Directional Option trades

FCXoptions

FCXoptions

How many of you all make purely directional option trades intraday? I did for a little while with decent success but ultimately ended in failure due to poor risk management and the fact I knew nothing about the reasoning behind my trades. I just had a simple strategy, based on something that took place every single day in a stock and I figured out how to capitalize on it. Then it stopped working all of a sudden and I blew up quick!

I took my first option trade in like 6 months today, and it was a success. I used a COMPLETELY different method of approach though, and ended up leaving a ton on the table. But a profit is a profit so I was happy to say the least.

I am not planning on getting back in the options game, I have different plans. I was just kinda curious if there were many people on here making pure directional trades though.
 
i don't see the benefit in trading options intraday unless you think the gamma will actually matter.

you are better off trading spot and taking the 5:1 day trading leverage.
 
Fcx..I have traded options intraday and with swing trades...had a few big winners with swing trade but more losers due to decay and market action..Intraday trades have had moderate success..
 
Quote from newwurldmn:

i don't see the benefit in trading options intraday unless you think the gamma will actually matter.

you are better off trading spot and taking the 5:1 day trading leverage.
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Why don't you see a benefit? Buy roughly ATM expecting price to move a specific direction, and if you are right then sell once you are up! Lol
 
Quote from rfriend73:

Fcx..I have traded options intraday and with swing trades...had a few big winners with swing trade but more losers due to decay and market action..Intraday trades have had moderate success..
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Yea, holding overnight always resulted in me getting a bad nights sleep. A big reason why is I was trading to the hilt on my account. I was all in. But intraday resulted in much better sleep lol.
 
You're adding an order of complexity to intraday trading which probably doesn't make sense unless you're paranoid of blowing through stops in the underlying. Overcoming the spread will be very difficult unless you're trading SPYs, etc. Why add vega to the mix?

As new states, you should probably stick to the underlying in daytrading.
 
Quote from atticus:

You're adding an order of complexity to intraday trading which probably doesn't make sense unless you're paranoid of blowing through stops in the underlying. Overcoming the spread will be very difficult unless you're trading SPYs, etc. Why add vega to the mix?

As new states, you should probably stick to the underlying in daytrading.
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Well I initially started with BAC and then moved to FCX, and on FCX I usually have a 1 cent spread, sometimes it will get to 2-3 cents but for the most part ATM the spread is minimal. It hasn't ever really caused any issues, the main reason I started with options was the extra leverage it created. 100 contracts is the usual amount I trade and I (for the most part) don't have an issue with filling the whole order. I just keep the bid/ask size in check before placing a limit order, I also keep an eye on the Greeks. The main one affecting me intraday is Delta so I know how price is going to react as the underlying moves. I like to keep an eye on that of course. So the main reason is just the added leverage of the options vs stock.

My problem in the past was cutting winners short and letting losers run too long though which obviously I decided to work on lol. That isn't a good plan for success.
 
Quote from FCXoptions:

Well I initially started with BAC and then moved to FCX, and on FCX I usually have a 1 cent spread, sometimes it will get to 2-3 cents but for the most part ATM the spread is minimal. It hasn't ever really caused any issues, the main reason I started with options was the extra leverage it created. 100 contracts is the usual amount I trade and I (for the most part) don't have an issue with filling the whole order. I just keep the bid/ask size in check before placing a limit order, I also keep an eye on the Greeks. The main one affecting me intraday is Delta so I know how price is going to react as the underlying moves. I like to keep an eye on that of course. So the main reason is just the added leverage of the options vs stock.

My problem in the past was cutting winners short and letting losers run too long though which obviously I decided to work on lol. That isn't a good plan for success.
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isn't trading directional hard enough? i don't know if i would trade options if i had true skill in trading directionally..
 
Well, if you think of it as a somewhat complicated instrument for leverage it's not so bad. Just don't hold long enough to allow the Greeks to affect you much is the kicker.

Maybe I'm wrong though, seems to be getting a lot of opposition. But using options has never caused me any issues intraday that the stock would not, aside from the increased leverage and if its on an expiration Friday time decay occurs very quickly from open to close. That's been the only hiccup is holding for any amount of time on Friday if price is stagnating, you will take a hit quick.
 
May I ask what your year end % return goal would be for your perfered strategy?
Do you feel you have a better chance of achieiving that goal trading long vs via options?
If you don't have a % goal for year end, is there a certain minimum %, that if you earned that minimum %, you would be satisfied via either strategy?
 
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