0.01 x 2 = 0.02%
Day trading SPX index options. 100% daily ROI possible?
- Thread starter TraderMontreal
- Start date
0.01 x 2 = 0.02%
Thank you for your very thoughtful reply and sharing your experience.
I have been doing it a little longer than you. In this business we each find our own sweet spot. There is no right or wrong way. In mine case even after read up on @jeffalvinson's approach of day trading options I still couldn't make it work. I had to go from day trade, very short expiration trade to longer expiration trade in order to survive.
Good luck and best wishes.
$1/$1=100%
$1/$1=100%
Actually ...
His geometric mean is 0.141421
(1/100 x 2/1)^(1/2)
The average loss is 85% per bet.
The arithmetic mean is -49
(-99+1)/2
The average loss is 49$ per bet.
You’ve mixed up the two !
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I don't buy options other than as a hedge against those that I sell; I sell vertical spreads, usually one strike wide but, occasionally, two strikes wide, the object being to collect the premium on the sale of the call or option pair or condor, which is both a call spread and a put spread, with the expectation that my spread will expire worthless. I'm not quite following what you are telling me. I apologize if I seem to be responding in excessively simple terms. I do not know your level of experience or sophistication RE trading options.
You know I am an idiot when it comes to math.Actually ...
His geometric mean is 0.141421
(1/100 x 2/1)^(1/2)
The average loss is 85% per bet.
The arithmetic mean is -49
(-99+1)/2
The average loss is 49$ per bet.
You’ve mixed up the two !
Romeg, thanks for the details.
"I want Probability of ITM to be in the 0% to 2% range, knowing it will move throughout the day. I want POP to be between 76% and 90%. I want my ROI for the trade to be at least 16% for the day. "
However SPX option chains didn't show anything even close to those guidelines this morning.
Would appreciate an example of such a trade. THX.
"I want Probability of ITM to be in the 0% to 2% range, knowing it will move throughout the day. I want POP to be between 76% and 90%. I want my ROI for the trade to be at least 16% for the day. "
However SPX option chains didn't show anything even close to those guidelines this morning.
Would appreciate an example of such a trade. THX.
At the moment. But since I started following the plan I have outlined on this site I've increased each of those three accounts from around $2300, as of April 8, when I started to almost $6000 EACH, about $3800 gain per account. I have now had 13 straight winning sessions (no losses) and am now averaging around $1200 gain each session. As my balances grow then the size of my trades will grow commensurately as does the amount of gain. I expect to surpass $25000 in each account by the end of the year. That is the goal I have set for myself.
As for that $25,000 cap, if you follow what I've laid out above, then that $25000 PDT limit will never come into play. If you structure your trades properly leaving room on both sides of the price line for it to move (an absolute minimum of 10 strikes and I would not hesitate to recommend 12 strikes) then you should be able to avoid adjustments which will result in your Day Trade Counter ticking up each time you make one.
If you have more than three 'Round Trip' transactions (a Round Trip is the purchase and sale of the same security within a 5 day period) then you WILL get suspended. First time, no biggie. Just request a reset. But you only get one of those every 90 days, which is how I wound up with three accounts. I actually have had five, two of which I closed permanently. I would get suspended and use part or all of the balance in that account and open a new account.
Do not exit your trades early. The goal is to have them expire worthless (OTM) Out of The Money so that you keep ALL of the premium you collected when you sold the spread(s) in whatever form they took. And, most importantly, DO NOT TRADE AM EXPIRATIONS. They are a trap and a sucker's bet. You will find yourself either having to exit the trade early, which is costly and that PDT ticker clicks up for each one you exit early, OR you will be stuck in the position until the next day's close which will, almost invariably, cost you not only all of the premium you collected but you will, in all likelihood, have your position expiring ITM (IN The Money) and it will be assigned and exercised and that will ding your account to a fare-thee-well. I ONLY trade weekly and non-standard expirations and ONLY on the day of expiration; IN in the morning and, when the closing bell sounds, I'm OUT and, so far, on average, around a Grand richer. ($1400 yesterday, the 6th of May and $1171 on Monday, the 4th of May).
As always, NONE OF WHAT I HAVE POSTED HERE SHOULD BE CONSTRUED AS ADVICE. I AM NOT A QUALIFIED INVESTMENT ADVISER AND WHAT I POST HERE IS FOR INFORMATION, EDUCATION AND ENTERTAINMENT PURPOSES ONLY. DO NOT TRADE SPX OR ANY OTHER SECURITY UNLESS YOU CAN AFFORD TO LOSE YOUR ENTIRE INVESTMENT.
As for that $25,000 cap, if you follow what I've laid out above, then that $25000 PDT limit will never come into play. If you structure your trades properly leaving room on both sides of the price line for it to move (an absolute minimum of 10 strikes and I would not hesitate to recommend 12 strikes) then you should be able to avoid adjustments which will result in your Day Trade Counter ticking up each time you make one.
If you have more than three 'Round Trip' transactions (a Round Trip is the purchase and sale of the same security within a 5 day period) then you WILL get suspended. First time, no biggie. Just request a reset. But you only get one of those every 90 days, which is how I wound up with three accounts. I actually have had five, two of which I closed permanently. I would get suspended and use part or all of the balance in that account and open a new account.
Do not exit your trades early. The goal is to have them expire worthless (OTM) Out of The Money so that you keep ALL of the premium you collected when you sold the spread(s) in whatever form they took. And, most importantly, DO NOT TRADE AM EXPIRATIONS. They are a trap and a sucker's bet. You will find yourself either having to exit the trade early, which is costly and that PDT ticker clicks up for each one you exit early, OR you will be stuck in the position until the next day's close which will, almost invariably, cost you not only all of the premium you collected but you will, in all likelihood, have your position expiring ITM (IN The Money) and it will be assigned and exercised and that will ding your account to a fare-thee-well. I ONLY trade weekly and non-standard expirations and ONLY on the day of expiration; IN in the morning and, when the closing bell sounds, I'm OUT and, so far, on average, around a Grand richer. ($1400 yesterday, the 6th of May and $1171 on Monday, the 4th of May).
As always, NONE OF WHAT I HAVE POSTED HERE SHOULD BE CONSTRUED AS ADVICE. I AM NOT A QUALIFIED INVESTMENT ADVISER AND WHAT I POST HERE IS FOR INFORMATION, EDUCATION AND ENTERTAINMENT PURPOSES ONLY. DO NOT TRADE SPX OR ANY OTHER SECURITY UNLESS YOU CAN AFFORD TO LOSE YOUR ENTIRE INVESTMENT.
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