I have a long-term, long only automated trading strategy that buys pullbacks and sells once a certain profit target is hit. I only trade the indexes. On a 10 year backtest I have: 96 of 97 trades have reached their profit target within 60 days 1 trade took a few years to reach its profit target I am not trading with leverage in order to sustain a market crash, etc. Based on the above, is there a low risk way to increase leverage by either trading a different or hedging? Thanks in advance.
Thinking out loud! You may consider a "parallel" version of your successful strategy, by sizing the size of a .60->.70 Delta long call with > 120 DTE as a test. The notion is to roll your position back down to a .70 delta, if/when it exceeds .86 Delta. Never hold if DTE is less than 20. It is leveraged, but you cannot loose more than you put up, and after 2-3 rolls, you are playing with house money. -- A derivation of Investools "trend trading with long calls".
I think it depends on the individual traders' likes/dislikes. (what they are comfortable with). For example, using a long Call, can greatly simply some aspects such as risk management and taking profits. Each roll up of the strikes, takes money off the table, and has qualities similar to a trailing stop, without missing future run-ups! -- A lazy man's trade. -- The rub, is one needs to be comfortable with the total loss of the "extrinsic" value of the option price on purchase, as it will burn away with time. -- Like prepaid interest payment on the term of your position. (You require future price movement to make that cost near negligible). Also, the roll timing occurs near price highs, which seems optimal.
You could say options are Explosive -- both in a good way, and bad way, It all depends on how you approach it;
There are many ways to magnify this. I recommend this book, which covers several (but is probably not exhaustive): Indexes will work for you if liquid. DITM long calls, calendars, verticals, synthetics: lots of stuff will work.