Day trading SPX index options. 100% daily ROI possible?
- Thread starter TraderMontreal
- Start date
I didn't make one at the time as I had no intention of ever publishing it. I only provided the above screen shot in response to an earlier question. For all 15 sets of contracts (five per account x three accounts) I used just under $10,000 of my buying power so, yeah. about 16% ROI for about 6 hours. And there's virtually no limit to how often I can do that. Lots of BP x modest ROI = 80+% POP = Decent Payday. Works for me. YMMV
I think the limit may come with falling VIX. This strategy works great in high vol environments like now. But once normality returns to the markets (and I hope it doesn't for a while), then things will change.
As an example, in March, when VIX was 60+, I was successfully trading double cals on the SPX on expiry days just like you are doing the IC's now. Making around 10-15% a day. Then towards the end of April that strategy started losing its shine, and I did a couple of small double cal trades this week, and they were break-even at best.
I guess like in other aspects of life, we just need to successfully adapt to the constantly shifting landscape.
Hi Romeg,
Thanks for sharing your experience and findings on here, very helpful. Would you be kind enough to touch on your plan if the strikes come into play (adjusting), or do you just leave as a binary outcome?
Thanks
It depends on the action up to that moment. I yielded to the temptation to adjust yesterday's trades based on what happened in the last half hour of the previous expiration where there was a sudden, sustained push downward after an almost day-long sideways move. Given that it was a Friday and that there was upward momentum I got to thinking "Hmmm. Maybe those calls are a little close in and if I move them out just two strikes I'll be OK. Besides, it's relatively cheap now and will only get more expensive as the day progresses." So I capitulated.
Big and somewhat costly mistake ($633) so, after realizing that mistake, I moved them back to the position you see in the screen shot which is actually one strike closer to the money than the originals. It still cost me about $350 and two ticks up on my PDT counter which will mean that I will either have to sit out Monday or be extra prudent in setting up my trades so as to avoid making an adjustment.
In another couple of months, if I can sustain this track, the PDT worries will disappear but I want to become more disciplined to trust my analysis and observances before I entered the trades. They have been correct EVERY SINGLE TIME since I started doing this. The adjustments I have made have all been costly, though not disastrous, mistakes.
Big and somewhat costly mistake ($633) so, after realizing that mistake, I moved them back to the position you see in the screen shot which is actually one strike closer to the money than the originals. It still cost me about $350 and two ticks up on my PDT counter which will mean that I will either have to sit out Monday or be extra prudent in setting up my trades so as to avoid making an adjustment.
In another couple of months, if I can sustain this track, the PDT worries will disappear but I want to become more disciplined to trust my analysis and observances before I entered the trades. They have been correct EVERY SINGLE TIME since I started doing this. The adjustments I have made have all been costly, though not disastrous, mistakes.
@Romeg were you able to enter an IC today (Mon 11-May) for a decent price?
I looked at the spreads which were around the 2935-2940 (calls) and 2880-2885 (puts) mark, but the premium was not good, and the SPX was around 2915 at the time, and my shorts could easily have been breached. I didn't take any SPX trade, which is as well cos it later rose to 2943 at one point.
I looked at the spreads which were around the 2935-2940 (calls) and 2880-2885 (puts) mark, but the premium was not good, and the SPX was around 2915 at the time, and my shorts could easily have been breached. I didn't take any SPX trade, which is as well cos it later rose to 2943 at one point.
Well, I entered the trade, low premiums and all. My short calls were at 2945. When it hit 2943 I bailed, AT GREAT EXPENSE!
Then the sellers came, late to the party, and, once again proved that my initial research and analysis were exactly correct. Had I stayed in the trade instead of bailing out, I'd be $1300 richer rather than $2700 poorer, a loss of $4000. But, I'm trying to be philosophical and analytical about it and learn from the experience. I'm still "playing with the House's money" (if you ignore the fact that I'm still down $25000+ from where I started).
I will continue to follow the same discipline and strategy and resist the temptation to bail out. Maybe I'll enter a hedging trade, just in case, to ameliorate the loss if it goes South. Or, maybe I'll just sit on my freaking hands or go for a walk. There were still three hours left in the trading day when I jumped; plenty of time to jump out of a window if I needed to.
On the brighter side, it's the first losing day I've had since I re-engineered and re-booted my trading strategy and the longest winning streak I've had since I made my very first trade 10 months ago, not to mention the most lucrative by a couple thousand.
Then the sellers came, late to the party, and, once again proved that my initial research and analysis were exactly correct. Had I stayed in the trade instead of bailing out, I'd be $1300 richer rather than $2700 poorer, a loss of $4000. But, I'm trying to be philosophical and analytical about it and learn from the experience. I'm still "playing with the House's money" (if you ignore the fact that I'm still down $25000+ from where I started).
I will continue to follow the same discipline and strategy and resist the temptation to bail out. Maybe I'll enter a hedging trade, just in case, to ameliorate the loss if it goes South. Or, maybe I'll just sit on my freaking hands or go for a walk. There were still three hours left in the trading day when I jumped; plenty of time to jump out of a window if I needed to.
On the brighter side, it's the first losing day I've had since I re-engineered and re-booted my trading strategy and the longest winning streak I've had since I made my very first trade 10 months ago, not to mention the most lucrative by a couple thousand.