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I don't think people on this thread think that selling OTM options is safe, but understand that you get money for taking on risk.
This thread is more about minimizing and dealing with said risk, not about ignoring it.
It is incorrect to say that put buying is going away. Here is a chart of the ES and EW3 option open interest combined. It is increasing. I suspect that the other options like EOM and EW1, EW2, EW4 are increasing in OI too.
When selling options, time is an important factor. A larger return in a smaller amount of time will give
a better return on investment. The following ratio might give some insight into the efficiency of a short
option position:
A larger return in a smaller timeframe means an ever increasing gamma risk, eventually turning the trade into a binary gamble. Longer timeframe and managing a winner early (not holding to expiration) will provide for a much smoother and less volatile returns graph.
502/5000
Hello everyone. As I said before I am trying to learn everything about this type of operation. Maybe it will seem absurd but I have a cash account with Tradestation and doing a little research I see that they ask me for $ 1000 for the verical 1ES MAY 2018 (W) 2600 PUT -1ES MAY 2018 (W) 2350 PUT. I wonder if these high margin are due to the current volatility increase (VIX 14.5) or due to the type of account. Do you have a margin account to get less margin?