What if there are no events?
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options strategy.. pls help me to improve
- Thread starter turco_directo
- Start date
Yes, I thought so too but when I tracked the IV of the options I owned, often they did not change that much on a very short time scale (like a few min) so to day trade options on a short time scale maybe I only have to deal with price change?
I welcome your comments.
Regards,
I think you will be eaten up by the bid offer. You pay more in dollars in bid offer for an option than for the underlying and you get much less delta exposure.
Suppose you trade ATM options. They have a delta of approximately .50 so that means that you need two options to nab the same initial move as the underlying which in turn means that you are paying double the number of spreads and they tend to be wider than the underlying's B/A.
So for scalping small moves, the underlying performs better. For larger moves, the leverage of double the number of options pays off better. All I'm suggesting is that the initial hurdle before profitability is higher with options.
So for scalping small moves, the underlying performs better. For larger moves, the leverage of double the number of options pays off better. All I'm suggesting is that the initial hurdle before profitability is higher with options.
I agree. I think that was why MrScalper advocated trading indices with reasonable bid/ask spread. As for delta exposure, how about buying the equivalent 1 delta option?I think you will be eaten up by the bid offer. You pay more in dollars in bid offer for an option than for the underlying and you get much less delta exposure.
Thanks.
Sorry we took your thread in a different direction. Here are my comments on your original post:I'm working on a new options strategy, I need folks to improve my odds.
-picking few potential volatile stocks before market opens (using stocktwits trending stocks, CNBC pre-market news, DOW Index upgrades) and go with the one above 20 SMA daily
-no complicated option legs, no spreads. only one way put or call
-Only first one hour of the morning enter and exit strategy
-no profit target, only timing based performance. Enter at 9:33 or 9:35 and exit by 10:27 am.
-3 times a week, my acct below 25k. no carry over, close position same day
-avoid trading on fridays, triple witching, 4 trading day weeks
-No ETFs at all means. I don't want to trade ETF options since %70 of the time they chop and end up eating your delta.
no stock under 40 $ a share
What you folks think? I'm looking positive helpful inputs
thanks
1. Essentially you are making a directional bet and I understand your philosophy. It is important you have a good methodology that gives you a high enough probability. So, back test as much as you can. It is more than win rate, it is positive expectancy you are after.
2. I am with you, no complex legs, just simple singles. As an amateur, I am not smart enough to do complex combination and also found it not necessary. KISS.
3. First hour tends to be very volatile. I usually avoid it.
4. I am surprise you can achieve positive expectancy with just a time trade!
5. In my situation, I have not found trading on Friday a detriment. When I get in/out, I don't wait.
6. I am with you. I don't trade ETF/indices, too crowded. I rather take a large bid/ask instead of betting against the professionals.
Regards,
Make sure you qualify for day trading with your broker.I
-Only first one hour of the morning enter and exit strategy