Need Advice for Directional Plays

A

achilles28

Hi Everyone,


I work a full time job and don't have the time to stalk good entries on the underlyings.

To put it bluntly, the time required to wait at the computer for a good entry would put me out of a job.

What i need is an instrument that can take advantage of my directional bias but remains altogether forgiving on precise entries/timing. Hence, options.

After combing the boards, it seems purely directional plays (buying calls and puts) are frowned upon because the added risk of volatility/time. "You can be right on the move and direction and still lose."

There has to be a way.


If one has a good idea where the market is going within the next 24-36 hours, how can a purchased call or put not profitably capture this???


To answer my own question :) If IV collapses during a rally and sell offs are associated with high IV, then bottom picking would imply high premiums (due to the sell off's high IV) that eventually collapse on the ensuing run up. Okay, I see your point.

So for the directional players out there, can we only expect to (safely) profit on sell offs? And rallys built on low IV?


I guess the crux of the issue for directional players is not knowing if a call option (bought after a large sell off) will expire ITM. Because if it doesnt, selling it prior might not turn a profit because the IV on the rally has taken a proverbial shit in the toilet.


I'll be honest. Writing puts or calls scares me and is something I do not want to do.

I just want to catch these move and still keep my day job!

Any suggestions?
 
There is nothing that can predict direction, otherwise everybody would be using it. The prediction must be much better than 50%!!! UP or Down. A coin flip is 50% accurate.

You may want to consider trading non-directional strategies such as iron condor, double diagonals, double calendars.... Not exciting, but less stress.

I heard this from the instructor:

"The only thing I can predict is the market is going to fluctuate. The market is going to fluc down or it is going to fluc up."
 
Atozcom.

With all due respect, try telling that to anyone who trades spot fx, futures, equities, index funds(cash). etc.

People bet (and win) on direction all the time.

Easy? Of course not. Neither are options.

Besides, I don't claim to have prophetic insight into the markets. I only have a 'good idea' what any given market will do once or twice a month (if that). Probabilities.
 
I respect your opinion, but I wholeheartedly disagree.

I'd rather not stray from the original query as to what option strategy would be best for a directional player/caveats/tips etc.

If you could speak that, I am all ears.
 
Quote from achilles28:

Hi Everyone,
I work a full time job and don't have the time to stalk good entries on the underlyings.
To put it bluntly, the time required to wait at the computer for a good entry would put me out of a job.
What i need is an instrument that can take advantage of my directional bias but remains altogether forgiving on precise entries/timing. Hence, options.
After combing the boards, it seems purely directional plays (buying calls and puts) are frowned upon because the added risk of volatility/time. "You can be right on the move and direction and still lose."
There has to be a way.
If one has a good idea where the market is going within the next 24-36 hours, how can a purchased call or put not profitably capture this???
To answer my own question :) If IV collapses during a rally and sell offs are associated with high IV, then bottom picking would imply high premiums (due to the sell off's high IV) that eventually collapse on the ensuing run up. Okay, I see your point.
So for the directional players out there, can we only expect to (safely) profit on sell offs? And rallys built on low IV?
I guess the crux of the issue for directional players is not knowing if a call option (bought after a large sell off) will expire ITM. Because if it doesnt, selling it prior might not turn a profit because the IV on the rally has taken a proverbial shit in the toilet.
I'll be honest. Writing puts or calls scares me and is something I do not want to do.
I just want to catch these move and still keep my day job!
Any suggestions?
More...

Translation; "Will someone do the work for me for free?".
 
I am looking for help/guidance -- which incidentally, your sorry ass has done too many times to recall.

If you're going to be a smart about it, take it to another thread.
 
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