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PART V: Options Trading > CHAPTER 31: Selling Premium
CHAPTER 31
Selling Premium
Darren is proving that all shrinks look like Phil Pearlman. With respect to trading, Darren loves to share ideas, keeps things honest, and adores options. No fear.
SECTION 1256 CONTRACTS
I have been actively trading since finishing graduate school in 2002. I currently manage the model portfolio at 6040 Financial and serve as the director of education. My strategy focuses on selling option premium in the broad-based indexes and options on futures (Section 1256 contracts). Typically there is about a 3 percent premium built into options when comparing the statistical volatility of the S&P 500 (SPX) versus the market expectation of the next 30-day range (volatility) of the S&P 500 (the VIX). This difference can fluctuate, but in general the implied volatility is higher than the realized volatility.