Remember the trend is down. Is it too late to place bear trades? How about a vertical call bear spread on ROKU or any of the FANG stocks far OTM.
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Any bear traders out there.
- Thread starter viruscore1
- Start date
It is never too late. There are setups on the short side, a lot of it! You just have to take it. Take note that when the trend changes to the upside, you have to adjust and move to the other side! I do not do any option spreads as I lost thousands trying to sell options. JMHO directional option trades are better! You risk a little to win a lot! With selling options, you risk a lot to win a little!
I've only had marginal success with all out directional trades, actually more failures. I like neutral with slight direction on very specific list of stocks. It's like hitting many singles and doubles. And even getting walk once in awhile. When the stars line up and it's coming down the pipe with the stitching in sight, hit it with everything. I do that with sell otm put with expiry date before ex-dividend and buy call. Worst case, i'm assign stock, with dividend insight.
I hit about 40% of my trades winning, losing 60% of the time. Fine with it as long as the losses are way smaller than the winners. One thing I am working on is letting my winners run. I tend to get out too soon. Per my backtest, if I had let winners run longer, my profit would have been several multiples of the small profits I pocketed. I got about 2 more weeks on my options positions. Have to see how it goes.
Very good. But you know about hindsight, it's always right.
Of course, hindsight is always right. However, a backtest measures the past. If the principles is sound, it should work in the future. Returns could vary in the short term. In the longer term, it should perform as expected. No different than a casino. If a certain slot machine has a hold of 10% for instance, over 1,000 spins it should take 10% of your monies. More likely more than 10% because you would run any leftover monies thru the machine over and over so, each time, the slot machine takes 10% of those monies on average.
Hi Smallfil,
With regards to letting the winners run, the single biggest discovery that I have made in over 2 decades of directional option trading is this (Note: I only do thing with uptrending VIX 15 or greater above its 200 day moving average):
Hi Volatility Trading (usually associated with at least a Short to Medium Term Downtrend):
Profit:
If the VIX is 15 to 19 and above its 200 day moving average, its relatively safe to consistently have a Sell Limit of +70% or > on Puts and +30% on Calls.
If the VIX is 20 & > and above its 200 day moving average, its relatively safe to consistently have a Sell Limit of +100% or > on Puts and +30% on Calls.
Stops:
I am cheap bastard on stops because when I am shooting for bigger profits, my W/L performance goes down.
Here's what I do on Stops:
If I pay 1.80 or more for options, my Stop is -.40.
If I pay 1.21 to 1.79 for options, my Stop is -.30.
If I pay 1.20 or less for optons, my Stop is -.20.
I know, these stops seem to tight for Hi Volatility trading, right?
I use tight stops with Hi VIX trading because I enter options as they are getting the shit kicked out of them.
In other words, if an option closes at 3.50, the next day I look for an intra-day counter trend within the actual trend (big picture trend), that brings an option down from 3.50 to 1.85.
An option with a closing price of 2.00 to 2.50, the next day I look for an intra-day counter trend within the actual trend (big picture trend), that brings an option down from 2.00 to 2.50 to 1.00.
It took about 10 years to figure this out, and again, these rules go out the window when
the VIX drops below 15.
i have never bought options only sold them so i am wondering what your doing for entry timing if anything. since i always look for vol to sell are you looking at a lull to buy where prices are better?