Percent Profit: Weekly Options vs. Futures vs. Futures Options

W

Wait4proof

This week I've been trying to get a clearer understanding of Futures trading. I know that the best way for me to learn this would be to open a Futures account. It's just that I really do not want to head down that path yet (without knowing).

My question is in regards to directional trading:

What gives you the biggest bang for your buck?
1) Weekly Options (stocks)
2) Futures
3) Futures Options

Personally, I love Weeklies - they are the perfect money machine. But if there is more money in #2 and #3 then I'd like to know. My confusion comes from the way margin works in a Futures account. So, when I ask, which has the "biggest bang for your buck", I mean, which based on the actual money tied-up - whether it's cash or margin (I'm confused).

If I were to guess, I would pick Weekly Futures Options (#4?) as the most leveraged instrument invented - but I have no clue. For instance, I find that stock Weeklies (slightly OTM) can make 50% ($2000 into $3000) on ATR movements, and 100% if you happen to catch the right swing trade (from OTM to ITM).

Thanks for helping me make some decisions.
 
Quote from Look4aSine:

This week I've been trying to get a clearer understanding of Futures trading. I know that the best way for me to learn this would be to open a Futures account. It's just that I really do not want to head down that path yet (without knowing).

My question is in regards to directional trading:

What gives you the biggest bang for your buck?
1) Weekly Options (stocks)
2) Futures
3) Futures Options

Personally, I love Weeklies - they are the perfect money machine. But if there is more money in #2 and #3 then I'd like to know. My confusion comes from the way margin works in a Futures account. So, when I ask, which has the "biggest bang for your buck", I mean, which based on the actual money tied-up - whether it's cash or margin (I'm confused).

If I were to guess, I would pick Weekly Futures Options (#4?) as the most leveraged instrument invented - but I have no clue. For instance, I find that stock Weeklies (slightly OTM) can make 50% ($2000 into $3000) on ATR movements, and 100% if you happen to catch the right swing trade (from OTM to ITM).

Thanks for helping me make some decisions.
More...

You are asking all the wrong questions. You are not buying a smart phone, you are trading. No such thing as bang for the buck. This is not a 99 cents store.
 
Quote from Look4aSine:

This week I've been trying to get a clearer understanding of Futures trading. I know that the best way for me to learn this would be to open a Futures account. It's just that I really do not want to head down that path yet (without knowing).

My question is in regards to directional trading:

What gives you the biggest bang for your buck?
1) Weekly Options (stocks)
2) Futures
3) Futures Options

Personally, I love Weeklies - they are the perfect money machine. But if there is more money in #2 and #3 then I'd like to know. My confusion comes from the way margin works in a Futures account. So, when I ask, which has the "biggest bang for your buck", I mean, which based on the actual money tied-up - whether it's cash or margin (I'm confused).

If I were to guess, I would pick Weekly Futures Options (#4?) as the most leveraged instrument invented - but I have no clue. For instance, I find that stock Weeklies (slightly OTM) can make 50% ($2000 into $3000) on ATR movements, and 100% if you happen to catch the right swing trade (from OTM to ITM).

Thanks for helping me make some decisions.
More...

It will depend on whether you trade in, at or out of the money options and what days of the week.

if u trade out of the money options on thurs or friday you will be on the wire without a net.:cool:

You also don't have to limit yourself to just one. You can trade all three instruments depending on the trade.
 
Quote from Maverick74:

You are asking all the wrong questions. You are not buying a smart phone, you are trading. No such thing as bang for the buck. This is not a 99 cents store.
More...
I apologize for not being more clear with my question. I'm refering to leverage, which is the most leveraged in your opinion (including margin considerations)?
 
Quote from Cdntrader:

You also don't have to limit yourself to just one. You can trade all three instruments depending on the trade.
More...
I eventually want to focus most of my attention on the SP500 rather than individual stocks. This is why I ask the question in the first place. The SP500 has many instruments (including the SPY) yet only one chart to follow, which is why I want the maximum profit.

Thanks again for the help.
 
Quote from Look4aSine:

I apologize for not being more clear with my question. I'm refering to leverage, which is the most leveraged in your opinion (including margin considerations)?
More...

I understood your question. Let me re-phrase my answer. Instead of trying to make more money by increasing leverage, try to increase your return by increasing your alpha. By doing the former, you will never get to the latter. Hope this makes sense.
 
Don't forget tax consequences.

SPX -and- SPX options are treated as 1256 contracts... 60% LT / 40% ST
Also applies to DJX, NDX, RUT and corresponding options

SPY and SPY options are treated as "stock"... holding period and wash sales apply to SPY, and options are always ST.
Also applies to DIA, QQQ, IWM and corresponding options.
 
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