A strategy I read about

It's a moving average system that buys ONE DITM option as opposed to stock.

Where the magic other than in a crash you are long the embedded put,but you would be out long before on the MA cross..

Tripling the S&P returns with no leverage???

Rolling strikes up is a defensive play

What am I missing??
 
Long & put with strike of call = same. So buy call and putspread. Less costs, because otm.
But interesting strategy? Not really. Maybe if asset rises 200% per t and crashes >50% often. But that would be reflected in price put
 
Yeah,Im not a fan,and it appears he's not taking leverage,so this tripling the return is really meaningless..

Zwaen said:
Long & put with strike of call = same. So buy call and putspread. Less costs, because otm.
But interesting strategy? Not really. Maybe if asset rises 200% per t and crashes >50% often. But that would be reflected in price put
More...
 
taowave said:
It's a moving average system that buys ONE DITM option as opposed to stock.

Where the magic other than in a crash you are long the embedded put,but you would be out long before on the MA cross..

Tripling the S&P returns with no leverage???

Rolling strikes up is a defensive play

What am I missing??
More...
I rather work with a combination of the underlying + DOTM calls/puts...
 
The idea of using options to magnify returns is definitely tempting. The risk management measures are well-considered, and the use of moving averages for entry and exit points brings a systematic touch. Definitely worth exploring further and adapting to personal risk tolerance.
 
Here's an example to illustrate how this strategy might work in practice: Suppose the SPY is currently trading at $400. According to the strategy, you'd look for a DITM call option with a delta close to one and a target strike price at about 60% of SPY's price, which would be around $240 in this case. Let's say you find a one-year DITM call option meeting these criteria, with a premium of $165. This puts your total cost (strike price plus premium) at $405, which is just above SPY's current trading price, fitting within the strategy's guidelines. If SPY's price increases to $450, the value of your call option would also rise, closely mirroring the stock's price movement thanks to its delta of one. Before the option nears its expiration, you would ""roll up"" to lock in gains and ""roll out"" to extend the duration by purchasing a new one-year DITM call option, continuing to ride the upward trend of SPY. In contrast, if the market turns bearish and SPY drops significantly, you'd switch gears and apply the strategy using DITM put options to profit from the downturn, following the specified indicators and moving averages for entry and exit points.
 
DayamiMoon said:
Here's an example to illustrate how this strategy might work in practice: Suppose the SPY is currently trading at $400. According to the strategy, you'd look for a DITM call option with a delta close to one and a target strike price at about 60% of SPY's price, which would be around $240 in this case. Let's say you find a one-year DITM call option meeting these criteria, with a premium of $165. This puts your total cost (strike price plus premium) at $405, which is just above SPY's current trading price, fitting within the strategy's guidelines. If SPY's price increases to $450, the value of your call option would also rise, closely mirroring the stock's price movement thanks to its delta of one. Before the option nears its expiration, you would ""roll up"" to lock in gains and ""roll out"" to extend the duration by purchasing a new one-year DITM call option, continuing to ride the upward trend of SPY. In contrast, if the market turns bearish and SPY drops significantly, you'd switch gears and apply the strategy using DITM put options to profit from the downturn, following the specified indicators and moving averages for entry and exit points.
More...

I don’t see the benefit of using options.
 
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