Hi, What is the best strategy to day trade SPX options? I am trading one account where I am only allowed to trade SPX index options and no naked positions and no portfolio margin. I would love to day trade futures but it's not possible for now. - Would you buy debit spreads in the direction you think you are going? - Would you sell ATM credit spreads in the opposite direction? - Would you leg in the spread buying first the long side and then selling to close complete the spread? - Buying an ATM option and hoping for a good move? I know of someone who claims to make 100% ROI PER DAY! Probably he doesn't have my restrictions. But he doesn't want to share his formula. Is that guy BS or is it feasible? Thanks a lot in advance, TraderMontreal
The tricky part is that -100% roi in a day is also possible. OTM options oftentimes double in a day or an hour, but if you're on the wrong side, you can lose 80% of your investment too. Your friend is probably doing this with a small percentage of his capital because of the potential risk. Classic risk management. Question your friend further and ask what his strategies are.
He probably had a few 100% ROI days trading the far OTM puts/calls during an OpEx...Just a cursory glance at the charts would tell you that 95% of the time the SPX can't move enough for someone to consistently achieve that (nevermind trying to get fills on both sides of the trades and slippage)...
mmm... let me see...? If a guy could pull off a 100% ROI.... and he did that only once a week....starting with only $2,000..... compounded... that would work out to $9,007,199,254,140,990,000 by the end of the year..... mmm... at a 38% tax rate that would be $3,422,735,716,801,580,000..... Hey!!! That would pay off the National Debt !
One 2x trade per week starting with $100.00 $100 $200 $400 $800 $1,600 $3,200 $6,400 $12,800 $25,600 $51,200 $102,400 $204,800 $409,600 $819,200 $1,638,400 $3,276,800 $6,553,600 $13,107,200 $26,214,400 $52,428,800 $104,857,600 $209,715,200 $419,430,400 $838,860,800 $1,677,721,600 $3,355,443,200 $6,710,886,400 $13,421,772,800 $26,843,545,600 $53,687,091,200 $107,374,182,400 $214,748,364,800 $429,496,729,600 $858,993,459,200 $1,717,986,918,400 $3,435,973,836,800 $6,871,947,673,600 $13,743,895,347,200 $27,487,790,694,400 $54,975,581,388,800 $109,951,162,777,600 $219,902,325,555,200 $439,804,651,110,400 $879,609,302,220,800 $1,759,218,604,441,600 $3,518,437,208,883,200 $7,036,874,417,766,400 $14,073,748,835,532,800 $28,147,497,671,065,600 $56,294,995,342,131,200 $112,589,990,684,262,400 $225,179,981,368,524,800 I'm at week 14