Would Appreciate Feedback to My Option Strategies Cheat Sheet?

V

ValZ2020

How's everyone today!

Fellow traders, I am only making my first steps in the wondrous world of multi-leg option trading and - based on all I read + some real life and paper trading experience on thinkorswim + loads of tastytrade videos and so on, I have compiled something of a cheat sheet for several strategies that I have tried so far.

If anyone could take a look and provide some feedback, that would mean so much to me guys!

Many thanks and stay safe and healthy!
 

Attachments

Hey Val, good to see you in action. Word of advice, use paper trading from Interactive Brokers for more realistic fills to test your strategy or set fill at bid/market at tos
 
Look into price pinning for Straddles, don't do calendars with long under 180 days because of theta and IV>HV is currently not very profitable/too much downside risk imho. IV>HV has been criticized by a few members on here as 70s Trading according to TT it still beat the S&P (risk adjusted) but not by much. I'd love to hear what expierienced guys have to say about it tough, my hunch is that they express direction on their verticals.
 
Last edited:
Atikon, thanks again! By "don't do calendars with long under 180 days because of theta" do you mean short calendars (buy front/sell back) where theta decay of the long outpaces the short? what about the IV coming in if you sell a calendar at IV higher than "normal" (short calendars are vega negative aren't they? or not so much if the vegas are weighted?). Also what's your take on the skew for the debit and credit spreads? did i get it right - for debit spreads look for the skew that is somewhat steep (reduce max risk by selling a more expensive short) and vice versa for the credit spread?
 
ValZ2020 said:
Atikon, thanks again! By "don't do calendars with long under 180 days because of theta" do you mean short calendars (buy front/sell back) where theta decay of the long outpaces the short? what about the IV coming in if you sell a calendar at IV higher than "normal" (short calendars are vega negative aren't they? or not so much if the vegas are weighted?). Also what's your take on the skew for the debit and credit spreads? did i get it right - for debit spreads look for the skew that is somewhat steep (reduce max risk by selling a more expensive short) and vice versa for the credit spread?
More...
I mean the Calendar, when you buy the long in low IV take a duration where theta decay doesn't hurt you. I haven't traded the scew yet, I was thinking of combining it with CFDs, but you got filling risk and I need to test how this would work out. Looking at Demand Derived Probabilities, you will have a hard time to find undervalued Put Scews at the moment, the Probabilities on most Tickers are Put Side heavy/right scewed. I focus on Income Strategies and I'm trying to collect Theta Decay while managing Gamma and Vega, there are def more expierienced Ppl here that can help you with a specific Scew Strategy. Try to make one Strategy work for now, backtest it then do a robustness test and try it out for 1-3 months on paper trading.
 
Thanks Atikon! Could you please elaborate on combining CFDs with the skew play? Is it some kind of arbitrage (like, sell naked put on high skew but if the underlying goes down you own a CFD on the underlying with which you collect the difference to cover the gap between the naked put strike and market price at expiration?)
 
You must log in or register to reply here.
Back
Top