Using options for swing trades

Lobster I once made a good profit on the exact scenario you just explained. It was kind of laughable I quickly was trying to close my position (long calls) into a short covering panic rally , canceled the order then resent it at a higher limit. It turned out that I had not canceled quick enough and actually sold on the first order. My second order for the same quantity went through now accidently (short calls) The volatility soon dropped like a rock I quickly bought back the calls. "profitable accident" :p
 
Originally posted by Maverick74


Lobster what I was referring to for him was the bull put spreads. Selling the ATM put and buying the OTM put. If he believes stock XYZ has bottomed after a sharp selloff and the vol has spiked because of that selloff, then if he puts on this spread he will be long delta, have positive theta and be short vega. So if the stock rallies he profits from the long delta, profits from the pos theta, and the more then likely drop in vega as the stock rises. Again this is a directional play. He can do this trade all year long and make great profits if he is good at picking his stocks and his bottoms.
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ok, but you are referring to a credit spread since you are selling the ATM and buying the OTM...Some people might have been confused because when you said bull put spread, it seems to imply a vertical or debit spread...Just a clarification...
 
Originally posted by illiquid
Anyone use long calls/puts for swing trading with a 1-week average holding time?

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I think it's a useful idea with all the usual caveats about any trade or vehicle. There were some very cheap calls to be had a month ago.
 
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