Would an options buy to enter calls pay better dollar for dollar than outright buy the etf? What delta might be best to work with?
as I said, I don't day trade. Tried it - failed, so not the guy.
However, if I wanted to trade something like that, I'd check out the ATR, then set up a vert spread on the nearest expiry and ride it to Friday, I suppose.
Or straight up buy calls for a day trade.
Deltas? - I don't exactly think in Delta terms so much as Premium. I look at premium and pick the option with the biggest drop from the one above, so I pay less. Then if it moves in my direction, I lose less prem as I gain intrinsic. Contrariwise, if it moves against me, there is a bigger premium gain as I lose intrinsic. Theoretically.
I find ultra-near term ATM options become so PA volatile with small underlying movements, that any edge eludes me.
I want to grab some premium over a few months/weeks or so, and set up the trade so that if it goes north I make at least 100% of total risk.
I look at a few FA things like P/TBook, Price to FCF, and a couple of TA things like support on my time frame. These are mainly to get confirmatory signals for a trigger pull.
Mainly I do a R/R calc on the options chains - is it >50% to win AND does the setup Reward to Risk >1. If both of those conditions are satisfied and I get a few more confirmations from the other stuff, I zero in for a spread I like.
Higher vols work with diagonals & longer term verticals. medium vols work pretty well with calendars.
Ultra-high vols work well with near-term calendars, but... results are VERY tricky to manage.
Lower vols work with OTM verts long-term IF the stock has proven it can spike multiple times in the past.
YOU: Would a long options call pay better than outright shares?
Ultra-short term options with tight spreads - of course. Not even comparable. Lower absolute risk, much higher potential return.
