Hello everyone. Would appreciate any help in picking what option strategy would be best for a system that predicts the weekly closing stock price will close higher or lower than the week's opening price. Binary options would probably be best since I wouldn't have to worry about being stopped out but Nadex does not have enough markets for my system.Selling naked options is another option but I don't want the risk of selling naked options. Spreads is the best I have come up with(buy 100 call /write 101 call etc ) but I haven't learned all the different option strategies and wanted to ask if there might be a better strategy. Any help would be greatly appreciated.
If you don't want to sell naked options or go long / short stock, that pretty much leaves you with spreads. Only other idea that comes to mind is a ratio, but that would involve some naked exposure which you want to avoid.
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Thats my conclusion as well.I haven't looked into all of the advanced option strategies so I was wondering if something more advanced might be better.Thanks for your advice.
I have a directional view but not for big enough moves to make it worth trading the stock or calls/puts. I'm trying to make it a 50-50 bet that the stock closes Friday higher or lower than Mondays open if even by 1 tick.I don't want to worrying about the position going against me first and being stopped out and only having a small profit if I'm right but only by a few ticks.With calls and puts I need bigger moves to get a 50-50 payoff.Binary weekly type options would likely be best for me since its a 50-50 bet (minus the spread) and I only have to be right about the price closing higher or lower for the week even if by a small amount and I don't have to be concerned about being stopped out.Problem with Nadex is it only offers around 10 markets. My system might have around 50 trades for the week from The S&Ps 500 stocks and gets around 30-35 right.
One method that is risky is to average down a forex pair and wait until it hits the take adjusted profit figure. Use Usd or Eur pairs. They won't plunge out the bottom.
If the moves aren't big enough to make it worth trading the stock or calls/puts and you don't wanted to be naked short then you are left with selling premium so that time decay is on your side. That means credit not debit spreads. Even that might be questionable if you win rate isn't above 50%.