Regarding the simple idea of long option trades in general, this only makes money when the options are cheap enough. How do you know if the option's cheap? That's with respect to realized vol of the underlying, over the life of your position. Also my personal opinion on your comment of "...I like simplicity so have avoided multi legged strategies up to this point." Having significantly delta exposure is only doable you have a significant edge in forecasting the underlying price direction. Otherwise, you need to hedge your delta, or your P&L vol will be way too high which implies a "volatility tax" (look it up), and that means at least 1 more leg.
Some good advice so far but no one has asked the question have you been profitable trading just the stock or future? The answer to this will be your solution.
I think you need to sit down and decide what you want to do with options first. What is it that you want to achieve with options, how do you want to trade it? Do you want to long vol. or short vol.? Directional move? And then go into each option trade with a clear plan of action. What do you want to do when this happens, what do you want to do when that happens and then have the discipline to do it when the time comes. Things can happen really fast with options, prices can change a lot in a matter of seconds, unless you have a very clear and precise battle plan in place, you are going to panic and then things can turn disastrous really quickly. In options, one thing you cannot do is panic. You panic, you DIE!!
These posters gave you some of the best advices you are going to get. Read them carefully. 1. Most of us don't have any edge. Our entries might as well be random, in the long run random entries will lose money. 2. Unless you are an expert in option maths and their microstructures, to trade single options successfully is like buying on margin, you need to trade the underlying successfully. 3. Professional option traders understand microstructures, we amateurs have zero hope of doing that. We are better off betting on macro trends and macro structures. 4. Try this: display the historical stock price chart and the historical option price chart side by side and see the correlation and you will appreciate what I said. I am paying forward, here are some suggestions for you as a possible approach: 1. Learn to swing trade the underlying successfully, then you can leverage by trading options instead of the underlying. Why option? If you ever had a margin call you will appreciate options, no margin call, only theta decay. 2. Select a good underlying, hold them long term and trade options around them (not just covered calls). This is a variation of Taleb's 80/20 rule. You objective is not to get rich quick but do perhaps 5-10 points better than buy and hold the underlying. 3. If you go long, don't buy anything with less than a month's expiration. 4. Next, learn to trade butterfly.
@zghorner You managed to get a 100K gain, that alone is better than 99% of ET trying to tick fuck for $50 a day. You have something that is working, you just need to work on the exits. Don't yolo 0 DTE options, be sparing with the weeklies and lower your expectations on returns. You'll do fine being long options. You can blow up in long butterflies as well. Double your hold times, and look at LEAPS.
Can someone explain to me why there’s seems to be obsession with butterflies on ET? Is it the @destriero effect?
@destriero uses butterflies??? LOL No I think the poster was trying to use butterflies as an example to advise OP to use limited-risk strategies.
About 90% of my trading is long options. "They" say 9 of 10 options expire worthless, but they never talk about the insane gains you can make in that other 10%. BUT, you need to be a good trader, with a real edge. Maybe you don't have an edge yet. Can you post some of your trades?
If you can't consistently predict the timing and movement of the underlying instrument at least 65%-70% of the time, then you are unlikely to ever win the war against the greeks, and overcome the drag of spreads and expenses. Your own experience has shown this to be true. So stop wasting your time and treasure, and put your focus where it belongs.