A trading idea

[Adam777]

Anyway, I am risk adverse, so I will paper trade before committing real money to these strategies. I sold options before, and it took a lot of time, and then I made a terrible trade. One of those you sell a cash secured put, and it goes down 20% in an hour.

What about just buying Spy when the vix curve is fully in contango, and exit otherwise. You can check this at vixcentral. com.

 

[shMark]

What about just buying Spy when the vix curve is fully in contango, and exit otherwise. You can check this at vixcentral. com.

I will check that out.

 

[ironchef]

Perhaps, the strategy should be used on SPY.

You should take @destriero's post to heart. Learn from him if you can, he is the real deal.

For me, I would rather buy a DOTM LEAP call. But I am amateur and a gambler.

 

[ZBZB]

If you don’t mind owning the stock if you are wrong then sell the puts short term to buy the leap.

 

[shMark]

It works not for DITM, but for ATM or even OTM, IMO.
I just quickly analysed the ATM case.
But waiting till expiration is not recommended...
B/c then it has shrunken to the normal outcome... due to time-/value-decay...

Hmm. due to time-decay a LongOption every day loses value, so hard to believe it can be a good strategy. But I could be wrong. Maybe others can tell more...

DITM have almost zero time value.

 

[Overnight]

First, stocks tend to go up more than they go down. Look at the stock market now versus 1970.

A bit late to the thread, but I caught your folly in time.

You are equalizing individual stocks with a stock index. They are mutually exclusive concepts when it comes to PA and risk.

Stocks do NOT tend to go up more than they go down. If you believe that, you read a very bad book by a charlatan. You would know this if you actually OWNED any stocks for a decade or three.

Or did any simple chart research on a few tickers.

The stock MARKET since 1970 has gone up, because that is an INDEX. It is not a stock.

Do you understand what I am cooking? BWS is my Rock who is cooking things. Heed him, man.

 

[vanzandt]

I have an ability to pick stocks. I know technical analysis and fundamental analysis. .

Maybe you do. I hit the "follow" button. It's free, nothing to lose really.

One question, and it is totally not me being sarcastic... but how do you think you'll do in a downtrend if and when it were to occur? Because if you're good, that matters too.

Either way... I did hit the follow button. Hopefully you'll stick around and share some ideas.

 

[ironchef]

Hmm. due to time-decay a LongOption every day loses value, so hard to believe it can be a good strategy. But I could be wrong. Maybe others can tell more...

Drift is not part of BSM.

You gain value everyday when it trends.

 

[shMark]

Maybe you do. I hit the "follow" button. It's free, nothing to lose really.

One question, and it is totally not me being sarcastic... but how do you think you'll do in a downtrend if and when it were to occur? Because if you're good, that matters too.

Either way... I did hit the follow button. Hopefully you'll stick around and share some ideas.

I have been doing this for 27 years, and have been in two bears. 2000-2003, and the GFC. In both cases, I did fine, but not as well as I could have. I bought a little more, but then got nervous, and just held what I owned not selling anything. If I had bought a lot when it went down, I would have made a killing, but emotionally it is hard to do that.

 

[Quanto]

Drift is not part of BSM.

You gain value everyday when it trends.

Don't talk BS !
Do you mean the options expert website Investopedia has it wrong when it below says "drift" ?
FYI: param r ist the drift: