Thread: Naked Options Selling!

Hi Frank!

The GBP/JPY calls were simple actually. It was the AUD/JPY calls that gave me the aggravation! I will sell calls and puts depending on my directional bias. For now, I just take on one position each week. If my accounts grows large enough, I'll take on multiple (albeit small) positions, along with longer-term spread trades. Take for instance, USD/CAD and USD/CHF... I wished to market a deep out-of-the-money call on a few of the pairs yesterday (along with GBP/JPY), but felt that GBP/JPY offered a much better R/R dependent on the number of pips between the strike and market cost, as well as the premium received to the trade.

With advertising calls against 10, how are you doing? Are you really going to sell calls puts or simply puts?


Frank

Originally Posted by ;

Ladies and gentlemen... the decision you've been waiting for!

My long standing in AUD/JPY was called away as the option expired in-the-money. The strike cost matched the entry cost, therefore I broke even on place... but more importantly, I kept the premium I purchased for selling the option. But I also gathered interest premium immediately than I had expected, and left me with a increased gain.

Today... the most recent position:

Sold short GBP/JPY put, strike 242.78, expiry June 25th, 2007 to get 32 pips.

As you can see, this represents a radical change in my egy. Up until today, I've only sold calls against the transport pairs... today, but I am selling a put. With little in the way of MMEs I think this will benefit pairs. Additionally, BoE meeting minutes will be hawkish. Though one could make a case this has already been priced in, even if there is a correction in GBP/JPY, I really don't see it going beyond the strike (because of buying on dips). We'll see what happens.

Ladies and gentlemen... the decision you have been waiting for!

My lengthy standing in AUD/JPY was called away as the option expired in-the-money. The strike price matched the entry price, so I broke on place... but what's more, I maintained the premium I received for selling the option. Also, but interest premium gathered overnight than I had expected, and that left me.

Now... the most recent place:

Sold short GBP/JPY place, hit 242.78, expiry June 25th, 2007 for 32 pips.

As you can see, this signifies a radical change in my own egy. Up until today, I have only sold calls from the transport pairs... today, however, I'm selling a place. With little in the way of MMEs I think pairs will be benefited by this. BoE meeting minutes will probably be hawkish. Although one can make a case this has already been priced in, even if there's a correction in GBP/JPY, I really don't see it going beyond the strike (due to buying dips). We'll see what happens.

In a feeble attempt to keep the carry critters week, their currency was sold by the RBNZ. Not even a flood of kiwis will be sufficient to prevent the raging beast. In much the exact same way that the yen has, they ought to throw in the towel andyield* to the insatiable thirst for interest carry.

But where does that leave me? Stay tuned to find out... because I'm just a couple of hours away in the inevitable... the inevitable... that the TERRIFYING conclusion that is otherwise called... the New York cut.

Believe me... you do *NOT* want to miss this!

The carry monsters came in and taken * a devastating attack on the yen out . The yen collapsed in the air, pitifully, with its pants down and white flag waving. But where does this leave me?

Long AUD/JPY, that's what!! However, maybe not for long, though... as soon as the option expires on Monday (hopefully in-the-money based on the way I've hedged the position) I will close all open places.

Stay tuned... the story is not over yet... you *won't* need to miss this!

Wednesday I Am attributing 103's break to Interest. Hedge orders still firmly in place.

Sold short AUD/JPY call, hit 103.59, expiry June 18th, 2007 to get 12 pips.

Intervention in the RBNZ together with the dearth of MMEs (according to the calendar) for Australia leads me to think that this set is topped out for this week. I *needed* to market a call against a NZD set (and due to the volatility would've obtained more pips), but because of the 100-150 pip fall between NZD/USD and NZD/JPY, the R/R for the transaction isn't quite as high as I want.

Update June 9th: I am * thinking * selling a deep OTM call against one of the following pairs: AUD/JPY, NZD/USD, NZD/JPY, USD/JPY, and USD/CHF Even though a little more research is warranted. Also *considering deep OTM places against EUR/USD, GBP/USD, and USD/CAD. Make my final decision and I'm going to run some numbers. Going into the weekend, the open position on GBP/JPY is still coming out of the money.

Upgrade June 7th: Increased risk aversion from the markets precipitated the correction of GBP/JPY. The option is deeeeeep out of the cash. It'd have been nice if I purchased a put option, but this thread wouldn't be called nude choices selling... I don't feel comfortable buying options with very little time value left anyhow...

Update June 6th: Glad I didn't sell a call against NZD/JPY. I didn't feel that Bollard could rates. And soon after he tries to speak the money down... what did he think would happen? So far as my position is concerned, the option is basically useless and deep out of the money.