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I typically do not trade options directionally other than some light ratio spreads and flys. but in your case,since you trade with an ATR profit stop,verticals make sense. I would look to a short strike that offsets at least half the Theta of the long and trades > than 20 percent of the long...

Need a little more input. Are we talking strictly directional,or are you including vol/gamma.i.e delta neutral trading? Are we only referring to long gamma/direction and not short gamma trades?? Are you including spreads,flys etc??

If you are a good stock picker/ timer it's not weird at all. So you are trading a fixed dollar amount,which means you will buy more OTM options thsn ITM.. And that shoukd imply you buy more spreads than the corresponding naked call of your long leg..So apparantly you do adjust delta's..

Lol....I wasn't about to put it that way,but you are spot on...

Bid offer spread on 1 year options,let alone spreads is way too wide to trade for a 1 ATR move.. He's a delta trader trying to offset some of the decay...At least that's what I am getting out of this

Not following your choice of strikes..If you are really convinced you go ATM,but otherwise 1/2 ATR ITM.. That would imply you choose the lower Delta when you have more conviction?? How do you choose your short leg??

Interesting..I recently moved from Sag Harbor L.I. to the Burlington Vermont area and just started going to Montreal for the first time..Its about an hour away.. What do you like so much about it?

So you are shooting for apx 3-8 percent.. You are trading short dated options,1.e 10 days or less to expiry?? Im not saying your strategy is wrong,just wanted you to compare apples to apples..And you could certainly make a case for cutting down on some of your theta with verticals

Whats your typical holding period? A 1 ATR is your "profit target"?? No stops? Are the bid offer spreads on the verticals you are trading pretty tight?

There are very few universal truth's in trading,and "always remember to buy a spread" is most definetly not one of them... The purchase of an option has a built in stop relative to the stock.You could also stop yourself out on a long option position based on the stock price or the option price...

Lol,not sure what that means,but it made me laugh

oohhhh,you are good...nothing gets by you:)

I assume you are long gamma for a very good reason.. If and when I am long gamma,I choose to do so because I think vol is cheap,and i believe the realized vol captured/traded will exceed the vol(implied) I purchased. Or once in a blue moon,I think there will be a large move and I take a punt...

That is one entertaining post.. You definetly need to post an example..

If hes shooting for 50% plus returns in a week,you know he isn't selling naked vol.Cap hit is too high for those returns,and he would be risking alot more than his 100k.. Hes either buying it(directionally) or spreading it.. For one week of trading,his edge is his grey matter.. Happy to stand...

To catch a thief,you have to be a thief..or sonething like that:)

Interesting...If I may,how much added value do you think having an understsnding of "all this DSP"stuff brings relative to extensive backtesting/WFA?? I fully agree to be great at anything one needs to step outside their comfort zone,but to what degree/direction???

Run a simple backtest,optimise the shit out of it,and when you think you have found the holy grail,run a walk forward analysis... Thats all the help you need

Im running TOS and IB at the same time and IB has much tighter markets on spreads,they show the bid / offer and size..TOS does not. What bugs me is if A spread is offered mid market,IB shows it where TOS does not. I believe IB also reroutes orders if a better offer or bid comes in,TOS does not...

So you got some good karma:) Not sure how selling strangles gets you 50%.... I am not a code guy,so what excactly is your "move"... By move ,I mean how do you adjust when you are wrong.. Are you a delta hedger,roller of options,hard stop or a que sera sera sort of trader?