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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures -- Ignore unavailable to you. Want to Upgrade?

To: Brian Hornby who wrote (6556)	10/16/1998 11:10:00 AM
From: Tom Trader	Read Replies (1) \| Respond to of 44573

Brian, writing index options -- for that matter any naked options is a high risk strategy, as you know. Writing deep OTM options like you do reduces the risk of having to deal with it though with the volatility that we have seen one never knows what may come back to bite one. Ultimately, it is a question of having a disciplined approach to when one establishes positions. My bias was clearly to the downside when I was writing Nov OEX calls a few days ago but when I got a buy signal, I ensured that I protected myself against any catastrophic loss. In this enviroment, I am not sure that I'd be writing naked calls--in fact, I am looking for enough of a pull back to write some naked OEX puts--and I will do that on a pull back -- assuming that I am not on a sell signal by then. As far as premiums are concerned--the VIX has dropped -- and so the premiums are not likely to be as rich at this point. Given that the global problems that were the subject of all of the concern is not resolved, sooner or later there will be a sharp pull-back and that may be time to take additional positions. For now, the trend is up -- and I shall respect the trend.