You were talking about weeklies sunshine, not monthlies. Anyway, first point, stipulate that 240 is points. You talk about weekly profit in dollars, and don't qualify the numbers for trades. Secondly, if you really want to attract a following, as said by someone before me, you need to explain more. The logic of buying a futures contract and selling an ITM call escapes me. If the market moves against you, the call will mitigate your futures loss, to a point, by diminishing degrees. Your sold call is about 0.50% ITM, well within the realm of possibility for a single days move. If it moves in your favour, convexity of the ITM option means an ever reducing benefit from the move as delta increases. If you have confidence in direction, why run the race with one arm tied behind your back? If you don't, why not, and why that particular choice of call? As suggested, you really need to explain more. If you'd like a great example of how to explain, here is one. https://charmandcolor.wordpress.com/2016/12/09/inner-workings/ I don't mean to be patronising, but I believe many who read this don't trade options. The title of the blog, charm and color (gawd, I hate that, I spell it colour), refer to second and third order greeks. Read and enjoy.
If you are spending money on premium, you may as well just buy a straight option and forget about trying to hedge a position with an option.
Good point .I have another strategy , where I buy calls when price oversold , but you have to pick calls at oversold levels or trending mode.
I believe he never has a proper trading account with any REAL broker. He is using some blood sucking bucket shop that normally use "point" instead real tick. I will let him figure out himself in the hard way why bucket shops are blood sucking, especially trading Options. LOL
Well, I just checked on my iPad, I can get a DAX option quote, so the chains should load on my PC. The next time he comes up with weird and wonderful stuff I struggle to understand, I can model it and see what price band he is being optimistic about.
Agreed:Bucket shop are blood sucking , with the wider spread on buying and a much hefty closing price , of 5 to 12 points for highly decayed options that are almost worth zero. The advantage is you get instant fill , in non trading hours and at all strikes .I don't like interactive broker platform and automatic rolling into futures . I will post in the DAX journal ,this method I am refining in a few minutes , the purpose is to get you guys to comment.This is actually a method not worth laughing it , it may give you a good 30 points a week , with managed risk. If we can all bang our heads , we might strike oil . with an orignal method , that could be highly profitable.
If you want comments and a reasoned discussion, then, as you were asked in your journal, explain your logic for structuring trades the way you do. What you are doing is posting in shorthand the most bizarre trade structures I've seen in a while. What is there to discuss? Laugh yes, discuss? All the heroes who want to profit from premium decay selling options look at how many standard deviations away they will sell the options. You sell one 0.5% from the money and expect to profit from decay. If I could have such confidence in price and be correct, Soros would look like a pauper next to me. To begin with, I wouldn't muck about with the pennies from premium, I'd do straight directional trades, leveraged but within reason. As suggested, buying vanilla options is one way you could do it. Get real. And Galvin, great job identifying the bucket shop thing.
This is not a premium decay strategy , it is volatility trading ranging strategy.Check it out. technical analysis dax signal Give me some constructive improvements , and I know you guys can help.How can I get more benefit from premium decay on sold options?
Yes, I've looked at your post there already. As noted, not all the trades you've put on follow the two plays you detailed. Anyway, without modelling actual trades with IV of the options, it is senseless to comment. There will presumably be a band of profitability if the numbers have been worked correctly, so probability, R:R and reality will have to be looked at. At least now that you have outlined your thinking, people can look at your trades in relation to your desired outcomes.
See if you guys can make some comments on this https://www.elitetrader.com/et/threads/option-trades-with-managed-risks.305070/