best options strategy to trade my stock system?

Discussion in 'Options' started by artem65, Nov 28, 2012.

  1. artem65



    actually I am a stock trader and have no experience with options.

    I trade and backtested a system with about the following results in the last 18 years

    winning rate (without transction fees): 75%
    avg win/avg loss: 1.25
    avg gain: 10%
    avg loss 8%
    avg holding period: 7 days

    i simply buy stocks that trigger a signal and sell them when an exit signal appears. because there are sometimes a lot of signals at the same time, i can not buy them all because i buy the stocks without leverage. i thought about using options since the risk is limited and only a small portion of my account is then tied up per position.

    my system is a pullback system as taught on

    it buys stocks that fell sharply in a short period of time. thus it has a high volatility.

    my question is:

    what do you think is the best option strategy i can use for my strategy? again, it buys high volatile, sharply fallen stocks and has usually bug moves up in about 7 days.

    i think one or two strikes in the money calls are the best choice but I am no "options guy". it would be great if someone is willing to help me.

    best wishes

  2. vol goes up.. options pricing goes up.. the sharp swing down "can" inflates the options pricing to accommodate for higher volatility.. including call prices... a itm buy write would neutralize some of this.. the farther in the money the wider the spread.. the closer to expiration the more sensitivity to the underlying... you have to figure out your time frame for every trade.. and do some What if scenarios...
  3. taowave


    whats the distribution of returns look like