Help me identify the right options trade

Discussion in 'Options' started by Mike805, Feb 10, 2013.

  1. Hello,

    I'm looking to take a straight equities trade and trade it using options.

    Here are some of the details of the equities trade and what I'd like to accomplish with the option trade:

    1. The equity trade buys when vol is up, I want the options trade to be short vol.
    2. The equity trade buys expecting price to rise, I want the options trade to capture any rise in underlying price.
    3. If need be I am willing to be assigned the stock. I don't want to just sell puts though.
    4. Fixed risk would be nice, although point 3 implies I might see a significant drop.
    5. 4 week hold time (20 days).

    I'm hoping someone can help me through the pros and cons of what I can do with various options strategies. FWIW I already sell naked puts (on stocks I eventually want to own) and trade verticals, but, that's where my knowledge ends.

  2. i would think if vol falls and price goes up.. an otm call fly would do well..
  3. Ok, thanks. So I'm buying a call spread and then selling a higher call spread. My gains are capped and I'm not sure how this trade takes advantage of dropping vol?

    How can I alter this trade to take better advantage of the dropping vol, and, take on more risk? I am willing to own the underlying...
  4. Calendars.... diagonals..... more agressive is more otm and closer to expiratiin