Ima go Broke Trading Long Options...Which Strategies to Focus On?

[murray t turtle]

i know exactly what you are saying...from time to time i trade options on leveraged ETFs or vol...timing must be perfect as they stay in a constant downtrend with a major spike once in a blue moon.

as a matter of fact I am holding SQQQ and UVXY calls currently getting my ass handed to me like a bum lol.

IF i lost money on sqqq PSQ or sds in FEB\MAR or SEPT, could still be a good trade in the long term.
BUT inverse ETFs tend to underperform to the max compared to qqq, QLD,TQQQ,spy,SPYG.+ many ARK Etfs+ have NO expiry dates+ nice bid/ ask spread................................................................................................................. Thanks

 

[gtober]

great reply thank you for posting that.

I tend to gravitate away from day trades...because i suck at it lol. 95% of the time i place a day trade i lose money...I love the action, but I lose money too frequently and avoid unless i see something i just cant stand passing on.

I usually buy 3m-1y options to give my theory some time to mature...look for big swings to exit but most of the time theta kills me lol.

"trick is when to take profits" truer words have never been spoken at least concerning my mistakes...I recently let a $100k profit evaporate down to roughly $5k before exiting...sickening man.

I've been reading along and have been luring for a while on EliteTrader. I just wanted to point out that if your biggest problem is letting profits turn into losses or maybe significantly less profit there is a VERY simple solution to this. Roll your options out or down or however you want to describe it. You're long the $350 SPY call option. You have $50 profit. Roll up to the $380 or $390 call option. You can roll forward in time or not. Your choice. Now you've protected your profit, you've paid some extrinsic that's true, and you can sit on SPY for another 50 if you like. The most you can lose is whatever the new option is worth. I would, and do, take profits like this all the time. For a lot less than $50.

 

[zghorner]

I've been reading along and have been luring for a while on EliteTrader. I just wanted to point out that if your biggest problem is letting profits turn into losses or maybe significantly less profit there is a VERY simple solution to this. Roll your options out or down or however you want to describe it. You're long the $350 SPY call option. You have $50 profit. Roll up to the $380 or $390 call option. You can roll forward in time or not. Your choice. Now you've protected your profit, you've paid some extrinsic that's true, and you can sit on SPY for another 50 if you like. The most you can lose is whatever the new option is worth. I would, and do, take profits like this all the time. For a lot less than $50.

nice first post. Happy to see an ET cherry being popped in my thread.

 

[Cabin111]

Over the years my option trading strategy has changed...It almost isn't even trading options, it is so conservative!! With inflation peeking through the fence, and people from around the world investing in the US market, here is what I now do...Just me.

Example (as I write), buy 100 shares of QQQ. Do I want to keep it 5 years for now?? Same with SPY...The answer is yes. QQQ is at $318 something. Buy 100 shares and do a leap to Jan 23...At the $400. price. I'll get about $13-$14. for the option. I am doing the same with BABA, McDonald's, Apple, Target, ADM, Coke. If we go into a recession...I still have quality. I will wait for a comeback then do more covered calls.

Just own and hold quality with a small amount of option money. Any dividend is bonus. It has taken me 30 years to figure out this way of trading. The government printing money throws a wrench into the mix...

The other way I will trade is with companies I am not too hot for...Example Boeing. This year I bought 100 shares of Boeing at $179.?? I then did a covered call for the Jan 22 $180...I got about $21. ($2,100) for the option. If Boeing crashed (Covid, computer problems, etc.) I still will own a quality company. It would be back at sometime. I just collect the option money like a bond. Do I care if Boeing gets called away...Not really. Would it be back at sometime if my option expired and the price was $120.? I think so....I could option the Jan 24 for $180 and get OK option money for it. I did this same move with BABA.

So two trades I do...Covered calls...Way out of the money, or just out of the money, depending on the stock...

 

[ironchef]

I think you need to find setups with a bigger r:r profile. That CLX trade was kind of luck that it worked out, but if you are buying options outright you need to target like 3-5x+++ on a winner to make up for all the losers. The MJ trade (assuming calls) were well itm and you should have taken the gains on 2/10. It's an etf, you shouldn't expect more than that move.

We are looking for things that are going to move a lot in a short amount of time. For example my favorite setup today is VIAC short. It's up a ton lately and we could get a market breakdown today/tomorrow (SPY ath? that's nuts), so a real break in VIAC would be around $78-82. I'm long $83p for tomorrow. Max loss is around $0.45 (I would scale out for a loss if the market keeps strong through tomorrow) and max win is around $5. It either works or it doesn't and I can't control that...but the r:r is there.

You mentioned paying more to be closer to ITM. That's a personal preference, but make sure you are at least 3-5x target of your price or the trade isn't worth it. Many trades I take are in the 20x range (which means I'm pretty far otm), and those pay for all the little losers plus a lot more.

Agree.

And the reason 80-90% of my trades are long is because to get that type of payoff, I needed to go OTM and I need lots of trades to catch the statistics. Tastytrade's telling their viewers to "trade often trade small" applies here.

Of the 10% shorts, listen to tastytrade is like asking for trouble, they are like playing Russian roulette so I traded very few times but with leverage and only when conditions were right.

 

[qlai]

Of the 10% shorts, listen to tastytrade is like asking for trouble, they are like playing Russian roulette

Why do you say that? When I listen to them, they always say to trade when IV rank is high. This filter should be good, no?

 

[bln]

www.Reddit.com/r/thetagang

Yes but most of what is going on there is reckless gambling what I can see. Most guys there does not understand or even know the concept of "risk".

It do work out for them right now because it is a strong bull trend since march 2020. In a sideways consolidating market or down trend they will be taken to the cleaners.

 

[Nobert]

Hey man,

(The title is bit over the top)

 

[zghorner]

Hey man,

(The title is bit over the top)

man the dude asking that question was so rude I was cracking up lol...what an ass.

Nothing but respect for Buffet...great example of success via following your passion. Not going to take his advice though haha. I also watched the video you posted of Morgan Housel which led me to watch several others and he is exactly right as well...the vast majority of people would do best parking their money in index funds like Vanguard...adding on each dip...and focus on other work. I admit if I had done that instead of pursue trading, my accounts would be way ahead instead of way behind currently.

I think the difference is I actually want to be a trader...I love it. I have always loved buying and selling...I have traded physical goods my entire life starting as a teenager getting my dealers license to flip vehicles and since have done so with all sorts of goods, motorized or not and always successful doing so. I always wanted to trade in the market but was intimidated and scared because I really didn't know anything about it or anyone who traded...I regret not getting involved much sooner to be honest.

What i have found out so far comparing my lack of success in the market to my experience as a trader of physical items is this: #1) I was basically just taking advantage of arbitrage opportunities with goods...get familiar with a product, notice a mispricing, purchase then turn around and sell almost immediately for what it was actually worth at a profit. Some things required some elbow grease I suppose but I avoided major projects as it eats up too much time.
#2) I am a naturally good salesman...also professionally trained by Halliburton (to sell drilling fluid jobs to operators)...i am friendly and respectful in person which makes a difference...also my listings always had nice pictures and worded very clearly and neatly...decent marketing skills.

I say that because virtually everything that gave me an edge in physical goods is completely eliminated in trading shares/options/etc...Arbitrage opportunities are all but disappeared and more than likely only available to big players trading global markets...im not that guy. The market doesn't give a sh!t how friendly or personable i am either...or how well i take pictures or write a listing etc...

So at this point i have invested a ton of time and money working towards figuring this out...and I would be a liar if i didn't say i have thought about quitting 100 times. Each time I come to the conclusion that if i quit on something i want so badly i will regret for the rest of my life.

Have you ever watched the Art Williams "Do It" speech? its incredible...he also has a saying that goes like this: "all you can do is all you can do...and all you can do is enough". And the problem with most people is they "think" they are giving something their all but in reality they aren't really 100% devoted...much of they time they more or less mess around and when it doesn't work out they quit and move on. This is me to a degree. I have put in a lot of work but im obviously not anywhere near where i should be and there is still plenty left to be done.

I have pinpointed some serious weakness I have and working on them every day.

 

[Nobert]

man the dude asking that question was so rude I was cracking up lol...what an ass.

Nothing but respect for Buffet...great example of success via following your passion. Not going to take his advice though haha. I also watched the video you posted of Morgan Housel which led me to watch several others and he is exactly right as well...the vast majority of people would do best parking their money in index funds like Vanguard...adding on each dip...and focus on other work. I admit if I had done that instead of pursue trading, my accounts would be way ahead instead of way behind currently.

I think the difference is I actually want to be a trader...I love it. I have always loved buying and selling...I have traded physical goods my entire life starting as a teenager getting my dealers license to flip vehicles and since have done so with all sorts of goods, motorized or not and always successful doing so. I always wanted to trade in the market but was intimidated and scared because I really didn't know anything about it or anyone who traded...I regret not getting involved much sooner to be honest.

What i have found out so far comparing my lack of success in the market to my experience as a trader of physical items is this: #1) I was basically just taking advantage of arbitrage opportunities with goods...get familiar with a product, notice a mispricing, purchase then turn around and sell almost immediately for what it was actually worth at a profit. Some things required some elbow grease I suppose but I avoided major projects as it eats up too much time.
#2) I am a naturally good salesman...also professionally trained by Halliburton (to sell drilling fluid jobs to operators)...i am friendly and respectful in person which makes a difference...also my listings always had nice pictures and worded very clearly and neatly...decent marketing skills.

I say that because virtually everything that gave me an edge in physical goods is completely eliminated in trading shares/options/etc...Arbitrage opportunities are all but disappeared and more than likely only available to big players trading global markets...im not that guy. The market doesn't give a sh!t how friendly or personable i am either...or how well i take pictures or write a listing etc...

So at this point i have invested a ton of time and money working towards figuring this out...and I would be a liar if i didn't say i have thought about quitting 100 times. Each time I come to the conclusion that if i quit on something i want so badly i will regret for the rest of my life.

Have you ever watched the Art Williams "Do It" speech? its incredible...he also has a saying that goes like this: "all you can do is all you can do...and all you can do is enough". And the problem with most people is they "think" they are giving something their all but in reality they aren't really 100% devoted...much of they time they more or less mess around and when it doesn't work out they quit and move on. This is me to a degree. I have put in a lot of work but im obviously not anywhere near where i should be and there is still plenty left to be done.

I have pinpointed some serious weakness I have and working on them every day.

Will drop you a dm & great reply.

P.s i know that speech