How do you find trade setups?

A

Alechka

A couple of questions to option traders who don't trade indexes only.
1) How do you go about finding trade setups: do you search the whole universe of stocks or you have a basket that you play over and over? Or maybe you look at stocks in specific sectors?

2) What are the main option strategies that you use? Straight calls/puts, spreads, butterflies, other? And why?
 
Exits are much more impotant than setups BTW...your risk management will also determine your trade expectancy more than setups, read some Van Tharp for more info. If this sounds crazy to you than you are on the right track.
 
You'll find successful traders for each of the existing strategies, using all kind of selections. Your poll will not give you any hint for what path to follow. Study and experiment until you'll find your niche. Money management (position sizing) is very important to keep you in the game.
Quote from Alechka:

A couple of questions to option traders who don't trade indexes only.
1) How do you go about finding trade setups: do you search the whole universe of stocks or you have a basket that you play over and over? Or maybe you look at stocks in specific sectors?

2) What are the main option strategies that you use? Straight calls/puts, spreads, butterflies, other? And why?
More...
 
Stick with a finite universe. Criteria based on modeling is equivalent to wet blankets and retarded brother-in-laws.
 
Looks like I didn't phrase my questions correctly - I was merely looking for someone willing to share their own approach to options trading in general terms without giving too many details. For example: "I am Joe TheTrader and I am trading butterflies on stocks XYZ, ZYX, etc. and credit spreads on whatever other stocks" The qustion "Why?" was "Why do you like this particular strategy?", not "Why do you choose this strategy in these market conditions?"

I understand that it's possible to find all kinds of trades for different market conditions. It's just interesting to see what experienced options traders like to use in reality.

ElectricSavant,
From your previous posts I thought you don't trade options yourself, you only use advisories. Do you?
 
I can trade options too!

But I am not very good...

But the precept still stands..

Michael B.

Quote from Alechka:

Looks like I didn't phrase my questions correctly - I was merely looking for someone willing to share their own approach to options trading in general terms without giving too many details. For example: "I am Joe TheTrader and I am trading butterflies on stocks XYZ, ZYX, etc. and credit spreads on whatever other stocks" The qustion "Why?" was "Why do you like this particular strategy?", not "Why do you choose this strategy in these market conditions?"

I understand that it's possible to find all kinds of trades for different market conditions. It's just interesting to see what experienced options traders like to use in reality.

ElectricSavant,
From your previous posts I thought you don't trade options yourself, you only use advisories. Do you?
More...
 
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