I tried to backtest spreads, but noticed they limit my profit too much. I need some of those big winners.
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Trend Following with options?
- Thread starter luckyputanski
- Start date
I tried to backtest spreads, but noticed they limit my profit too much. I need some of those big winners.
Quote from luckyputanski:
I've tried that and couldn't find anything better than futures. My experience with options is very limited, that's why I asked here.
If you're good at trading futures just stick with them. They are simple beasts, they just go up or down with the underlying. No theta, vega, or gamma, although there is a tie to interest rates and any other costs of carry.
you can use 50EMA to initiate positions. if up trend, buy on the EMA (when it is dropping toward it), if down trend, sell on the EMA (when it is poping toward 50EMA). then sit tight and wait.
SPY crossed 50EMA, QQQ too, I was buying at those level, all turned out to be good trades. aapl not yet, but 10% pullback can give you a good clue, that is why I bought 600 call in the drop at 3, sell them when they are ITM, buy next level OTM, and on and on. when those stuffs are way from EMA, do the contrary,fade them. all those things are just typical PUMP and DUMP. nothing more than that.
SPY crossed 50EMA, QQQ too, I was buying at those level, all turned out to be good trades. aapl not yet, but 10% pullback can give you a good clue, that is why I bought 600 call in the drop at 3, sell them when they are ITM, buy next level OTM, and on and on. when those stuffs are way from EMA, do the contrary,fade them. all those things are just typical PUMP and DUMP. nothing more than that.
Quote from trader198:
the best way to trade options is DAY TRADE them.
why?
options are magnifier of the underlying, a tiny move for example AAPL drop 5points or up5points, most OTM will be easily doubled/tripled. while such multiples move can be achieved in half hours or 3~15minutes. for the underlying aapl, it may move like 1%.
I do not suggest to apply long-term strategy to options. trend following is the best strategy for long-term investment (not derivative tools).
I bought some SPY 137 call at 1.11, looks it already printed 30~40% gain.
so never try to do option in long-term perspective, gains are very evaisive.
Well, I've had some good successes with LEAPs held for over a year.
Whatever floats your boat.
Quote from trader198:
you can use 50EMA to initiate positions. if up trend, buy on the EMA (when it is dropping toward it), if down trend, sell on the EMA (when it is poping toward 50EMA). then sit tight and wait.
SPY crossed 50EMA, QQQ too, I was buying at those level, all turned out to be good trades. aapl not yet, but 10% pullback can give you a good clue, that is why I bought 600 call in the drop at 3, sell them when they are ITM, buy next level OTM, and on and on. when those stuffs are way from EMA, do the contrary,fade them. all those things are just typical PUMP and DUMP. nothing more than that.
I already have a profitable system (although it's hard to believe that judging by my journal) and I'm only trying to use options instead of futures for better profit / max drawdown or at least to limit my risk when market gaps overnight.
Quote from luckyputanski:
I already have a profitable system (although it's hard to believe that judging by my journal) and I'm only trying to use options instead of futures for better profit / max drawdown or at least to limit my risk when market gaps overnight.
have you thought about buying otm options to protect against gaps?
A typical trendfollowing approach with stops and no profit target is basically a synthetic option. If you get stopped out for a loss that'd be the analogy for option premium paid that expires worthless.Quote from luckyputanski:
I already have a profitable system (although it's hard to believe that judging by my journal) and I'm only trying to use options instead of futures for better profit / max drawdown or at least to limit my risk when market gaps overnight.
There's a number of academic research on 'lookback straddles' as a synthetic way to replicate directional macro strategies, try google.
Don't forget to factor in options bid/ask spreads and liquidity. I doubt using options is better in qualitative terms for whatever you're doing than taking positions in outright futures. It's just a different approach.
Quote from Butterball:
A typical trendfollowing approach with stops and no profit target is basically a synthetic option. If you get stopped out for a loss that'd be the analogy for option premium paid that expires worthless.
There's a number of academic research on 'lookback straddles' as a synthetic way to replicate directional macro strategies, try google.
Don't forget to factor in options bid/ask spreads and liquidity. I doubt using options is better in qualitative terms for whatever you're doing than taking positions in outright futures. It's just a different approach.
I don't know man, I always thought that the reason some trend following strategies worked was due fat tails in financial prices. With options you can benefit from that without being exposed to it, in the underlying you will get killed every once and a while and have your stop gaped