Also, have you considered trading fewer contracts, and widening the spread to take better advantage of theta decay on the closer to money contracts? is 10 pts spread standard for you or do you change it up a bit, depending on IV and other things?
Can weekly strategies be profitable?
- Thread starter spectastic
- Start date
Yes, that's what I do. For the /ES I usually set the legs 10 points apart vice trading more contracts. That works for me.
Best
Yes, I have been working with tsla weekly options selling on Monday. Way out the money. I buy back at 10c. Heavy put skew now and the 400 12/18 tsla puts are still around 20c.
I try to pair with a call way out of the money too but with the put skew, you can't get much for them. I closed out the Dec 18 1000 call yesterday. Got tired of looking at it.
Sold the dec 24 350 put today but only got 84c. Hopefully it sells some tomorrow and friday so I can add. I would be happen with 1.20 or so.
I just try to make 200-300 a week.
I try to pair with a call way out of the money too but with the put skew, you can't get much for them. I closed out the Dec 18 1000 call yesterday. Got tired of looking at it.
Sold the dec 24 350 put today but only got 84c. Hopefully it sells some tomorrow and friday so I can add. I would be happen with 1.20 or so.
I just try to make 200-300 a week.
I don't think they were designed to take into account the "chaos" and "random walk" elements you speak of. Yet, when I think about it, pitchforks, gann fans, and elliot wave actually do lay out a format for the chaos. But first lets define chaos? Whats "chaos" or "random walk" in the stock markets? Price action? Thats what comes to mind for me, the day to day price movements are considered random to the folk who subscribe to the random walk theory, that trying to predict market movements in the future is a futile task.
As I get older and the more I trade and study, the more I'm starting to unlearn all this random talk crap. Markets are definitely not random. At least not "random" in my definition. Completely random and total chaos would be a stock which fluctuates 7 sigmas a day for example. But as we all know this isn't true. Markets have a rhythm, an ebb and flow. We witness this "wave" movement daily. Thus, elliot wave was the first attempt at theorizing the ebb/flow movements of financial instruments into a trading method. Also remember, these market strategies (elliot wave, fibs, gann, harmonics, etc etc) were created by men. Each human has his own perception of reality, so of course no method will be the holy grail. You need to use elliot wave WITH other metrics of your choosing that matches your personality.
I don't use Elliot Wave, but I've studied it out of curiosity because I think its important as a trader to understand how other traders might view the market you are trading. It puts things in perspective.
Each analysis is a specific tool with a purpose.
Spectastic
SPX is 100 multiplier. So say it is trading at 3700 then the contract is worth 370000. That is twice what the 3700 ES would trade for. SPX is european expiry so you can't be assigned early. ES is American style so if are itm, which you should never allow yourself to be you may be assigned. ES is 50 multiplier.
Both ES and SPX have mini or micro analogs. With SPX it is XSP with a 100 multiplier but the contract is 1/10 the SPX. So a 3700 SPX for XSP will be 370 (x 100 or 37000 contract price).
If interested in XSP and can appreciate the european style scheme then you could do 5 XSP to equal one ES.
ES has 1/10 counterpart, MES that is also American style if you wanted to goof around with that.
Work backwards. Determine what you would like to make weekly and go from there.
Doesn't matter why people are buying or selling. You will go crazy trying to figure that out. All that matters is how far out of the money you need to go and still make what you need.
Consider not going over .05 or -.05 delta. Go further out of the money and more contracts.
If I had $500k in my account I would just do SPX. It is not an efficient use of margin but the european style certainly has its advantages.
Also, if you want to do individual stocks make sure their implied vol is at least 2x SPX. Also don't do any stock that has a market cap less than $100B. Worst nightmare is to wake up and see a stock you sold a call on has been taken out with a 50% premium. $100B company is too big to be taken out like that. Actually $200B is even better
Also don't worry if the price is good or bad. Just let the delta value be your guide, I mean it is what it is, and consider only working with close in expiry's. 2 weeks maybe. But, the ideal expiry is just when the theta starts to really work and I don't know how to figure that out, just yet any way.
SPX is 100 multiplier. So say it is trading at 3700 then the contract is worth 370000. That is twice what the 3700 ES would trade for. SPX is european expiry so you can't be assigned early. ES is American style so if are itm, which you should never allow yourself to be you may be assigned. ES is 50 multiplier.
Both ES and SPX have mini or micro analogs. With SPX it is XSP with a 100 multiplier but the contract is 1/10 the SPX. So a 3700 SPX for XSP will be 370 (x 100 or 37000 contract price).
If interested in XSP and can appreciate the european style scheme then you could do 5 XSP to equal one ES.
ES has 1/10 counterpart, MES that is also American style if you wanted to goof around with that.
Work backwards. Determine what you would like to make weekly and go from there.
Doesn't matter why people are buying or selling. You will go crazy trying to figure that out. All that matters is how far out of the money you need to go and still make what you need.
Consider not going over .05 or -.05 delta. Go further out of the money and more contracts.
If I had $500k in my account I would just do SPX. It is not an efficient use of margin but the european style certainly has its advantages.
Also, if you want to do individual stocks make sure their implied vol is at least 2x SPX. Also don't do any stock that has a market cap less than $100B. Worst nightmare is to wake up and see a stock you sold a call on has been taken out with a 50% premium. $100B company is too big to be taken out like that. Actually $200B is even better
Also don't worry if the price is good or bad. Just let the delta value be your guide, I mean it is what it is, and consider only working with close in expiry's. 2 weeks maybe. But, the ideal expiry is just when the theta starts to really work and I don't know how to figure that out, just yet any way.
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First of all, it's not "random talk" it's random walk.
Second, even though the market behaviour does have some noticeable patterns but it is not 100% predictable. And it is not possible to always predict what is going to happen exactly at t+1 according to what is happening at t. And this is what the concept of "random walk" is talking about. You can be making profit for n number of times with the observed pattern but you never know one day you will make a loss with the same observed pattern. Elliott Waves uses mathematical concept of Fibonacci sequence to try to show where the market will possibly be going according to observed patterns of what happened in the past but the issue is did those patterns take into account of everything that could possibly happen? And that is assuming that the waves are unambiguous and without debate. Is that a wave 1 or is that wave a? Are we in wave 2 or is that wave b? It's hard to say it's someone else's perception of reality when it's not even clear what he is trying to illustrate. Like I said, you can use it as a rough guide to show you what's happening in the market but if you want to use it to trade, you need something more reliable or at least more precise.
And you can also go long too. They make really good money when there is unexpected volatility like during the 1st wave of Covid back in March.