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Strategies & Market Trends : Gersh's Option trades
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To: Win-Lose-Draw who wrote (610)12/15/2005 10:28:01 PM
From: Mark Johnson  Read Replies (1) of 652
 
Depending on how you look at it and your level of risk, 5% can be a decent return. From the previous naked options positions I've posted here in the past (to the best of my knowledge)
they have all be profitable at options expiration.

For example, let's say you invest in 10 companies (to spread the risk) every month for 12 months. If you can average around 5% +/- a month for 12 months, that is a decent return.

Of course... you will have your blow ups and bad months. If you implement a strategy, diversify and follow it accordingly,
decent returns can be expected from selling naked options.
Common sense must be used when making this selection. I usually try to cover a naked option position when the option
doubles in price in order to minimize risk. Just move on to the next one, it's all a numbers (and crunching ) game.
Deep out of the money options is my specialty.

If you think gm is one PR away from going to zero, maybe buying the puts would be wise. I would be more than willing to sell you the January 10 puts / 200 contracts for around 10 cents :) <I don't think it would be a wise option purchase> If there is bad news to come I don't think it will
happen till after earnings or after January options expiration. GM is the worlds # 1 auto maker, with a big problem.... $2 an hour foreign labor and foreign models that are cheaper and more dependable. Yes, it is a problem but they will survive. Question is, how low will the stock go?
I say above $10 by the 3rd friday in january.

I am eyeing selling the Kosp .... january 70 to 75 calls on any short covering pop (yes, i'm waiting ). this play is more risky i think but has potential. Company has some problems with competition and the threat of slowing sales.

Good trading !!!!!
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