Have you bought an OTM option for the home run?

Have you bought an OTM option for the home run?

  • Yes - I have bought an OTM option.

    Votes: 13 100.0%

  • No - I have never bought an OTM option.

    Votes: 0 0.0%
  • Total voters
    13
put about 5k in amzn calls before earnings in 2015 sold them for about 25k the next day took half of the 25k and put it on goog calls the following october and made around 65k, i was only 23 when this happened so i was quite happy to say the least. Lost mabye 15-20k trying to do this over the years again. I always gamble on 1-2 earnings calls every year, it keeps me disciplined throughout the rest of the year.
 
Have you bought an OTM option for the home run?

Yes, and it is the kind I am happy they expire worthless as they more for catastrophic in case of fat finger errors. As far as for profit, am not good at OTM, sort of look at them like playing the lottery.
 
OptionsOptionsOptions said:
Have you bought an OTM option for the home run?

  • Maybe going for the 5x or more one day trade.
  • I assume everybody on ET has tried for the big trade at least once.
More...

Only 1 strike out of the money and I liked the trade enough to risk losing part of the premium. If it did not work, I would bailout and take what is left of the option premium. In the case, of NVDA, I have taken slightly out of the money call option trades because the cost of option premium is too high for my tastes. My position size is $600.00 per trade so, to get a trade in at what I deemed reasonable option premiums, I am willing to take a small risk. Maybe, I have done that 1-2 other times. In 97% of the time, I trade in the money options with about 3 months out till expiration. I want to give myself a margin for error.
 
The one exception for me was a warrant. I had a very good understanding of how the warrant traded and what it was worth. There were also option on that stock. I was a market maker in the option. I looked to buy the warrant, which was OTM, for a discount to options with a similar strike price but less time to expiration. Warrants are almost always worth more as they often can't be shorted. I put large bids out below the market and waited for block trades where the seller looked to be either in liquidation or wanted a tax loss. I once bought 25,000 shares at $0.40 and 10,000 at $0.35. I valued the warrant at $0.65. I did not hedge it right away as the options did not trade every day. Before 30 days were up, the stock jumped and I sold the warrant for an average of $2.50. It traded up to $4.00.

Better to be lucky than good!
 
I nailed the bottom in oil in 2016 using DWTI otm puts for about $85k overnight. I was a few days early to the trade and added to the position each day. The only puts that really paid were the final buy on the close on the last day (around 15x return if I remember), but they more than made up for everything else. That was a fun night seeing oil futures trading way up.
 
Homerun options used to be my kind of options. The low volatility of the past couple of years have really hurt home run trading, but it seems to be making a move back. I watched a LULU weekly 115 call just last Friday open at $1 and traded as high as $7. If you're looking to hit home runs on day trading options, then there's only one way to do it. Buy those calls or puts a couple of strikes out of the money within 30 minutes of the market open on a Friday on a high beta stock that just reported a surprised earning result. These suckers will fly most in the 300-400% returns, but you'll get your 1000% returns too. The win ratio is low at about 2-3/10 though, so do account for that.
 
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