What is your nondirectional strategy? Do you do iron fly or iron condor or calendar spread or just a single call put spreads? Most importantly how far and how wide do you enter the options? I am interested in nondirectional strategy but I have a hard time deciding on which strikes to trade.
Profitable Options Traders - Long Term
- Thread starter Palindrome
- Start date
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Can you please quantify these maybe with examples numbers? I also believe in flies but I have a really hard time choosing which strikes to get into. This is challenging because I don't know what to pay for them and what to get from them.
There is no non-directional strategy. I tried option spreads and lost thousands. It doesn't make sense to try and gain $200-$300 on one trade while, losing thousands! That is dumb. Others have done it and become successful but, as far as risk vs reward, I would rather risk $500 on one contract with the chance to win $800-$1000. When you get those windfall profits trades that fall in your lap, you can make 200-400%. There are probably, 1,000 ways to make monies in the stockmarket. Use that one that works for you. There is no rule that says you have to trade each and every method even if you are not good at it! That would be dumb and only cause you unnecessary losses!
One more thing I forgot to mention. On those losing option spread trades, that is for 5 options spreads I bought on each trade. If you bought only 1 contract on the option spreads, the gain would have been only $40. To get that $200, I had to buy 5 option spreads on it. Imagine if that trade goes against you $200, you will lose $1000 atleast, to gain a measly $200?
when you say you tried option spreads, are you talking about selling spreads or buying spreads? are you talking about single spreads or combination spreads like iron butterfly and condor which can be non-directional, actually.
from your post it seems like you are bought them and lost money because of that. is that it?
i am of the view that one can make money by selling combination spreads like fly and condor.
i believe they can offer 1-1 risk reward ratio. https://www.smbtraining.com/blog/th...ng-strategy-improve-your-reward-to-risk-ratio
I am not talking about condors or flys but, bear call spreads. You sell the lower strike call and buy the higher strike call to limit your losses and for protection. There are two legs to the bear call spread but, can be done together in one combined trade. It is a vertical spread. Both calls would be way out of the monies and if the options both expire worthless, you keep the net premium you received. Now if the stock runs up big, you will have to buy it back to close it at much higher premiums and you have sustained large losses!
Correction: I mispoke, it was I sold 5 option bear call spreads. You sell the lower strike and buy the higher strike for protection. It is a two leg trade and you get the net premiums of the option sold after deducting the cost of the option you bought for protection. You do have the liability to the call buyer if the stock runs up and you lose on the trade. He can at his option exercise his calls against you! Your liability ends when you buy back your option spread to close it!
Have not traded iron condors or flies so, cannot comment on the risk vs reward of those options strategies. You are best to go slow and test it! Even then, simulated trading is very different from real trading. Not even close!
I have been trading non directional strangles for 7 years with all of my available capital. I am averaging just over 21 CAGR. This year YTD is around 15 percent.
I haven’t updated my white paper on the strategy in awhile but the latest version is tylerjewell.github.io.
I don’t believe in credit spreads or butterflies. The long components eat away at your eligible theta. It is better to trade fewer contracts at a more aggressive strike than large volumes further OTM.
I just anticipate and frequently go ITM with puts and calls. I have risk and adjustment protocols that I use to get out of any trouble. I have survived flash crashes, 15 percent corrections and a massive melt up earlier this year and never had a draw down greater than 15 percent of total capital.
I haven’t updated my white paper on the strategy in awhile but the latest version is tylerjewell.github.io.
I don’t believe in credit spreads or butterflies. The long components eat away at your eligible theta. It is better to trade fewer contracts at a more aggressive strike than large volumes further OTM.
I just anticipate and frequently go ITM with puts and calls. I have risk and adjustment protocols that I use to get out of any trouble. I have survived flash crashes, 15 percent corrections and a massive melt up earlier this year and never had a draw down greater than 15 percent of total capital.