How to harvest 60% success right direction on SPY?

[i960]

That doesn't interest me. But others might find that tidbit of info useful.

Okay well how about 1256 contract rule taxation? Does that interest you? Or would you prefer paying 100% short-term gain tax on SPY and accounting for every single trade at the end of the year?

The only thing SPY options have going for them is liquidity during market trading hours and a smaller size vs ES or SPX.

(Assuming you're in the US)

 

[Erick Gomez]

If you're long-term 60-70% correct on the direction then Nadex binary options might work. They're not leveraged but your risk is fixed, don't have to worry about decay and you can avoid stop-outs. Your gain will be less than your loss on each trade but your winning pct will give you the positive expectation.

Another idea:

As far as unlimited risk with choosing the ES to make your play, you could use the Nadex ES binary options (or spreads) to hedge your downside risk. That is, you can make your stop super large: to the base or ceiling of your BO spread, for example. You can find youtube vid examples on this strategy.

Interesting I thought that Nadex was a scam

 

[longthewings]

@longthewings are you suggesting using weeklies instead of 40DTE?

No. Just pointing out that using longer dated options is not somehow safer because your theta burn rate is lower. Theta is a derivative calculated from a model that's wrong, so I wouldn't get too caught up in it. It's a theoretical sieve used to bleed premium offsetting continuous dynamic gamma hedging within a no-arb, complete market world. In the real world, the market is not going to give you a free pass on a longer expiry. If you buy longer dated options and the market doesn't move, at some point the vol will be repriced lower and you will get smoked.

 

[OTM-Options]

• Have you planted the seeds yet?
• If so when will the harvest be?
• Do you expect a bumper crop?

 

[Erick Gomez]

@OTM-Options you are very active here I am doing some paper trading still not able to crack it, It looks like I my destiny is to be a option seller instead of been long on options.

Pro side- Better probabilities
Con Higher the Risk <- This why I am not happy with my current strategy

EG