OMG...vanzandt.. thanks for the article push but now you just gave me a ton of work next week(s) ... this sentence from that article is very significant... "Near as we can tell, this is a persistent source of edge in the market and yet the complexity of the process seems to deter investors from using this kind of data to make alpha-generating decisions. Speaking of alpha-generating decisions, we might sell a December call in LITE (or in any number of other currently high-GEX names)." gotta plumb that edge and see if I can create my own GEX and use it to scalp contracts last 3 days to exp or easier is to buy flies centered around that sticky strike. A quick and dirty would probably be to look at price x% higher (since covered calls are mostly 2-3 sigmas higher, look for elevated open interest there and buy the fly there..The last part of open interest is the harddest part since I gotta figure out a way to load the bloated OI in my scans.
Mr. Morse you are an expert on the subject. And I would love to learn from you all the tricks that you used to trade options!
My point is simple. You are looking for edge when the current implied vol is higher or lower than the past or current actual volatility. If that happens, sometimes there is real value there and sometimes option traders are factoring in uncertainty for pending events. LVX is a great tool for evaluating the past. I can't help you with the future.
selling options means that you are in the insurance business. you are competing with the guys on the Exchange floor. they know how to hedge their trades and their costs are much less than yours. furthermore they are likely to have more capital than you. the odds are not in your favor.
Don't give us small mom and pop option traders a hard time. Some of us do make money sometimes. But anyone that tells the OP there are simple "golden rules" that one can use to make money, or by subscribing to an options service one can make money is not telling the truth. There are no simple rules like "selling options is the only way to make money".... Think about this: To the OP, why would someone keep buying your options when they are guaranteed to lose money? Anyway, thanks for the coaching.
Best advice I have seen on this thread. You are a real pro. Thank you for your coaching sir. Best regards,
May I ask you a question: Many of the options I traded were thinly traded with wide bid/ask. Normally I just aimed for mid point between bid/ask. Was I wrong to aim for mid point?
Try this formula. iv -iv low x bars back divided by iv hi xbb - iv low xbb.... long veta < 20 / short vega > 75, verticals in between... The secret is in the finding the x