How to harvest 60% success right direction on SPY?

@longthewings are you suggesting using weeklies instead of 40DTE?

 

If you want a pure play and need leverage... just use ES futures

 

@promagma good point it is just 10 times more expensive than SPY but yes that might be other option

 

ES Futures

• Unlimited loss.
• If stops are used then you run the risk of being stopped out, locking in a loss - any reversal will be without you.

SPY Options

• Limited loss, unlimited gain.
  
• More bang for the buck than futures.
  
• Can't get stopped out early.

 

True, but with options, one way or another your gonna pay for these benefits, so it's not such a clear decision. Unless, if you have an idea of the magnitude of the move you are targeting, you can have an advantage using options, like another poster has mentioned.

 

you should be selling spreads, think about it, harvest your directional edge + harvest decay & profit limited because your risk is caped. it's a turtle wins the race startegy

 

Buy and hold. Over 60% success rate.

 

If you're long-term 60-70% correct on the direction then Nadex binary options might work. They're not leveraged but your risk is fixed, don't have to worry about decay and you can avoid stop-outs. Your gain will be less than your loss on each trade but your winning pct will give you the positive expectation.

Another idea:

As far as unlimited risk with choosing the ES to make your play, you could use the Nadex ES binary options (or spreads) to hedge your downside risk. That is, you can make your stop super large: to the base or ceiling of your BO spread, for example. You can find youtube vid examples on this strategy.

 

I like how you completely ignored talking about gap risk on SPY options given an environment where ES truly trades 24/5 with significant moves happening in all sessions now.

You're not even talking about ES vs SPY anyway you're talking about futures vs options.

The ideal is the market that offers the longest trading windows, accessibility, and direct hedgeability: and that's ES and ES options.

 

I'm sure the OP has a basic understanding of options and is well aware that the SPY could gap up or down during the after-hour market. This could work for him or against him - I don't think he needs to be bottle fed on the matter.

Yes that is correct. My post was in reply to promagma's post.

That doesn't interest me. But others might find that tidbit of info useful.