What Option Strategy Do You Use?

[Sweet Bobby]

Welcome back. Have not seen you around lately.

Sounds like you are doing well.

Questio: What is the purpose of the debit spread?

The debit spread matures over time and gives you a nice little profit zone to the downside. I take the naked out off at 95% profit or 30 DTE, so you have a paid for put debit spread all by itself for 30 days.

 

[Quanto]

I trade the 1-1-2 trade in /ES. Buy a 50 point wide put debit spread at 129 DTE for about $10. Then sell two five delta naked puts in the same expiration.

Close the naked puts at 95% profit or at 30 DTE. Put on a new trade each week. After 15 weeks I close one trade and put on another trade.

Most times the put debit spread is a full loss at expiration. Occasionally, you get profits when price moves inside the tent structure. This has been a wonderfully consistent trade for me.

The debit spread matures over time and gives you a nice little profit zone to the downside. I take the naked out off at 95% profit or 30 DTE, so you have a paid for put debit spread all by itself for 30 days.

I think @Sweet Bobby's strategy is based on Tom King's 1-1-2 options strategy, described here:
https://optionstradingiq.com/tom-king-1-1-2-income-strategy/
The NetPremium must be positive, ie. NetCredit. This can be achieved by the leg with the 2 short Puts, ie. the credit of them must be more than the debit for the put debit spread (the other 2 legs). Something like this example:

 

[Quanto]

Welcome back. Have not seen you around lately.

Sounds like you are doing well.

Questio: What is the purpose of the debit spread?

Booster, if underlying falls into the main profit area of the strategy.
Yes, it works also w/o the put debit spread, then of course w/o the booster.

 

[ironchef]

I think @Sweet Bobby's strategy is based on Tom King's 1-1-2 options strategy, described here:
https://optionstradingiq.com/tom-king-1-1-2-income-strategy/
The NetPremium must be positive, ie. NetCredit. This can be achieved by the leg with the 2 short Puts, ie. the credit of them must be more than the debit for the put debit spread (the other 2 legs). Something like this example:

View attachment 336573

Booster, if underlying falls into the main profit area of the strategy.
Yes, it works also w/o the put debit spread, then of course w/o the booster.

Good job! Thank you.

Looks very interesting. Let me see if I can make it work.

By the way, the reason I want to trade butterflies, I like to find ways to pay for my long speculative bets.

 

[Quanto]

Good job! Thank you.

Looks very interesting. Let me see if I can make it work.

By the way, the reason I want to trade butterflies, I like to find ways to pay for my long speculative bets.

Hmm. the butterflies are net debit.
But you could do it with the "2"-leg of the 1-1-2 strategy, ie. let it pay for your longs; if necessary simply increase the qty ...
Since this should be a Delta -0.05, this means about 95% success rate...
For this see also the note in the link I provided above.

Btw, if your platform does not show the Deltas, then with such a following tool you can try to find an option with the desired Delta:
https://optioncreator.com/options-calculator
Or use a tool that scans automatically a range of parameters for a given Delta...
(requires some programming when done as DIY)

The Tom King video describes the 1-1-2 by himself:

 

[taowave]

You arent alone.Long options really aren't about win rate..If win rate is high on the checklist,short premium or delta 1 is the way to go.

You can click and see the results.

Less buyers (long single leg, directionals) than the other two categories, rightly so because it is not easy to profit from buying and the win rate (mine anyway) tends to be low.

 

[ironchef]

You arent alone.Long options really aren't about win rate..If win rate is high on the checklist,short premium or delta 1 is the way to go.

Yes, you are correct. After a decade of practice, I only managed to win about 30% of my trades.

It is like venture investing.

 

[ironchef]

Hmm. the butterflies are net debit.
But you could do it with the "2"-leg of the 1-1-2 strategy, ie. let it pay for your longs; if necessary simply increase the qty ...
Since this should be a Delta -0.05, this means about 95% success rate...
For this see also the note in the link I provided above.

Btw, if your platform does not show the Deltas, then with such a following tool you can try to find an option with the desired Delta:
https://optioncreator.com/options-calculator
Or use a tool that scans automatically a range of parameters for a given Delta...
(requires some programming when done as DIY)

The Tom King video describes the 1-1-2 by himself:

You missed my point, I wasn't looking for credit, I was looking for very high win rate limited risk and limited payoff trades.

 

[Sergio123]

I use different strategies based upon how I am already poisitioned relative to how the market is moving. I will use verts and diagonals and ratios and calendars.

I consider myself more of a risk manager than a speculator.

I use correlations and volatility between instruments and DTE's moreso than directionally biased trades.

But every now and then I might sense an imbalance and take a directional view.

 

[ironchef]

I use different strategies based upon how I am already poisitioned relative to how the market is moving. I will use verts and diagonals and ratios and calendars.

I consider myself more of a risk manager than a speculator.

I use correlations and volatility between instruments and DTE's moreso than directionally biased trades.

But every now and then I might sense an imbalance and take a directional view.

You trade like a pro, I am more amateurish, a one trick pony.