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Silver normally does go up Jan and Feb. But I suspect that if we get past the fiscal cliff that gold and silver might not have legs to run higher. But if you are far enough OTM selling silver puts might still be OK.
I'm thinking that ES, CL, RB and grains are the best places to sell puts early 2013 once we get past the fiscal cliff and raising of the US debt limit.
Here is what I have found with IB.
I have gone 50/50 (margin/cash) at times and even having two big drops in CL go against my positions, I never got into a situation where the margins went up higher than about 65/35. So I was never anywhere near a margin call (or rather IB closing out positions as it is a pension account). Also most of my CL positions were strangles, so there was a "winning side" to help counteract the "losing side" in margins and premum and premium was increased by selling both sides.
It does seem that because IB uses such high margins to start with, there is less effect when margins increase. Or in other words the reduced margin from OX is a form of incresed leverage. Also one is able to nominate certain positions to be closed out last so giving a little control if forced to liquidate a position.
I am opening an OX account so I can do some other things not available in my IB a/c, such as equity credit spreads (i am not allowed to sell stock or stock options at all in the pension account, except for covered calls and cash covered puts)
I have received the latest Cordier email on silver puts but I have noticed lately he no longer gives any specific levels to sell at just vague "below the current range". Still think we need to wait for the market to make up its mind which way to go first.
One reason that gold and silver haven't been increasing in price is that the hedge funds have quit buying it. They used to usually have ~200,000 long gold futures (pre Sep 2011). Now they are down to 130,000.
One reason for that is COMEX raised the margins sky high Sep 2011 and have very slowly reduced them but not to pre Sep 2011 levels.
I agree with Brit Re; IB. I do the same thing and try to run apx 50% margin. So far this has been fine for any move against me. It gives me enough cash to adjust if needed. Also With the low commissions I just get out if Ive made 75% or better and still have 30 days or more to go. In Canada IB is the only choice, so have to find ways to be creative!
Currently Short SI, CL, KC & HG
Thanks to all for posting!
Thanks for the great info everyone!
Ron, you replied that you tracked Cordier's recommendations over 5 years and that he was about 76% correct. I presume that you are talking about general market direction?
76% sounds pretty good to me for general market direction-do you consider that pretty good? Or are you doing even better on your own? I'm thinking of maybe following a newsletter like Cordier's and selling DOTM options like you based on where the newsletter thinks the market isn't going. Over time, I will learn the markets and eventually make my own calls. In the meantime, 76% and proper money management sounds like a winning system to me.
What do you think?
Also, you said in a previous post that you don't follow IV. Do you sell options just when they are historically expensive based on actual dollar value, or does that not
matter to you? Or do you sell when expensive and buy when cheap?