Hi Joe,
I think your scale idea is very good.
The market could be very different in 30, 60 days.
Hank
--- In ConservativeOptionS
>
> i don't want to sit down and write a detailed paper so people can try to follow to the letter. so, instead, let's all discuss short puts.
>
> let's start with a discussion of what equity do you trade and how do you determine which one to trade? what expiration do you pick? and what strike do you pick?
>
> after a discussion of the above we can discuss management up until expiration, then management at expiration, and if assigned, what to do next?
>
> first, i only trade index etf's almost all my short puts have been iwm, qqqq, spy, eem but mostly iwm. i currently have iwm and qqqq short puts.
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> second, i decide how many contracts do i want to have outstanding. for example lets say i chose 15 contracts for iwm.
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> third, i use 90 days to expiration and i leg into the position.
> lets say it is november expiration. i will sell 5 contracts with feb expiration. at december expiration i will sell 5 contracts with march expiration and at january expiration i will sell the last 5 contracts for april expiration. each successive month will have 5 contracts therefore coming to expiration.
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> fourth, i choose the first strike out of the money.
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> fifth, i do not do naked puts. i have 50% secured in a fixed income etf and 50% in cash in the margin account. i do not and do not recommend anyone using margin especially someone new to options and short puts.
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> sixth, i do look at charts...i like to look at 1 month and 3 month linear regression channels, macd, sto, and ma's ....i have no hard fast rules but i like to get an idea that it is definitely in an intermediate term uptrend and more in the oversold than overbought situation.
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> so let's here from the rest of you and after a few days of discussion we can move onto management after the trade is executed.
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> drjoe
>
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