Does anyone use the canslim method combined with option strategies. It seems to me that it would be an excellent source to find stocks to sell naked puts from. Any comments?
Except when everyone fades the CANSLIM breakout and the stock gets crushed and volatility spikes! :eek: In all seriousness, I think if you're making a directional bet, you might as well just play the underlying....
Particularly since a vast majority of IBD stocks are small-medium caps with highly illiquid options, if any. Hence, the edge you give up can be pronounced. That's not to say, of course, that there won't be situations where vol may reach an extreme on an IBD name, making an options play interesting. But, generally speaking, I'd have to agree that the underlying would be a better vehicle for playing break-outs on those types of names.
%%%%%%%%%%%%%%%%%%%%%%%%%%%% Dont want to amplify the paraphrase ,at this time ,William O'Neill frowning on risk/reward of selling options Agree with William O' Neill mentioning index options , actually long SPX puts; however that was in a context of a bear market. And William O' Neill ,[ founder IBD/Daily Graphs ] is more hard working investor; than hard working trader
Point taken but I have found others on the IBD board that have had returns of 1000% using a canslim and option combo's. I just wanted to find out if anyone on Elite has done the same and if so what strategies they where using.
One of those Market Wizards used options with the Canslim stuff but I forgot which one. It's in one of those books.
Both William O'Neal and David Ryan are interviewed. O'Neal founded the CANSLIM method, and Ryan later worked with him, using the same method. Ryan still does work with Investor's Business Daily (the company O'Neal started was Investor's Daily).
The CANSLIM method seems really suited best to being long the equity. I was looking at options chains on some of the recommendations, and they were not very attractive. A few of the more established companies are okay, but that's the exception.