Day Trading Options

[Baozi]

I like to sell options against big moves and way OTM and I like to get the top tick or close to it for the day.

My scheme works OK. On NVDA today (3/24/2022) I got a call off at 1.60 which was top tick for a while until someone sold at 1.66. (4/14 340 Call)

My method as shown in the picture uses an arbitrary Vol Expansion of 15% and an estimated top price of the stock off the chart which works OK.

I know the best way to try and figure the top price is by using vega but I don't know how to estimate the implied
volatility that the option would be if the stock got to the projected price to apply to the current option price at the current stock price.

Any help would be appreciated.

you can try implementing a local volatility model. There are many models around.

The one in the link uses Dupire's formula and (compared to others) is relatively simple.
https://financetrainingcourse.com/education/building-implied-local-volatility-surfaces-excel/

 

[taowave]

Hes trading equal dollars,so he would pick up more gamma purchasing the OTM's if hes dead right..

 

[Hari Seldon]

Thanks all. I started using this Tool that I may have gotten from here. Thanks to whoever it was that posted it if that is the case.
http://www.option-price.com/index.php

 

[Hari Seldon]

If you are day trading option:

So you need to be flat by the end of day, why would anyone trade OTM options vs ITM?

My thought process is, ITM options have higher deltas which equal more gains on the intraday moves, right? Where as OTM options have lower deltas.

Thoughts/help please?

Thank you

I am not Day Trading them. I hold until the next monthly expiry. I hate to sell without getting a good price which means I sell on a trend day and use the chart to tell where to expect the move to.

I am not trying to get rich or anything. Just piddling.

 

[easymon1]

Bigalow's touting some hot off the grill 'high probability' setups for options trades. ymmv
Thought I'd post em to see what happens.
e.g. to see how buy puts would work for the shorts, etc.

 

[easymon1]

Over $40k eventually.

 

[GotherL]

I'd trade OTM options if...

1. They're capable of huge moves. Meme's, trending, upcoming catalyst etc.
2. You like the setup but lack funds and only wanna risk a very tiny amount but still feel there is a chance it would come green.
3. Your hellbent on taking options but shitty liquidity on the ITM strikes so you have no other choice & go with the OTM strike.

 

[nitrene]

The SPY & QQQ ETFs have become so volatile that if you day trade some of these ODTE options there is incredible leverage -- upwards of 100X in some cases. That is one idea I got from the "degenerates" at WSB.

 

[MacBookProHo]

The SPY & QQQ ETFs have become so volatile that if you day trade some of these ODTE options there is incredible leverage -- upwards of 100X in some cases. That is one idea I got from the "degenerates" at WSB.

You don't need that amount of absurd/bold/risky options leverage to make a lot of money from the market. A tiny, new, account that can, on average,...continually grow by each trade...will turn into an absurd amount in a very short amount of time.

The problem is most people are just complete gamblers, who have no advantage or idea in what they are truly doing in their approach. That's why a ton of people get similar results to being at a blackjack or roulette table in a casino.