Beginning Options Trader

L

lyfegrd

Hello everyone,

I have been trading options on and off for the last 10 moths or so, but over the last month I have been trading IBM on an intra-day basis will little success. I use an 15 minute 10 day chart as well as a 5 minute 5 day chart with the following indicators: MACD, Slow Stochastics (14,3 period), RSI (14 period), and Momentum (14 period). Are there any of you out there that have been day trading options with any success with simple BCO, BPO strategies? I would appreciate any insight or success stories that you can share.

Thank you.
 
simple and options don't go together well. Like other people will say: read some books like Natenberg (Option Volitility and pricing strategies).
 
You can't make money on OPTIONS daytrading. Options are a crooked game, the manipulators make the spreads too wide for you to make money daytrading. If you are lucky, you might make money in a few days if IBM moves $5 or more in price.

:p
 
QDZ, although I think large bid/ask spread is a serious problem, but it is just one tip of the iceberg of the fundamental crooking scams in the unfair options markets.

lyfegrd, I would suggest you to stop touching options. If you can take the kind of risk and rip-off you are already taking(whether you understand it now or some time in the future), you will be in much better position if you try other instruments. So leave the options. It is not worth your time and money.

For others, do not, I repeat, do not touch options or you will remember what NoMoreOptions has said.



Quote from qdz5:

You can't make money on OPTIONS daytrading. Options are a crooked game, the manipulators make the spreads too wide for you to make money daytrading. If you are lucky, you might make money in a few days if IBM moves $5 or more in price.

:p
More...
 
lyfegrd,

First, I don't think your indicator-based method is viable. Have you ever backtested it? Why use four indicators that all measure essentially the same thing anyway?

Second, I have to agree with the above posters. Options are not a good daytrading market for retail traders. You can't daytrade and give up the edge coming and going, which you inevitably will do in options. Plus, you will run into all sorts of execution issues unless you are using ISE exclusively.

Finally, much of the flow in an issue like IBM is program-related or hedging. In effect you are trading against people who are responsible for the moves in the stock you are trying to game. It's like playing poker with a marked deck and you are the only one who can't read the marks.

Sorry to sound so negative, and obviously it's just one person's viewpoint.
 
I'd also chime in that I've never met a someone who makes money dt options, positions are typically at least 2 days. DeMark has a book called dt options and it still didn't appear totally viable to me. Good luck to you though.
 
Quote from lyfegrd:

Hello everyone,

I have been trading options on and off for the last 10 moths or so, but over the last month I have been trading IBM on an intra-day basis will little success. I use an 15 minute 10 day chart as well as a 5 minute 5 day chart with the following indicators: MACD, Slow Stochastics (14,3 period), RSI (14 period), and Momentum (14 period). Are there any of you out there that have been day trading options with any success with simple BCO, BPO strategies? I would appreciate any insight or success stories that you can share.

Thank you.
More...

I agree with the above ET members. Options are not designed for daytrading. The bid-ask spreads are just too big. I have been swing trading IBM options few times in the past few weeks with some success. But if I daytraded these options, I am sure that I have a net loss by now.

:p :p :p
:D :D :D
 
Thank you so far to those that have replied. It sounds as though DT options is not a wise venture. Also, a special thanks to AAAintheBeltway for pointing out the indicator issue. To answer your question though, for confirmation. However, I am open to suggestions. I am no professional by any means, but desire to be. So, if anyone has suggestions for building a successful strategy using simple put and call buying, or any ideas as to different indicators to use please feel free to reply. Again, thank you to all who have shared their thoughts so far. Good luck trading to you all.
 
Day trading options is hard. Why don't you try swing trades? I have found it's viable to do directional trades on options. Of course, you have to be very precise in order to catch any big moves on underlyings and mindful about time decay. It does require more patience than trading stocks since options move so slowly for many of them.
 
it can be done: although probably not in the sense you mean it. Options trading is trading in more than one dimension.
 
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