Options Daytrading?

Quote from Cache Landing:

C'mon OC. Daytrading options can be very profitable, but probably not how the OP is trying to do it.

To the OP I would say not to daytrade options until you've got a bunch more experience. I traded options for about a decade before I started daytrading them. Now I make much more daytrading them than I ever did swing trading them. The strategy is much different and you really have to know what you're doing. There are only a handful of options worth daytrading. Conversely, I would suggest that you practice on e-minis for the next 2 years or so. ES or NQ are my favorite next to NDX and SPX options.

I strongly suggest daytrading NQ first, and then after a couple years if you're doing well, make the transition into NDX options. If you can't make money off NQ, then you'll fail miserably at NDX options.
More...

Now now you know my opinion on daytrading options, especially index options where the spreads are even worse. Just because you can do something does not necessarily make it the best thing to do. To have an NDX options move enough to make the profit worthwhile you have to get a nice move in the NDX index. You can caputre way more of that move using NQ futures which will move almost 1:1 with the NDX move (i.e. if NDX moves 8 points you can almost get 8 points in the NQ as well, not exactly but close) than ATM NDX options with a delta of .60 at best plus the .20 b/a spread.

It is possible to daytrade options but they are not built for daytrading like stocks and futures.
 
What level (there are 5) is optionsexpress willing to give you? generally there is some due dilligence a financial firm must give when granting trading permissions. This is generally based on an inhouse "credit scoring". I just can't see a firm allowing you to write naked puts or some advanced option strategy.
 
Quote from optioncoach:

Now now you know my opinion on daytrading options, especially index options where the spreads are even worse. Just because you can do something does not necessarily make it the best thing to do. To have an NDX options move enough to make the profit worthwhile you have to get a nice move in the NDX index. You can caputre way more of that move using NQ futures which will move almost 1:1 with the NDX move (i.e. if NDX moves 8 points you can almost get 8 points in the NQ as well, not exactly but close) than ATM NDX options with a delta of .60 at best plus the .20 b/a spread.

It is possible to daytrade options but they are not built for daytrading like stocks and futures.
More...

I knew I could get you going. LOL:D

As a general statement, I agree with what you're saying. Futures are much more daytrader friendly. I just want to make it clear that the biggest difficulty in daytrading options isn't the delta because gearing overwhelms the low delta. The biggest problem is the wide spreads. That is why I stick with NDX options. Relative to the options' nominal values, they have very narrow spreads.

Again to the OP. Try yourself on NQ first. Daytrading options very much necessitates strong directional/timing skills. You'll only make money 1/2 as fast with the futures. But you'll only lose money 1/2 as fast too, even while using more distant stops. You also don't have to worry about the PDT rule freezing your account, volatility issues, or time decay. If you can make it trading NQ, then very slowly ease into NDX options.
 
Quote from optioncoach:

Optiosn are not meant for daytrading.

Low deltas compared to movement of the stock

Wide bid/ask spreads relative to the underlying movements.

IV crushes in minor instances

can it be done, perhaps, but you will be spinning you wheels mostly chasing pennies.
More...

Good advice, day trading options can/should only be done on a trading floor, and there "ain't too many left" LOL. You have to compete with the people who see/hear the order flow, and trade with much bigger accounts and pay much lower costs.

FWIW,

Don
 
Quote from Don Bright:

Good advice, day trading options can/should only be done on a trading floor, and there "ain't too many left" LOL. You have to compete with the people who see/hear the order flow, and trade with much bigger accounts and pay much lower costs.

FWIW,

Don
More...

OC's advice was good because the guy is a beginner, but you guys seem to be missing the broader picture.

Assuming the following prerequisites are followed, then daytrading options isn't much harder than daytrading the underlying.

--Heavily traded options.
--No crazy stock-moving events in near term.
--Holding period no longer than 2 hours.
--At least 2 weeks from expiry.
--Relatively low b/a spread.
--Commissions + Slippage isn't greater than 5-10% of projected profit.

It all really comes down to whether or not the trader nails the direction and timing. He doesn't need any more information about order flow or an account any larger than a stock/futures daytrader needs. Saying that an options daytrader must be on the floor is equivalent to saying that a stock daytrader must be on the floor to make money.
 
WARREN... Take my advise trade stocks short term first..

U WILL LOSE ALL YOUR MONEY. There really is so much to know about options, Delta, Intrinsic value, time decay, implied vol..

IF YOU DONT KNOW WHAT THAT MEANS.. DONT TRADE THEM.
 
I will not go out and say you cannot daytrade options, but they were not built for it in my opinion. For daytrading futures and options work much better. If you catch large intraday moves then you can certainly make more money doing it.

For indexes, futures are still better to catch those moves. I cannot deny you can make money just as you cannot deny options were not built for daytrading, especially retail.
 
Quote from optioncoach:

Try swing trading using options looking for positions to hold for a week or a month or two. Might be easier to find positions and manage the risk on your portfolio and no daytrading rules if you stick with it.
More...
Yes, good advice.....and correct me if I am wrong.....daytrading options will flag PDT rule violations....I'm almost positive of that. (PDT = Pattern Day Trader)
Therefore, he would have to trade Prop....and few prop firms encourage options trading.
So this whole concept looks to be a failed one.
 
Quote from optioncoach:

I will not go out and say you cannot daytrade options, but they were not built for it in my opinion. For daytrading futures and options work much better. If you catch large intraday moves then you can certainly make more money doing it.

For indexes, futures are still better to catch those moves. I cannot deny you can make money just as you cannot deny options were not built for daytrading, especially retail.
More...

That's why I said that I agree with your general statement. Options were created for hedging purposes. I just think that statement saying that one needs to be a floor trader is incorrect. I'm living proof of that.

When you compare total costs (commiss + slippage) of equivalent roundtrip trades. You lose just less than 2X as much of your gains as you would've if you traded the underlying.

IMO, if you can overcome that 2X issue, then options are the preferable trade because the gearing allows for enhanced returns. So by default, options are better for large moves while futures are better for smaller moves.

FWIW, I think anyone who daytrades options on single equities is nuts.
 
You must log in or register to reply here.
Back
Top