This article was originally published in The Option Strategist Newsletter Volume 11, No. 16 on August 22, 2002.
The sale of naked options is a strategy that is probably over-used, in general. However, at the current time, with options remaining expensive, but with the skews lessening, volatility traders’ thoughts should turn more towards selling options these days. This is one of the riskiest option strategies, since losses could be large – even theoretically unlimited. However, the probabilities of such losses occurring might be lessened and the overall profitability turned in favor of the option seller. In this article, we’ll look at the specifics behind writing naked options successfully.
This article was originally published in The Option Strategist Newsletter Volume 6, No. 2 on January 22, 1997.
In this article, we're going to take a look at the strategy of selling options. Just how profitable it is, and some of the considerations for naked selling or for using credit spreads. With option premiums inflated in many markets because of increased volatility, this seems like a timely topic. I'm not specifically including covered writing in this discussion, but since a covered call write is equivalent to selling a naked put, you can apply any of the commentary that pertains to naked put selling.
This article was originally published in The Option Strategist Newsletter Volume 2, No. 9 on May 13, 1993.
Covered call writing is not one of our normally recommended strategies, because we prefer ratio writing or the equivalent, since it is a more neutral strategy. However, covered writing is a strategy practiced by many option investors and therefore is a topic worthy of discussion. In this article, we will approach this subject from a slightly different, more sophisticated viewpoint: we will compare the covered call write with the sale of a naked put. In addition, we'll see how this comparison leads us to conclusions regarding neutral strategies such as ratio call writing or straddle and combination selling.
