Not a bad way to swing with options

Discussion in 'Options' started by qlai, May 24, 2019.

  1. Don't know
     
    #11     May 24, 2019
  2. jvanelli

    jvanelli

    Probably combination of large plus vega and declining IVol (implied volatility). Your expiration is distant, which makes vega large. In this scenario, the changes back and forth in IVol will override just about everything else, including delta. Note when trading options you are always trading against market makers, their algos are probably working off better price models than yours, they have a better view of the market than you do, and their game is essentially to manage risk whilst collecting the bid/ask spreads. My opinion, for what it's worth, if you want to trade options then start thinking in terms of what the market maker needs to be doing in the daily market context in order to stay in business.
     
    Last edited: May 24, 2019
    #12     May 24, 2019
    wave likes this.
  3. qlai

    qlai

    Damn it, can't you people create your own threads!? I need answers :)
     
    #13     May 24, 2019
  4. jvanelli

    jvanelli

    Been doing options on ES and 6E futures for several years with modest success overall, but I have never had much luck with short term price-directional strategies, thus hard for me to see how one can gain a statistical "edge" with them as a swing trade vehicle. What you can do is limit risk, and you can profit (or lose) from time decay, and you can profit (or lose) from changing volatility, as well as changes in the underlying price, of course. My favorite, back when we had volatility, was the gamma trade (maybe because I am a scalper at core) but that's a tough one now that the broad markets are becalmed. Retail options traders are almost always trading against market makers, who are living off those (excessively) large bid/ask spreads, and managing their own risk very well. Trying to trade directional moves against those guys is like running with weights around your ankles.
     
    #14     May 24, 2019
  5. We just talking about swing trading options ;-)
     
    #15     May 25, 2019
  6. You are right and it is very difficult to assess if buying a put were the right decision at this time. Which kind of options (OTM,ATM, ITM) with which expiration would you prefer for swing trading?
     
    #16     May 25, 2019
  7. Wheezooo

    Wheezooo

    Yep, might as well start a thread, "How to beat the casino at Roulette."
     
    #17     May 25, 2019
  8. Wheezooo

    Wheezooo

    Vol came in.
     
    #18     May 25, 2019
  9. qlai

    qlai

    I don't know, if I trade directionally, I don't think I trade against MM ... They just pair me up with some other idiot(or hedger) and take their cut no matter what.
    I don't get it, let's assume there are people who have an edge doing short term (up to 3 months) directional trading ... Why can't they use options to help them better structure/execute their strategy? Many people make money simply on noise (Overreactions that have no fundamental significance) and options seem to be very good at noise exaggeration.
     
    #19     May 25, 2019
  10. ironchef

    ironchef

    I totally agree, especially the part about bid/ask spread and running with weights around my ankles trading thinly traded options.:banghead:
     
    #20     May 25, 2019