will be interesting.
Wish it used 20 delta option, not much premium in 10 delta.
Right?? Every other study is classic Tasty mechanics 20 Delta 😢
It’s about concept
@@Reutzel507 and when you dive into the concept you have to assess the risk / reward. When you look at 10 delta options there is virtual no premium. So what does the study say about 20 delta. That is the delta that Tom speaks to a lot in his very useful videos.
Look through the videos, you will learn more.
I’d rather be long 10d and under options. There’s no point being short. All risk with little reward. I’d definitely be covering shorts when they get under 10d.
Now that it's posted the market will change directions and make the probability of touch on the put side much higher.
This was very helpful you guys got right to the point and gave usable information. Thanks
What the reality is when the market goes down it goes down so significant that it wipes out everything in its way on the call side it goes up a lot but in smaller increments in comparison to the movements of a downward market example Black swan events. Any trade that you're in during a Black swan event that's on the put side with bullish intentions is 100% going to lose money
on the put side with bullish intentions Please explain
Great comment!
Well, the study has been done on high Beta equities ( QQQ, AMZN, etc) in a highly uptrending period, heavily skewing the results. Please conduct again with the 11 sectors: XLE, XLF, XLK, etc. Much more representative.
Or on low beta stocks comprising the DOW, works great imo.
He literally said at the begining that this was going to be Skewed. You run the data, then
Selling calls or puts gets more premium on high beta stocks
I sell 30 delta calls 1-2 weeks out against Leap Calls. Roll if price reaches ATM. I have no problems
What is the strike price of the Leaps when buying?
Usually around ATM
I buy around ATM
can you explain your exact method?
I find a stock I like with good liquidity in options. Buy a Leap ATM (perhaps 400-800 days out) I then sell 30 delta Calls perhaps 8-25 days out. If price reaches my short strike I will roll it forward to the next 30 delta that will net me a credit. Leaps are good for stocks you may consider to expensive to own 100 shares on. If its a lower priced stock under $30 for example I may buy the stock out right and sell 30 delta calls on it
Well... This is on 45 dte's. 7 dte's are great ❗on the call side
Absolutely with you on it!
Telsa naked calls. - flash back
On the other hand, the down moves are more often sudden or unexpected, so there is less time to react and adjust the position. The up moves are more often steady.
I’ve stopped selling call spreads. Too many touches.
I found in my back testing that selling the Put spreads on Monday at market open has a much higher win rate than selling spreads on a Friday at close. Can you do some back testing and make a video about that?
Selling puts mean selling cash secured puts?
Not necessarily. Some people with large enough accounts are authorized for naked puts. The whole value isn’t cash-secured. Margin is used.
@@bm9322 And if you want to look at options on futures things get much simpler.
Yes
@mineralmax I put a video about the statistics behind covered calls and puts based on 351 trades I placed last year. That would help you with the edge when trading.
Good video. I was looking at POT for years. This is a good confirmation.
This reinforces my plot: hold cash, sell puts and spreads, receive premium and continue to earn interest during the process.
if you sell an OOTM call, is it's POT the same as a put at that strike (half the delta), or is its POT the same as delta?
Please have a video which discusses about 16 and 20 delta…
maybe can be useful this kind of study of POT for futures (GS, SI, ES, NG etc)
What about probability of out of the money on the put side? Wouldn’t those percentage numbers be a little off also, like POT.
pls provide the probability of touch 20 delta option on re-entry which is higher
educational! good work guys
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A touchy issue indeed
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Its possible to win in the market but be aware the market maker sees. your position and is there to make money and has advanced AI and has enough money to violate any pattern your relying on. They can also skew volatility legally beyond the standard option models. I was once over 2 points in the money on a put I bought and it was still at break even. If you find your losing more than 50% of the time. Now you know why.
Selling a call when you own the underlying stock or commodity. Conservative strategy. Enhance your income
Same strategy as selling PUTs but with more capital tied in the stock. Only dividends can make it better but then you are running the risk of being assigned away on a stock you probably want to own.
@ selling a put is extremely risky when the market goes down
@@bobf1174 You are exposed to the same risk by selling a PUT and selling a CALL against a stock position. There's no difference in how much downside risk you're taking.
Thats very interesting! I feel so much safer in a call for whatever reason.
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