Hi All. I've been researching & playing around with trading options for about a year now. I've done a few trades here and there, but nothing large scale or concrete. I've been having problems with doing the Due Diligence, chart analysis, etc. to figure out if a play is the right one consistently and be confident about it. Most of the trades i've done previously have been either following high Call volume trades or large changes in Open Interest. Besides searching big news about a company that comes on my radar, i find it hard to pinpoint the catalysts sometimes. The only ways i've been trying to analyze volume are with Fidelity's Option quote chart to see which volume appears to be opening or closing contracts, and i'm not even sure if I'm reading it right. Looking for any good advice on doing the Due Diligence for these trades, possible profitable strategies, ideas on analysis of options trades, etc. Would anyone be willing to help?
Click on "Options" on the left of the screen. Plenty threads with strategies/ideas/education. ***BTW, do you live in a Jewish part of New York?
I think the challenge is with options there are options. Finding a style of trading that fits your personality and time commitment is important. My own journey is I've tried a large number of things. I've dabbled a decade ago with futures options and made money selling premium until a nice jump up in minneapolis wheat caught me exposed legging out of call spread. Blew that bitch out after a nice year of winnings. Live and learn. I've been part of the TT Iron Condor sellers but I find it like watching paint dry and nothing sucks more than piling up profits for a few months to just be wiped out by a large move one way or the other and covering at max loss. It isn't for me. I've had some success with selling cash covered puts and trading the wheel. But once again personality wise I end up bored with this style of trading. I've gravitated more recently to trading weekly butterflies. I like the in and out action of them and as someone with a day job I can put these on mid week and take them off Friday morning. The R/R profile is favorable. I can research my set ups outside of market hours and be ready to go. I like going into the weekend flat of all positions. Throw in a few calendar trades as well. What I see on these boards is there is no one way to make it as a trader. Everyone has a different style. Some are good at swing trading, some at day trading, some in forex etc. Some promote technical analysis. It seems that those who make it have paid their dues by blowing up an account or two, worked hard at learning from their mistakes, and have developed solid risk management. The entertaining thing is you will find some people on these boards that are full of shit and post fake wins etc. Some are good at rooting this shit out and exposing it for what it is which is always fun to watch. I'm now a fly guy.
Alrighty. Thanks for that. And Thank God no, i'm just a Jew at heart. Yeah, i've learned a lot of things as well. Got crushed by IV in one trade, lost money holding puts after the end of the March crash like an idiot, learned to always take profits at the first big peak (go with the gut feeling), etc. I'm trying to stick with swings because i'm starting off with a small account and sticking mainly with buying calls. Always figuring something out, but most of the time i talk myself out of trades due to fear. And i've seen trades i was looking to make and how they didn't turn out very well in the end. Gotta get over that and figure out a way to screen for winning trades better.
It looks to me like you are way overthinking it. A simple way to get involved is to use the wheel strategy. Basically CSPs and CCs. Start slow with a single contract on something priced say under $50. You will need capital of 100x the price. Start with a CSP. If you are not familiar, do some searches on the option wheel and understand it before starting. But basically pick something with somewhat high IV, sell a CSP with a delta of maybe 20. Watch it and the price will either move toward the strike or not. If it doesn’t, you will likely expire. Repeat again. Eventually the price go below your strike and you’ll be assigned. Then sell CCs at the price you were assigned. Repeat until it is assigned. Then start over with CSPs. Note this is a simplistic explanation so do you research maybe even doing a paper version for a while. Also note that you should try to stay with stocks you wouldn’t mind owning. And please don’t do this with emergency funds or money that you can’t afford to lose.
Another choice would be just covered calls. Find a stock you don’t mind owning, buy 100 shares and start doing CCs on it. Basically sell a 30 or so delta CC. Let it run. If it expires, do it again. If it assigns, buy another 100 of it or something else and start again. I will sometimes use the premium to buy more shares of the stock. Eventually you will have 200 shares with this then you can sell 2 contracts. You can get more aggressive than 30 delta if you like but I would start slow. But try to avoid meme stocks.
really nice answer and journey, reminds me of mine, funniest thing none of these people want to hear that we did it for a decade or so because they dont want to do it that long, they want results now
Consider selling vol such as straddles with risk filters. Positive edge over long run. But trade conservatively with fix bets.
VIX or VIX term stucture. You can read Euan Sinclair books on volatility trading and positional option trading. But for any short vol strategy, trade small. It should just be one of the strategies.