The best options strategies
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rmorse
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I recommend that you don't start from a strategy point of view when it come to options. The approach I prefer is to have a thesis on where an underlying will or won't trade during a time period because of analysis you have done. Then, look at the current option markets to determine the best course of action given your expectation and current prices.
Bob
Bob
Don't you have it already?
It's a brute-force portfolio system requiring many instruments, many trades/day, and much capital.
I would prefer a mathematically "elegant" strategy that has not that high requirements.
OTOH, with any strategy, maybe except the options spreads, one will need to apply diversification, and that too means higher requirements...
I think in terms of not what is best as I do on what is best recovery, way I looking at trading is not greatest profit but ways to bring losing percentages as far down as possible, if you not losing....I think most instruments cycles 99% of the time, so what I look for is time, on average and each instrument a little different, how long will it take for my option spread take for me to get out at better than breakeven OR how far in percentage do I have to place another one as in averaging down for time cycle to go far enough so I can get out at better than breakeven.
So I am spending far greater time to think and test in money management terms of not taking a loss. For most I suppose they rather not do this or think I am can't take a loss, but to me, why not if you can. Not talking of betting the farm on averaging down either. Say you got into SPY Put credit spreads when SPY was 208 in August of last year then SPY tanked and then added to Put Credit Spreads when SPY hit 188, it didn't take great deal of time where overall position was at better than breakeven, plus Credit spreads have limited risk.
So I am spending far greater time to think and test in money management terms of not taking a loss. For most I suppose they rather not do this or think I am can't take a loss, but to me, why not if you can. Not talking of betting the farm on averaging down either. Say you got into SPY Put credit spreads when SPY was 208 in August of last year then SPY tanked and then added to Put Credit Spreads when SPY hit 188, it didn't take great deal of time where overall position was at better than breakeven, plus Credit spreads have limited risk.
I agree, don't think so much about the options strategy, per se -- but more on your ability to predict or read the underlying's movement.
Because if you can't more or less...predict the underlying movement correctly...then you're just basically gambling -- and shouldn't even be in the markets in the first place.
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Same with everything. Without opinions about the underlying ... Don't trade. Once knowing about the underlying, choose the strategy that best fits it. There ain't no best without any conditionals. What's Best is an optimization. Not God's words. That's not even a newbie question. But an attractor for charlatans. Take care.
Hmm. is it really possible to predict the movement of the underlying?I agree, don't think so much about the options strategy, per se -- but more on your ability to predict or read the underlying's movement.
Because if you can't more or less...predict the underlying movement correctly...then you're just basically gambling -- and shouldn't even be in the markets in the first place.
I was thinking it is impossible.
But OTOH one just needs to do some statistics to find the stocks with the best histories.
Yes, then it would be possible over a period of say a month or a quarter. Of course not always 100% correct, but statistically to a high degree.
This statistical method was recently demonstrated by me in the other thread, but I've not applied it myself yet. For example in these postings:
http://www.elitetrader.com/et/index...est-income-method.298163/page-15#post-4253981
http://www.elitetrader.com/et/index...est-income-method.298163/page-11#post-4253480
There also "no loss if exited early" is said, but this should be replaced by applying "dynamic hedging"... then the claim of "no loss" would work,
at least theoretically; ie. that is not proven yet by me or others here.
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But what about those here who do not trade directional of the underlying but volatility of the options instead?I agree, don't think so much about the options strategy, per se -- but more on your ability to predict or read the underlying's movement.
Because if you can't more or less...predict the underlying movement correctly...then you're just basically gambling -- and shouldn't even be in the markets in the first place.