Let me give you a bit of a context; often when I look at NQ and ES daily I get the turning points and the consequent direction right, based on my strategy. I know that my approach works for options too, as few of my mentors used to trade options, but I was like "it seems complicated with all these greeks, strategies, out of money, in the money, strangels and what not..." so I just stuck to day trading futures. However, now I'd like to learn how to trade options, to swing trade SPX and NDX(or maybe SPY and Qs, not sure what would work better for options), maybe some other markets too. So after a quick search it seems like the simplest and best strategy for this kind of trades would be to use long call & put options. Did I get this right? If not, what would you suggest? Also, how complicated it is to get the basics well enough so that you can start (demo)testing your trading strategy? What resources would you recommend to get me going? Thanks in advance!
As no one replied, maybe this is a dumb question. If so, I'd appreciate some sort of feedback so that I can figure out what I got wrong.
I'm no expert but it depends on the current volatility and how long you will be in the trade. High VIX means spreads work better so you don't get killed by vol crush if VIX collapses. Low VIX is probably okay for naked options. I just use futures options on the ES or NQ. They trade with the CME as opposed to the regular hours of the CBOE (0930-1615 EST). With the current VIX ~20 you get about 30:1 leverage on the ES options going out about 2-3 weeks expiration. I'm sure if you like living dangerously you can trade the daily 0DTE and get like 100+:1 leverage.
for the most part yes. but you add a component of time and volatility (how fast and the magnitude of the move). This can become a drag or a tailwind to your profit. And it can be substantial or even exceed the directional component that you were trying to monetize.
I'm curious, what are the advantages of trading options on the markets that you mention vs straight up directional trading using futures? If you're not incorporating a hedging strategy with options then you're still just trading the direction?