Favorite Trading Strategies
- Thread starter exQQQQseme
- Start date
I just want to know why ?
My favorite strategy is not really a strategy but more of an 'approach'.
It's straight up call buying...or put buying using deep in-the-money calls or puts on select underlying stocks/ETFs/indexes....using deltas north of .70.
It sounds almost too simple. It is...and it isn't.
And there is nothing novel or new here. It's a noted strategy. But I have morphed it a little.
The risk component lies more here in the stock option selection, as you would imagine. Obviously the filters one uses here for the spreads/interest/liquidity must be tight.
Just a few key trades per day. Sometimes there are none that go through the filters and there are zero trades per day. Patience is an important attribute accordingly. Sometimes there are more trades than you can handle and then you tighten your filters more so there are fewer trades for that day...thereby, minimizing risk further, in theory.
The batting average here is a little higher than some of other 'strategies' most of us have probably employed here. The reward is a little lower. But time in this context is not expensive. Nor are the missed opportunities.
Average hold is between 2 hours and 3 days....but most are not carried overnight.
Stock/ETF/idex option selection becomes the key here and is carries the higher risk component. Fundamentals become nearly as important as the technicals defining the entry and exit points.
We're talking anywhere from 20 trades per month to perhaps no more than 40. The number of trades is irrelevant. The missed opportunities are 'relatively' irrelevant.
But this is full time stuff...because the time you spend consists more of perusing the opportunities more than managing the trades. What is going on 'fundamentally' in every time frame with the underlying stock must be discerned more accurately here. It is an additional component, so therefore, you are adding risk accordingly. Yet the 'value added' pays off.
It's much like a batter being at the plate having unlimited balls. You don't have to swing. If you have more than 4 balls, you don't walk. And it is not important to hit home runs. A double every now and then and the occasional triple is fine. You have to hit more doubles than singles for the appraoch to be profitable commensurate with the risk incurred.
But it is very doable.
I would define a double here as a 20% gain on a trade.
Losses are confined to 15% less the occasional market meltdown/meltup/gapped market opening.
It's straight up call buying...or put buying using deep in-the-money calls or puts on select underlying stocks/ETFs/indexes....using deltas north of .70.
It sounds almost too simple. It is...and it isn't.
And there is nothing novel or new here. It's a noted strategy. But I have morphed it a little.
The risk component lies more here in the stock option selection, as you would imagine. Obviously the filters one uses here for the spreads/interest/liquidity must be tight.
Just a few key trades per day. Sometimes there are none that go through the filters and there are zero trades per day. Patience is an important attribute accordingly. Sometimes there are more trades than you can handle and then you tighten your filters more so there are fewer trades for that day...thereby, minimizing risk further, in theory.
The batting average here is a little higher than some of other 'strategies' most of us have probably employed here. The reward is a little lower. But time in this context is not expensive. Nor are the missed opportunities.
Average hold is between 2 hours and 3 days....but most are not carried overnight.
Stock/ETF/idex option selection becomes the key here and is carries the higher risk component. Fundamentals become nearly as important as the technicals defining the entry and exit points.
We're talking anywhere from 20 trades per month to perhaps no more than 40. The number of trades is irrelevant. The missed opportunities are 'relatively' irrelevant.
But this is full time stuff...because the time you spend consists more of perusing the opportunities more than managing the trades. What is going on 'fundamentally' in every time frame with the underlying stock must be discerned more accurately here. It is an additional component, so therefore, you are adding risk accordingly. Yet the 'value added' pays off.
It's much like a batter being at the plate having unlimited balls. You don't have to swing. If you have more than 4 balls, you don't walk. And it is not important to hit home runs. A double every now and then and the occasional triple is fine. You have to hit more doubles than singles for the appraoch to be profitable commensurate with the risk incurred.
But it is very doable.
I would define a double here as a 20% gain on a trade.
Losses are confined to 15% less the occasional market meltdown/meltup/gapped market opening.