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Based on the above the average premium received is $34 and the average loser is $310.
It appears that it is better to collect very small amounts for this method to be successful. I am guessing that the deltas when the contracts were sold are in the 2% areas.
I am wondering how you treat adjustments (say rolling further down when threaten) in the above results - were they counted as losses and the new rolled down contracts if they were profitable treated as profitable.
Anyway good work!
Can you help answer these questions from other members on NexusFi?
1. Yikes! That 8% rally was painful to watch and I'm very close to my exit point in my position.
2. Selling naked positions is not for the faint of heart. As previously stated by John.
3. The Ratio Spread saved me from a forcible exit.
4. 27% out of the money sounds like a lot but the cushion can go away very fast.
5. The fundamentals are still in my favor but I just need to be patient and watch my margins.
Well, lesson learned and my next trade will def. be structured a bit more differently. I'm also switching brokers to one that charges lower margins, DeCarley. My trade was structured to pay out a decent premium while still maintaining what I thought was a high level of cushion. I still believe I'm right and that $58 will be very difficult to reach but it's surviving the margin hold. Next time, win or lose, I'll go further out and run a few additional protection plays.
As you are learning, it's not whether your strike goes ITM it's whether you can ride out the loss of premium and the increase in margin. So you need to pick a strike that will allow you to do that and not pick a strike that you don't think futures will reach. They aren't the same.
Thanks for sharing this. Maybe I'm being thick but for some reason I just can't follow the information in there. What was the net from each side of the strangle? Can you walk me through it? Seems like I'm forgetting everything I've read about this...<sigh>.