Buying or selling stocks based on support and resistance, indicators and oscillators is well grounded and a statistically sound methodology but is prone to subjective analysis and losses while one method stops working due to a shift in the trend.
Around 75% of options expire worthless (various sources), this puts the odds in favour of the option seller by the very nature of the options market.
Selecting and diligently applying risk strategies, position sizing and money management to any plan will enhance returns and keep losses at bay.
Goal setting in a broad sense is important to have an overall impression of the long term expectation. These goals must be realistic, quantitative and achievable. Short term goals are needed to be set and tracked in order to remain on track. Checkups are critical along the way.
Selling credit spreads to generate premium income puts the cash in my account immediately and the trick is to manage the trade in such a way as to keep as much of this cash as possible. I feel that having the cash up front creates an edge all of it's own. It is easier to work to keep than it is to work to make. Besides, getting paid in advance to work the trade just sounds better.Adjusting the plan to accommodate varied price activity should prove far easier as the price action is being bracketed with credit spreads income strategies so price direction may not necessarily important. Amplitude of the next move is though.
Odds are that I have a much better edge in working toward keeping the premiums paid to me to place the trade than putting up a bunch of capital in order to try to generate profits. This has become my goal, smaller more secure gains made consistently.
I look at this as a front end load strategy rather than a back end load stock strategy, that is how the mutual funds work so why not me? Odds are this little paradigm shift is for the better in the long term.
Jeff.
No comments:
Post a Comment