Intraday options strategies

J

jgiasi

Hello,

I essentially day trade two stocks - Goog and OIH. I trade 500 - 1000 shares and look for .25 to 1.00 + moves. Holding periods can range from 2-3 minutes to 15 - 30 minutes.

Generally, I have a pretty good idea on the direction of the impending price movement but my dilemma is the entry. Lets say I buy OIH but it slips .10 to .15, more often than not I take the stop loss since I can not be sure that I am right on the expected direction (and a .10 drop would equate to about a $120 loss on 1000 shares including commissions). However, more often, after the drop the expected move (in this case up) will commence.

Therefore, I am looking to delve into options strategies where I can afford some price slippage before the equity moves in my anticipated direction.

Outside of buying calls and puts directly to hedge my equity position, does anyone know of any other options strategies that I could employ. Also, is this concept even feasible given the characteristics of options relative to my approach.

Any help from savvy options traders would be greatly appreciated.

Thanks, Jennie
 
Jennie:

I would not advise to trade options on such a short time frame. This is just me, maybe someone else does it but at the extreme least; morning and afternoon, but I would go 2-3 days as a min.

Not sure how "savy" I am, but that sounds like a high risk approach. If I am wrong, I hope someone will correct me.

That would be cool if you could do it on such short time but entry and exit sometimes takes hours in itself. (At least in my experience).

:cool:
 
Your exactly right Mr Spread. Slippage and the higher cost of commission do not lend themselves to intraday trading of options. Every now and then it falls into your lap and you take it but for the most part options are best used for trading theta and volatility, not pure directional short term bets.
 
If you have a method for identifying big breakouts, give it a try. Ultimately, you'll have to contend with the "greeks" in addition to price movement
 
Good question Jennie. I have been struggling with some quick intraday trading strats to help me sit through a few extra ticks of noise when trading the index futures. The best I have come up with is selling atm puts when market is crashing into your buy zone and buying atm puts when market is rising into your sell zone. This way you always have the greeks working with you if your direction is correct.
 
I don't recommend using options to daytrade. Slippage will kill you. That said, if anything use frontmonth ITM options to minimize other greeks so you are focused on delta. Using frontmonth ITMs are a great way to swing trade IF you are right. Other then that, you need to trade the most liquid ATMs on the most liquid underlyings. Liquid = 5 to 10 cent bid/ask, not volume wise.
 
Sorry to disagree but if you are daytrading stocks you CANNOT afford slippage nor would you want to move to a product that has GREATER slippage. Slippage is a cost so if you say you can afford slippage then you are not managing the positions correctly.

Look for errors in your entry timings so you are not stopped out with a $0.15 pullback only to watch it move $1.00 in your favor. Adapt your signals for entry, do not raise your costs to trade. That could not improve your performance.

Options will not budge at all if GOOG moves $0.50, add in slippage and commissions and you will really be eating into your bottom line.

When the stops are not working, adapt and adjust, do not look for the product that costs you more :D
 
I know guys who try to scalp the oih and get the same results, and goog is much much worse. Options are the way to go say for the OIH's last trips from 133 to 150 and back to 135. Those trips were good for 300+ percent on the front contracts. One problem with OIH contracts is they don't trade until about 15 minutes after the open.

But with the bp you're using for those 1000 shares, the equivalent would be 10 OIH contracts but the cost for those would be less than $5000. Goog is a bit trickier with the volatility every day can be a double digit gainer or looser.

You might take a look at the AAPL contracts which are alway cheap and the underlying tends to trend better. The conracts for all three of these are about as liquid as they get on the equity side. GL

http://tequity.blogspot.com
 
Quote from pv150:

I know guys who try to scalp the oih and get the same results, and goog is much much worse. Options are the way to go say for the OIH's last trips from 133 to 150 and back to 135. Those trips were good for 300+ percent on the front contracts. One problem with OIH contracts is they don't trade until about 15 minutes after the open.

But with the bp you're using for those 1000 shares, the equivalent would be 10 OIH contracts but the cost for those would be less than $5000. Goog is a bit trickier with the volatility every day can be a double digit gainer or looser.

You might take a look at the AAPL contracts which are alway cheap and the underlying tends to trend better. The conracts for all three of these are about as liquid as they get on the equity side. GL

http://tequity.blogspot.com
More...

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:p
 
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