If your strategy results in a "great setup," by which I assume you mean a high likelihood of a directional move you've predicted, then why not use the underlying instead?
optioncoach: What is your time frame for the expected move? 1. Most of the time ( depending on the timeframe of chart that the trigger for the entry occurs ) it is...... within a few days ( if the entry occurs on a Daily or 2 day chart .... where each candle on the chart represents 1 day and 2 days of trading ) If I get an entry on a 4 day or weekly chart ..... then I Expect the move to occur within 1 weeks time If the entry comes off of a Monthly chart .... then I expect it to occur within 30 - 45 days Knowing this, I can buy Options with Less or More times to expiration , based on the timeframe chart(s) that I get me entries off of . I would say that for a monthly chart entry .... 60 days till expiration would be the minimum. If I get it off of a weekly chart .... then 30 - 45 days till expiration ( preferably 45 days minimum How much in general are you expecting the stock to move? 2. I can usually get a " Consistent move in the sock " at the minimum percentile of 5% in the stock , and in the upward Percentile of 15% " Tops " ...... The expected / likely move as a percent in the stock .... mainly comes down to the timeframe chart that I get my entries off of . So when I enter a trade based off of a setup on a Monthly chart, then a 15% is in the upper range of an " expected " move in the stock If I get an entry off of the Daily and or 2 day chart ..... then I set my target at the 5% mark I think a decision to buy DITM Leaps v. looking to trade a 3 week move would each have different IV considerations. 3. Can you give an example / comparison of the two please Brighton: Do you mean, that instead of ONLY looking at the IV Rank based off of a stock, future, forex's 252 day calculated IV Rank , that I should also look at the 504 day ( 2 year ) IV Rank as well..... to give more clarification on where the IV Rank is for the current year, and if the 2 year IV Rank and the 1 year IV rank are close to eachother in " Rank " , then we can be quite certain that we can put a greater faith in the current IV rank that we're getting , for what ever market / stock that we're trading ? Sonoma: Some of the stocks I can afford to by the stocks outright ( under $10 per share stocks ) But on those stocks that are expensive.... say AMZN which is trading at $529 a share Since I can't afford to buy 100 shares of this stock outright, then I was looking for a way to trade the stock via outright Long Calls and Puts , but the ATM and even some of the OTM options ( with 45 days till expiration ) are still to expensive for me to trade, do to my account size. So I am considering doing Debit Spreads on the expensive stocks like, GOOG, AMZN, CMG, NFLX, PCLN I can usually do $5 spreads, and risk $2.50 to make $2.50 , as well as pay for NO Extrinsic value .... as long as I do a bit of shopping around on the spreads