How will you guys be trading volatility next week?
Let's share some strategies!
buying weekly VXX puts when VIX is above 20 or 25?
Let's share some strategies!
buying weekly VXX puts when VIX is above 20 or 25?
How to trade volatility next week?
- Thread starter stockoptionstrader
- Start date
I don't think it will get anywhere close to 25. That would be a gift. I think 20 would be a gift. Use 18.9
Yes, but do you think it's good to buy weekly options? I think it's safer to buy options expiring 2 weeks further but the reward is a lot less then.
I take back what I said. I looked at the option chains on VXX, and because of the 4 for 1 split, the option chains are ... imo.... too complicated to figure out. That probably sounds dumb to a lot of people here, but I won't trade something that I need to be doing mathematical gymnastics in my head with.
That being said, to answer your question... no, I don't think its better to go two expirations out. But it depends on what you are trying to accomplish I guess. If your plan is to time the volatility in the underlying and make a quick scalp, the weeklies are the way to go. ITM weeklies I might add. On a Monday morning you are going to have to go several strikes out to minimize time decay to the utmost. Time decay is the enemy. Especially if when you pull the trigger you are wrong on the direction of the underlying. The farther out in the money you go, the greater the buffer you have in waiting for the underlying to move in the direction you anticipated.
If your timing is right however, and the underlying is moving nicely.... your time frame on trading like this should be no more than 5 minutes to 2 hours. If you get stuck because you were dead assed wrong and you want to hold on overnight, thats where the strategy of buying DITM with minimal time decay protects you. You just better hope you are not wrong the next day however.
Again, it all depends on what you are trying to accomplish and also how much you are playing with, both in total (Pattern day trader rule) and in specific, to that trade. But for quick in and out scalps, this is the way to do it. Use the options that expire that Friday. Divide the trading week into ten sectors. Each day has two sectors, AM and PM. Your trading strategy is basically the same for each sector, however which strike you chose to trade will vary, reason being.... the ENEMY.... time decay.
I would go with out of the money options based on the magnitude of the move you expect, the reward is much bigger than just ITM options.
But if you're wrong,... you lose it all. Not good.
The reward may be much bigger, but dude, as I said before....trading is a marathon, not a sprint.
There will always be a new day and a new volatile stock to play. Conserve your powder. Play smart, play slow. MLB players don't swing for the cheap seats each time at bat. You shouldn't either. If you do, you will wind up losing it all and dropping out of the game. You can take this as gospel.
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Hey Baron.... do you give out a chip or something for the one thousandth post?
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But if you're wrong,... you lose it all. Not good.
The reward may be much bigger, but dude, trading is a marathon, not a sprint (I just wrote that in another post too lol).
There will always be a new day and a new volatile stock to play. Conserve your powder. Play smart, play slow. MLB players don't swing for the cheap seats each time at bat. You shouldn't either. If you do, you will wind up losing it all and dropping out of the game. You can take this as gospel.
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Hey Baron.... do you give out a chip or something for the one thousandth post?
You are right.
But if you're wrong,... you lose it all. Not good.
The reward may be much bigger, but dude, as I said before....trading is a marathon, not a sprint.
There will always be a new day and a new volatile stock to play. Conserve your powder. Play smart, play slow. MLB players don't swing for the cheap seats each time at bat. You shouldn't either. If you do, you will wind up losing it all and dropping out of the game. You can take this as gospel.
_______________________________________
Hey Baron.... do you give out a chip or something for the one thousandth post?
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Like buying a strangle on the open monday, isn't it a no brainer? win-win situation or not necessarily?
Best to sit on your hands on Monday and watch how the dust settles.