Selling naked positions allows for a LOT more flexibility and higher win %. The real reason why you should not trade naked options is if you think it is safe to do so on MEMEstocks, now that will destroy you. Using the insurance analogy from the video, selling a naked position on a MEME stock is like selling insurance to a fresh-faced 16-year-old with a cherry red lambo. You will get some sweet premium(charge a lot), but that kid IS going to wreck the lambo and you will be covering the damages(while he smirks at you).
You are correct. It is possible to use naked options effectively, and meme stocks certainly come with a much higher level of volatility. But we live in volatile times, even standard stocks can make sudden volatile moves under the right conditions. It doesn't matter if you have a 99% win rate, if 1 bad trade has the potential to wipe out the gains of 99 successful ones. This video is only meant to caution excited trading novices, bot prohibit the strategy in all circumstances.
Good for you, but I'm sure that first year of crashing and burning was not fun. I interact with too many people don't survive that painful learning period, and cannot in good conscience recommend those strategies to anyone new to trading.
Ah the title got me ... to further a point you brought up, my 'teaching' videos get 10% of the views my 'here's what to buy NOWWWW' videos .. so, yeah. I want to teach but people aren't as interested, they want the final answer, so, I do random stock analysis and the videos are doing great. The videos teaching how to do stock analysis have 0 views.
I didn't say trading naked options is impossible, I said it was a bad idea. Trading short same day short options is pretty pointless since the whole point of a short options is to benefit from theta decay (Loss of an option's value over time). If you are entering and exiting a short option position on the same day, you are not benefitting from Theta decay and might as well just trade long options that have less potential risk. With naked options, one bad trade could wipe out gains from over 100 successful trades.
lol I saw the word naked and couldn't resist, haha just kidding very informative video I appreciate ur explanation its Definitely easy to understand, you won a new friend here!
Hey Hector, That by definition is a Cash Secured Put, not a Naked Put. The Cash secured Put is a viable strategy with the caveat that it was the same risk as a long stock position. If the stock goes to zero you loose 100% of your investment. But Since you have already set aside 100% of the capitol you are not at risk of a margin call like you are with a Naked Put. I use cash Secured puts like you described all the time and they can be a very beneficial strategy.
@@hectorjimenez-qx8tb Thanks! I have not designed a formal course, but I do have several video series on different topics like Options, Investing for Beginners, Stock Analysis etc. on this RUclips Channel. I am always working on more content to add.
Haha, There are ways to sell premium that don't expose yourself to the infinite risk of naked options. Cash secured puts and covered calls are one way. Using vertical spreads to define your risk is another.
Your video is even more dangerous that the others you mentioned. The key to naked is the mechanical edge, especially doing strangles, where you can easily adjust delta and roll the untested side. Yes its not for people just starting out on options. But not clearly stating pros and cons with data is just another useless half ass knowledge video on the internet. 0 value. 0 help.
Thanks for watching! The lesson is caution. Its not so easy to "adjust the delta" and roll the options when a stock price makes an unexpected move. Often rolling the untested side of the strangle will net you very little premium to cover your losses. But Good Luck!
@@investingforthecommonman4533 You even said it’s exactly what insurance companies do. They are very profitable, despite paying millions or billions in claims every year.
I think you missed the point of the video. If you are out here on RUclips, trying to learn how trade naked options, then you are probably not experienced enough to safely do so. You would be better off learning about other risk defined strategies. (Like I cover in the more serious videos on my channel) I never said that it was impossible make money selling options. Insurance is similar to selling PUT options, sure. But insurance companies never insure things with no cap on its value like a naked CALL option.
Thx for breaking that down in the only way i could ever rly understand
Selling naked positions allows for a LOT more flexibility and higher win %. The real reason why you should not trade naked options is if you think it is safe to do so on MEMEstocks, now that will destroy you. Using the insurance analogy from the video, selling a naked position on a MEME stock is like selling insurance to a fresh-faced 16-year-old with a cherry red lambo. You will get some sweet premium(charge a lot), but that kid IS going to wreck the lambo and you will be covering the damages(while he smirks at you).
You are correct. It is possible to use naked options effectively, and meme stocks certainly come with a much higher level of volatility. But we live in volatile times, even standard stocks can make sudden volatile moves under the right conditions. It doesn't matter if you have a 99% win rate, if 1 bad trade has the potential to wipe out the gains of 99 successful ones. This video is only meant to caution excited trading novices, bot prohibit the strategy in all circumstances.
Nice one man, just been catching up! Congrats on 600 subs aswell!
Thanks for this video! Changed my mind on naked options
Glad I could help! There are plenty of other awesome lucrative strategies out there that don't expose you infinite risk.
I do it; and have survived 1 year of crashing and burning. 1 year now of consistency. you simply have to learn to trade
Good for you, but I'm sure that first year of crashing and burning was not fun. I interact with too many people don't survive that painful learning period, and cannot in good conscience recommend those strategies to anyone new to trading.
I agree with you 100%
I actually lol'd at 2:47! Great video... I'll personally be staying away!
Haha, Smart man!
Ah the title got me ... to further a point you brought up, my 'teaching' videos get 10% of the views my 'here's what to buy NOWWWW' videos .. so, yeah. I want to teach but people aren't as interested, they want the final answer, so, I do random stock analysis and the videos are doing great. The videos teaching how to do stock analysis have 0 views.
Thank you
What is naked options are traded and closed on same day with proper Entry and Exit... and of course with Stop Loss
I didn't say trading naked options is impossible, I said it was a bad idea. Trading short same day short options is pretty pointless since the whole point of a short options is to benefit from theta decay (Loss of an option's value over time). If you are entering and exiting a short option position on the same day, you are not benefitting from Theta decay and might as well just trade long options that have less potential risk. With naked options, one bad trade could wipe out gains from over 100 successful trades.
lol I saw the word naked and couldn't resist, haha just kidding very informative video I appreciate ur explanation its Definitely easy to understand, you won a new friend here!
💜 Thank you for watching, I'll check out your channel when I have a few minutes!
It's a preference bro. Stop scaring the beginners away. Let them find out themselves and weigh their options. 😂😂
Question, why not to sell a put option in a Stock that you want to own an a cheaper price?
Hey Hector, That by definition is a Cash Secured Put, not a Naked Put. The Cash secured Put is a viable strategy with the caveat that it was the same risk as a long stock position. If the stock goes to zero you loose 100% of your investment. But Since you have already set aside 100% of the capitol you are not at risk of a margin call like you are with a Naked Put. I use cash Secured puts like you described all the time and they can be a very beneficial strategy.
@@investingforthecommonman4533 your videos are great! Do you have any course?
@@hectorjimenez-qx8tb Thanks! I have not designed a formal course, but I do have several video series on different topics like Options, Investing for Beginners, Stock Analysis etc. on this RUclips Channel. I am always working on more content to add.
Keeping it real. ;)
ROTH RIA? man, I don't have 6,000 to put in. what going to happen? :(
You can out in any amount 6,000 per year is just the maximum.
Lol that intro tho
After this Video . To be honest I don't know what to believe about Selling premium . I think I've got information overload 🥴 Thanks .
Haha, There are ways to sell premium that don't expose yourself to the infinite risk of naked options. Cash secured puts and covered calls are one way. Using vertical spreads to define your risk is another.
Pause at 0:29 for self reflection 😂🤣
The guy that madse this video needs help.
Your video is even more dangerous that the others you mentioned. The key to naked is the mechanical edge, especially doing strangles, where you can easily adjust delta and roll the untested side. Yes its not for people just starting out on options. But not clearly stating pros and cons with data is just another useless half ass knowledge video on the internet. 0 value. 0 help.
Thanks for watching! The lesson is caution. Its not so easy to "adjust the delta" and roll the options when a stock price makes an unexpected move. Often rolling the untested side of the strangle will net you very little premium to cover your losses. But Good Luck!
What a wuss ha. You will never lose unlimited money if you follow your trade and close out a loss.
🤣 If you think you know better than heed words of caution, all the more power to you! Good luck out there, you will need it!
@@investingforthecommonman4533 You even said it’s exactly what insurance companies do. They are very profitable, despite paying millions or billions in claims every year.
I think you missed the point of the video. If you are out here on RUclips, trying to learn how trade naked options, then you are probably not experienced enough to safely do so. You would be better off learning about other risk defined strategies. (Like I cover in the more serious videos on my channel) I never said that it was impossible make money selling options. Insurance is similar to selling PUT options, sure. But insurance companies never insure things with no cap on its value like a naked CALL option.