Over the past 3-4 months I have been selling very out of the money call/put credit spreads. Obviously these trades have low premium associated with them and large collateral. However the win rate of the trades are very high. Is this actually a suitable way to trade and make money or have I been getting lucky?
Posted by cgreenm18
5 Comments
Pennies in front of a steam roller
If you’re blindly selling credit spreads just because they’re there then you’ve been getting lucky.
If you’ve determined that the IV skew indicates that the short strikes are overpriced relative to the long strikes and have used that insight to structure credit spreads with a favorable expected value then you’re earning a good return for your risk.
How do you pick stocks and strikes? What return on risk? What’s the probability of success on each trade? Are you calculating for expected value before entering a trade? What DTE? Earnings?
That’s what all the big guys do for their clients. Check out TOS top options sales for the day. Hundreds of call/puts contracts with very low delta.
I’ll let you know what I’m selling so you can lose money with me