Selling a naked option in /ES with an account of only $20,000 is EXTREMELY dangerous. If /ES makes a crazy move against you, your buying power requirement is going to skyrocket. And in the strategy, your selling TWO naked options. This puts people with small accounts at risk of blowing up their entire accounts.
Agreed. Not to mention I saw at least 7 positions on, each with 2 naked puts. Oct 19th, 1987, there was a +20% drop in one day. If that occurred tomorrow, it would be just under a 1,400 point drop. If that occurred midway through expiration, it would be apprx. an unrealized loss $125,000 on each of the 7 positions or an unrealized $875,000 loss. This strategy will probably consistently work for a long time until it don't. All it takes is one big crash to devastate someone's life.
You should never trade with more than 50% of your buying power to prevent against IV expansion issue. Therefore, if you have a $20k account, then you can trade 1 112 trade (or roughly $7000). If you want to put on more than one trade, then you’ll need to trade MES If you nervous about blowing up your account, then trade with less size and have stop losses and hedges (which I always do and recommend)
You should never trade with more than 50% of your buying power to prevent against IV expansion issue. Therefore, if you have a $20k account, then you can trade 1 112 trade (or roughly $7000). If you want to put on more than one trade, then you’ll need to trade MES
Thanks for sharing
Of course, thanks for watching!
Selling a naked option in /ES with an account of only $20,000 is EXTREMELY dangerous. If /ES makes a crazy move against you, your buying power requirement is going to skyrocket. And in the strategy, your selling TWO naked options. This puts people with small accounts at risk of blowing up their entire accounts.
Agreed. Not to mention I saw at least 7 positions on, each with 2 naked puts. Oct 19th, 1987, there was a +20% drop in one day. If that occurred tomorrow, it would be just under a 1,400 point drop. If that occurred midway through expiration, it would be apprx. an unrealized loss $125,000 on each of the 7 positions or an unrealized $875,000 loss. This strategy will probably consistently work for a long time until it don't. All it takes is one big crash to devastate someone's life.
You should never trade with more than 50% of your buying power to prevent against IV expansion issue. Therefore, if you have a $20k account, then you can trade 1 112 trade (or roughly $7000). If you want to put on more than one trade, then you’ll need to trade MES
If you nervous about blowing up your account, then trade with less size and have stop losses and hedges (which I always do and recommend)
@@AustinBouley112 is still $30k margin requirement on IBKR
20k for an es 112 is way too risky. Just because upu vould do it there the key to the trade is campaigning them on. IV expansion will kill you one day
Yeh it's irresponsible to be telling people with a $20k account to trade ES on the autotrader especially every week as it's currently set to....
You should never trade with more than 50% of your buying power to prevent against IV expansion issue. Therefore, if you have a $20k account, then you can trade 1 112 trade (or roughly $7000). If you want to put on more than one trade, then you’ll need to trade MES