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Let's Trade Options

  • #18,341
  • Dec 23, 2022 3:53pm Dec 23, 2022 3:53pm
if you trade the same thing all the time (me - SPX, SPY, XPS, RUT, IWM = 99% of what I do), you start to notice things. It's not rocket science.

Most of the action in SPX occurs in the first 60-120 minutes and the last 60-120. Not always, but pretty often, or usually. Also, you'll note that frequently, there's a lot of action overnight, so you get these $20, $50, or $80+ gaps at the open. Useful information, especially if you are fond of trying to leg into spreads.

Different days of the week have their tendencies. And different days of the month also, relative to monthly opex's....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,342
  • Dec 23, 2022 4:09pm Dec 23, 2022 4:09pm
Really glad to find this thread! I just traded options for the first time today on TSLA and I completely loved it! I've been trading mainly Forex but I was always interested into this type of field. Looking forward to read your thread and learn from it


BW and Happy Holidays everyone!
The consistency that you seek is in your mind
  • #18,343
  • Dec 23, 2022 4:14pm Dec 23, 2022 4:14pm
Quoting alexvmit
Really glad to find this thread! I just traded options for the first time today on TSLA and I completely loved it! I've been trading mainly Forex but I was always interested into this type of field. Looking forward to read your thread and learn from it BW and Happy Holidays everyone!
cool, merry hoho to you too. Feel free to post your trades or trade ideas....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,344
  • Dec 23, 2022 4:30pm Dec 23, 2022 4:30pm
I don't rely on indicators just purely price action. I use to trade GU and Gold mainly but I have a friend trading options and he was bothering me to do some TSLA today so I did some scalping. I mainly looked for breakouts and scalped 1 to 2 ticks, nothing crazy but managed to bank
I tend to let the trades breath but here I had to act way faster of what I'm used too. I left a lot of money on the table yet I'm happy with the trades a lot to learn from this .. I'm mainly thinking to trade TSLA and SPY next year
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The consistency that you seek is in your mind
  • #18,345
  • Dec 23, 2022 5:12pm Dec 23, 2022 5:12pm
Quoting alexvmit
.. I'm mainly thinking to trade TSLA and SPY next year {image}
well I can't tell from what you posted what it is you did. I'm assuming you were buying short duration puts & calls? I don't think options is a very efficient tool for scalping actually, maybe just in the most liquid names, like SPY/SPX for instance. However, to each his own..... If you're used to scalping in fx and you want to translate that over to equities, probably futures will be better for you than options. Buying even short-duration options with the intent to scalp is inefficient, because you are paying something for the time value. Not so with futures. Check out /ES for scalping the S&P, instead of SPY.....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,346
  • Dec 25, 2022 12:57pm Dec 25, 2022 12:57pm
my attention span for stuff like this not great, but this is good....
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,347
  • Dec 25, 2022 7:54pm Dec 25, 2022 7:54pm
Any good books for a trader that is getting into stocks to read? more into the fundamental area and even a beginner side of stocks in general.. and thank you for your suggestions The Fool regarding what to trade I'll defo /ES a try!
The consistency that you seek is in your mind
  • #18,348
  • Edited 1:58pm Dec 26, 2022 1:15am | Edited 1:58pm
gonna be trading the 0-1 dte scalps a bit, below picking a strangle but instead of the long put/call, using long put/call verts, to lower the entry price. Long strikes are around 15-20 delta. Width variable depending on skew, but as shown I want to have about the same roi potential on either side. These to be put on, not randomly, but in anticipation of days when there are data releases or other potential news that will move the market bigly overnight and/or at the open the next day.
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,349
  • Edited 1:44am Dec 26, 2022 1:30am | Edited 1:44am
Quoting alexvmit
Any good books for a trader that is getting into stocks to read?
...a lot of the best books are getting pretty dated. And also, it's been a long time since I actually read a book on trading. Trading options you need to learn by doing, so get a paper trade account and get started. Trade all kinds of different strategies, keep an eye on implied volatility and the greeks and how those affect the price of options over time. Here are a few titles that come to mind that you can try but they will be very dry if you are an absolute beginner.

Options as a Strategic Investment: Fifth Edition – August 7, 2012
by Lawrence G. McMillan

Trading Options Greeks: How Time, Volatility, and Other Pricing Factors Drive Profits
by Dan Passarelli and William J. Brodsky

Option Spread Trading: A Comprehensive Guide to Strategies and Tactics – January 11, 2011 by Russell Rhoads

The Intelligent Investor Rev Ed.: The Definitive Book on Value Investing by Benjamin Graham , Jason Zweig , et al. | Feb 21, 2006
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,350
  • Dec 26, 2022 1:35am Dec 26, 2022 1:35am
I wouldn't waste much $ on buying books, anyway. Most everything you'd want to learn is available free on the internet. A primary resource is tastytrade.com. They have years and years of educational content, so knock yourself out.

Trading options is like anything else - there's many different ways to do it and you just need to find the methods/strategies that suit you and that you can make money with.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,351
  • Dec 26, 2022 1:52am Dec 26, 2022 1:52am
Quoting The Fool
Trading options is like anything else - there's many different ways to do it and you just need to find the methods/strategies that suit you and that you can make money with.
...one last word of advice: Pick one very liquid name and trade that heavily, if not exclusively. Non-liquid options are a rip-off because you start out in the hole from the widened bid/ask spread. In the volume and open interest columns you want to see numbers in the 1,000's. SPY and SPX, XSP; RUT and IWM; QQQ, etc - those are the best index names. Some individual stocks also have good liquidity. The nice thing about the index options, especially SPY and SPX, is they have daily options. Pro traders like Wulfgar will be in and out of all kinds of options, futures, forex, bonds, stocks, etc, but you gotta learn to crawl before you can run.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,352
  • Dec 26, 2022 2:07am Dec 26, 2022 2:07am
..was just looking back thru the trading books I have bought. I only ever buy books like that on Amazon, so they're all in my orders page, going back to 2007, about 15 or so. Have not bot a trading book since 2014. Maybe the best book I ever bot was the one below, now out of print, about 10 years ago, because it helped me shake the directional bias trap. That, along with realizing that it's easier to predict changes in volatility than to predict direction, is what I still trade on mostly. But of course I am trying to pick directional targets with deadly accuracy - just in either direction. Anyway, I doubt if I will ever buy another trading book. Need to put all the ones I have up for sale on ebay, make some cat food money.

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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,353
  • Dec 26, 2022 11:43am Dec 26, 2022 11:43am
Thank you so much for all your suggestions The Fool, will defo trade SPY I think would fit my style. This is totally a different game from what I'm used to trade I wanted some sort of books to learn how to read earnings reports and understand correlations between markets but that's something I'm sure I can find online for free Will give yours a look! Thanks a lot once again and wish you a happy new year! My trading style is very fundamental but I do include some technicals into it yet for me price action is more important than all of that.
The consistency that you seek is in your mind
  • #18,354
  • Dec 26, 2022 12:01pm Dec 26, 2022 12:01pm
Quoting alexvmit
Thank you so much for all your suggestions The Fool, will defo trade SPY I think would fit my style.
K good luck amigo. Just put $100k in your paper trade account and see what you can do with it. I recommend using Thinkorswim, which is the platform seen in screenshots I post here. You can get that from TDAmeritrade with a $0 balance account. There are other platforms also of course. You can follow trades I post here, which are mostly done in real time. Also, you can follow the traders on tastylive (I note tastytrade is changing names to tastylive) - see below...

https://www.tastylive.com/shows/tastytrade-live
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,355
  • Dec 27, 2022 6:06pm Dec 27, 2022 6:06pm
No new setups. All I did today was roll down and out the far otm SPX calls above, for an avg debit of about 50c, and I am left with a pile of Dec 29/30 3960 calendar calls. I still believe in Santa, but only for the next week or so....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,356
  • Dec 27, 2022 9:41pm Dec 27, 2022 9:41pm
maybe Santa will come thru and give me a better entry for the great capitulation move everyone has been expecting, to retest the 2022 lows. Looking for a scenario to fit the combo below: stocks will trend down in Jan and drop hard on bum earnings in the last 2 weeks. Inflation may fall but not fast enough for the Fed, who will hike again on 2/1/23, and the new lows arrive in the week or two after that. As shown, if the condors are not attacked b4 1/23, the trade risks <$1000 to make $50k or more...

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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,357
  • Dec 28, 2022 3:29am Dec 28, 2022 3:29am
Hi there, just found your thread, pretty interesting to read. I myself planning to start trading options in 2023, preparing the ground now. I have a question to ask you about trading 2 OTM directional butterflies in SPX just when the market open. Placing one above and one below with the first leg 10 points from the current price and they are 20 wide. My assumption is on the open of the market volatility should be elevated, so it will give me cheap entry? And I guess in the first 1-2 hours the price should be moving up or down, so profit will be reached. Usually this kind of butterfly can make risk to reward of 1:6 or better. With 2 butterflies open maybe it can go to 1:3 or 1:2.5? What do you think about it?
  • #18,358
  • Dec 28, 2022 9:07am Dec 28, 2022 9:07am
Quoting meowflying
Hi there, just found your thread, pretty interesting to read. I myself planning to start trading options in 2023, preparing the ground now. I have a question to ask you about trading 2 OTM directional butterflies in SPX just when the market open. Placing one above and one below with the first leg 10 points from the current price and they are 20 wide. My assumption is on the open of the market volatility should be elevated, so it will give me cheap entry? And I guess in the first 1-2 hours the price should be moving up or down, so profit will be...
I like the general approach, but I don't think I'd use flys. Also, not sure your premise that iv's are elevated at open is correct. However, doesn't matter what I think - just paper trade them and see what happens. Nice thing about short duration trades and SPX also is you can paper trade them for a few weeks and get > a dozen iterations. Feel free to post your trades in real time.

For me, I can't get interested in these 1-0 dte trades unless I know I am shooting at a known market-moving event or news release. If you know how to backtest, it would be interesting to compare some daily iterations and see how they pan out. In the spoos markt these days, we get a lot of sideways action, and those sideways days are going to be tough on the short duration trades, I suspect.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,359
  • Dec 28, 2022 9:28am Dec 28, 2022 9:28am
I'm not trading today and prolly done until next week, sideways markets on tap it seems. But shown below are 3 different 0 dte trades for today: a strangle, a double vert, and an IC. If we are going to dither sideways I'd bet the IC is the only one that makes money. We'll watch and see.....
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #18,360
  • Edited 2:34pm Dec 28, 2022 10:06am | Edited 2:34pm
buy back the call side of the IC for a dime. The put side of the vert is worth $5. Put side of the strangle worth $10+....1105 ET

1115...with SPX @ 3802, selling the 3810 puts for $14. The vert is worth ~ $6. Put side of the IC @ -$5+.

1205.....3810 put >$20 with SPX @ 3791.6.......@1225, I saw >$21....I think I woulda sold the puts at $20, if not less....

@ 1230 I bot a few 3830/3840 vert calls for 35c....with SPX @ 3797.5....looking at the 5-min chart, thinking we might see a reversal of the down move after NY lunch, ie, at about 1300-1330. Risking ~$100 actual.

sold 2 of 3 the 3830/3840 vert for $1.60 - $1.25 net profit, I'll watch the 1 remaining for a bit....

....well, you never know, looked like another dead day to start and now we have dropped >1%. 3810 puts from the strangle above the best case finish, with those selling for $23-$24 now at 1530. Cose to $2k win per unit.....

oth, to buy out the attacked put side of the IC would cost you $9.50 now, but you might have cut losses on that well before it going so far itm.
"If The Fool persists in his Folly he will become wise." - William Blake
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