what's the best way to grow Faster?
By - ihpalash
CSPs and CCs are the lowest ROC of any options strategies. They are totally un-leveraged cash positions. You can trade credit spreads, which will lower the amount of premium you collect, but it will lower your capital requirement way more. You can also trade naked positions if your broker will let you
Credit spreads are harder to manage. Opening, closing, and rolling them are harder for brokers to do. You are also sacrificing a huge chunk of the extrinsic value since the extrinsic values of the long and short legs cancel each other out. Lastly if you are wrong with a credit spread, you lose your money forever. If you are wrong with a CSP you get the shares and can wait for them to recover. Or if you are wrong with a CC, you GET money, rather than lose it.
I would stick to CC and CSP as long as you can afford it and are happy with premiums you are receiving.
>Credit spreads are harder to manage. Opening, closing, and rolling them are harder for brokers to do.
Not really. If you are using a trash broker like RH, probably. If you use a real broker, you should get filled at mid. Spreads move slower than naked positions, this is true. It's one of the trade-off's.
>You are also sacrificing a huge chunk of the extrinsic value since the extrinsic values of the long and short legs cancel each other out.
This is a misleading statement. You do give up some of the premium you receive compared to a naked position, but you also define your risk and cut down your capital requirements significantly.
>Lastly if you are wrong with a credit spread, you lose your money forever. If you are wrong with a CSP you get the shares and can wait for them to recover. Or if you are wrong with a CC, you GET money, rather than lose it.
This is patently false. You can take assignment on a spread, the same as a naked position. You get a small benefit because you have a long leg that you can sell for profit, widening your break even point.
There's no guarantee that stock you get assigned will recover. It's foolish to think that. Even if it does, it could take a long time and that unrealized loss is dead capital.
If you're wrong with a CC you don't "get money." If you're wrong, it means the stock tanked and you have a bad position. It's a bullish position that has risk to the downside. If the underlying goes up, you will realize max gain.
> You can take assignment on a spread, the same as a naked position. You get a small benefit because you have a long leg that you can sell for profit, widening your break even point.
Yes, but if you are taking assignment, then presumably you will have lost money on the long leg since it will have decreased in value. Breakeven might change, but you are spending more money for the shares in the end compared to only having the short leg.
> There's no guarantee that stock you get assigned will recover.
Obviously, but you are supposed to be running the wheel on stocks you are bullish on. Same as if you were doing a put credit spread.
> If you're wrong with a CC you don't "get money." If you're wrong, it means the stock tanked and you have a bad position.
If the stock goes down, you receive the maximum premium from the CC plus you can keep the shares. The stock might be down, but that loss is unrealized. And again, if you are bullish, you will wait for the stock to come back up again and you can sell CCs in the meantime.
The only situation in which I can see spreads being useful is when you don't have a lot of capital available, in which case you have no choice. But if starting capital is not an issue then I would personally do the wheel with CC and CSP.
>Yes, but if you are taking assignment, then presumably you will have lost money on the long leg since it will have decreased in value. Breakeven might change, but you are spending more money for the shares in the end compared to only having the short leg.
Not necessarily, but this can happen. It's really unlikely to have a spread go against you in any way and not have the long leg gain, unless you're selling weeklies or really short DTE. If that's the case TT has literally hundreds of videos explaining why you shouldn't do that.
>The only situation in which I can see spreads being useful is when you don't have a lot of capital available, in which case you have no choice. But if starting capital is not an issue then I would personally do the wheel with CC and CSP.
The situation where a spread is useful is when you want to lower your capital requirement and improve your ROC, which is what OP was asking about.
I understand. but I see all those tards in WSB making mucho dinero. I know my risk is low but I still wanna big bucks.
Can't have everything in life, for every person flexing 100%+ gains on WSB there's hundreds that blew up their account
PMCC is probably the best way to increase your return without more risk because you can use leverage to your advantage but can’t get margin called. The best way to increase your return with more risk is credit spreads
This right here is the way to grow
WSB is big risk big reward. What WSB doesn't show you is what their collective profits are for the year.
The forum is like a casino. For every jackpot winner there are another 100+ that walk out with losses.
haha I'm pretty screwed with my RIDE csp.....thought premiums were well worth it on OTM puts.
on the other hand I see GME and AMC 2023 csp of strikes $2-4 extremely low risk. Considering on a margin account you need to post around 25% collateral, this seems like a no brainer 50-100% ROE for 1.5 year holdout.
I would take it a step further. If you’re the kind of person who would put their entire account on OTM calls on a meme stock, you may win the lottery. You also probably won’t suddenly become smarter and you’ll do it again and again. You’ll lose out eventually, probably pretty fast.
It can happen. Big risk big reward. Some of them hit it big time. Most of them generally don't. And the ones that do hit it big give it all back just like a casino.
Very rarely does anyone ever walk away when they are ahead.
Brig brisk brig breward
Faster and low risk are exclusive terms
Theta gang should be entirely selling options (or, fine, credit spreads). So by definition you have a max profit for a position. You can’t exceed it.
So to make more money you need to open more positions, close them faster, or open bigger positions.
Opening bigger positions (eg selling closer to the money, or even ITM) is inherently riskier. You’re changing your risk tolerance. That’s the simplest answer.
Closing faster either means closing earlier than you normally might, or doing closer dte. Closer dte will reduce max profit and increase risk (assuming you’re near the money). There is an argument to be said for 7dte vs 30dte positions. I like 30, because it has room to recover, but 7dte obviously goes to zero quicker. Personally I’m 30dte, close at 66% or 15dte, unless shit has got real.
Opening more positions means getting more efficiency out of your capital. If you’re doing CSP on a $200 strike you need $20k. However, check out what you need to do that naked. You may find your capital required is only $10k. So you can open two short positions for the price of one. Of course naked is very vulnerable to volatility expansion. Your broker *will* increase the capital required if things get hairy, so you need some padding.
Most sane traders would say you want lots of padding, and will have lots of unrelated stocks in the same account they can sell to cover any losses. That’s up to your to define your risk there.
Fwiw naked puts aren’t unlimited loss. In fact the max loss on a naked put is exactly the same as a CSP. It’s just a CSP is a guarantee to your broker. You just get in trouble when you sell multiple puts and don’t actually have the cash to cover when the stock goes down. But consider this: MSFT at $285 might drop $85 in a month, but it would be unheard of to drop to zero. So you can do naked puts where you (in your own accounting/head) do it as a half CSP. You keep enough cash to buy that MSFT put back if it drops to $200. Yeah, it’s possible MSFT might drop below that, so pick your own limit.
As for naked calls. Same deal except the max loss is infinite, but consider MSFT again - Is it likely in a month that MSFT would moon from $285 to $385? Call that your limit and now you’ve got a “mostly defined risk” naked call.
So you can see my answer to your original question. Take off the training wheels, put on big boy pants, and stop with CSP and CC.
Footnote: yes, you can roll. But in the end that’s just closing one position and opening another. It’s just an accounting trick.
I agree ,very well explained my friend!
You’re seriously asking how to get rich quick with little risk? 😂
SPY PCS on red days
hey guys i have a unique strategy where I prefer to make money... what is the best way to make more money?
[LEAPS and PMCC](https://youtu.be/95suqaJcFtU)
Adam is the best youtuber out there
Easy, get bigger paychecks and deposit more lol
Viagra!… oh wait that’s not what you’re asking about…
Start selling closer to at the money if you want more reward (& risk) or like others have said, head off to WSB and try and strike gold.
Commenting because I would also know how to gain higher profits with lower risk. Actually screw it, highest profit with no risk please.
Screw profit, I just want they to hand over the money already
SPY 0DTE FD's
Screw that. /ES 0 dte. Lose money like a real man.
SPX would be a better choice as long as you do some iron condors and double your max gain
CSPs and CCs have lower leverage than going long - your delta/Buying power is less.
My core is CCs and I make stupidly large % gains YOY.
Perhaps you are using the tools wrong, and that's why you are growing slowly?
Maybe the solution is to learn how to use the tools you have better.
If there was a way to grow faster than CSP/CC with a lower risk, CSP/CC would literally be wiped out of existence. Low risk is the whole point of CSP/CC over other option strategies.
find some benchmarks to compare your growth to. Most common one is the S&P500. If you are beating the S&P then you are doing well, if not then go looking for some more risk somewhere. But know, higher returns mean higher risk. So you could all of a sudden loose 6m of returns in a single trade if you push things to hard
No, risk and reward are inversely related. To make steady but smaller gains means taking less risk the CCs and CSPs provide.
To make higher returns will require higher risk strategies, but these come with the chance of blowing up your account and often have losses as part of the plan.
There are no low-risk high-gain options strategies . . .