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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures

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To: Patrick Slevin who wrote (6137)	10/12/1998 2:41:00 PM
From: Tom Trader	Read Replies (1) of 44573

Patrick--my strategies for trading the OEX are definitely not for everyone. In fact there are times when I wonder whether I should even post this stuff--given that it could cause someone to try it -- who should not do so. Fortunately the combination of capital requirements as well as getting approval to do it will keep many away from doing so. The critical thing is having the discipline to close out the trade or otherwise take other protective action, if it goes against one--and knowing when to do so. As a futures trader, I have no doubt that you would have that discipline -- but the other side of the coin is that one also needs to be comfortable doing so. The trading desk that I use at Schwab tell me that I am one of only 2 traders who write naked OEX options--so that tells one something as well. In the years that I have done this there has been only one time that I took a really big hit -- and that was when I thought that I had closed out the position and it turned out that I had 5 contracts that I was still carrying. I know that it sounds stupid--but that is what happened. Ever since then I check my positions every morning to confirm what I am holding. What I like about the strategy is that it is the lazy man's approach to trading --- I can literally hold the position from the point of initiation to the time of expiration--assuming that I have legged into the necessary protective spread. In fact that is the situation right now with the October series that I am holding for the bulk of my positions. The other reason that I am doing a lot of this is that since I am in cash for the most part, it is a way of generating a better return than to just let the funds earn interest. The rich premiums are an added attraction. The negatives are the limited upside, commissions, the spreads and the fact that I can't use stops since the MMs will assuredly screw one if one does.

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