![]() ![]() In the thinkorswim® platform, add “Return on Capital” to your layout in the Trade tab. ![]() (From the Chart, go to Studies > Add Study > Volatility Studies > ImpVolatility.) You may want to consider selling puts when vol is at or near the top end of the vol range.ģ) Look for high return on capital (ROC).īefore entering a naked-put trade, determine your minimum acceptable daily ROC as part of your goal-setting. Adding the Implied Volatility (IV) to a thinkorswim® yearly Chart will give you a quick glimpse at the vol range. Before selling that put, you need to understand it’s possible you could end up long the underlying at that price and be comfortable with that potential outcome.Įven when the CBOE Volatility Index (VIX) is low, there are stocks with higher than usual “fear” priced into their options. Before you jump in, you might want to keep some key criteria in mind.Ĭost basis is calculated by subtracting the credit received for selling any given put from the strike price of said put. Not having the hedge maximizes the premium you receive, but also the risk. To enter a short-naked put, you sell to open a put. With short-naked puts, that means understanding the strategy as well as its risks. The first step to overcoming any fear is understanding what you’re dealing with. “ My wife was afraid of the dark…then she saw me naked and now she’s afraid of the light.”-Rodney Dangerfield ![]()
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