Help me identify the right options trade

[Mike805]

Hello,

I'm looking to take a straight equities trade and trade it using options.

Here are some of the details of the equities trade and what I'd like to accomplish with the option trade:

1. The equity trade buys when vol is up, I want the options trade to be short vol.
2. The equity trade buys expecting price to rise, I want the options trade to capture any rise in underlying price.
3. If need be I am willing to be assigned the stock. I don't want to just sell puts though.
4. Fixed risk would be nice, although point 3 implies I might see a significant drop.
5. 4 week hold time (20 days).

I'm hoping someone can help me through the pros and cons of what I can do with various options strategies. FWIW I already sell naked puts (on stocks I eventually want to own) and trade verticals, but, that's where my knowledge ends.

Thanks,
Mike

 

[cdcaveman]

i would think if vol falls and price goes up.. an otm call fly would do well..

 

[Mike805]

Ok, thanks. So I'm buying a call spread and then selling a higher call spread. My gains are capped and I'm not sure how this trade takes advantage of dropping vol?

How can I alter this trade to take better advantage of the dropping vol, and, take on more risk? I am willing to own the underlying...

 

[cdcaveman]

Calendars.... diagonals..... more agressive is more otm and closer to expiratiin