Real-time options education and strategies
When back-testing an options strategy I want to first test the potential profitability of the strategy against the best possible outcome. The home run outcome. If it doesn’t perform well under the best potential outcome then I can safely abandon the strategy and continue my search for a better one. Of course I also need … Read more
Below is the current SPX position in the account that I refer to as the PDT (Pattern Day Trader) account. It is a smaller account (less than $25K) that is limited to a maximum of 3 round-trip trades within the same day over a 5 day period. PDT accounts are especially well-suited to using longer … Read more
A common strategy by ‘professional‘ option traders and strategists is to buy a 60 Delta option to initiate a new trade. The reason I put quotes around the word ‘professional’ is because having a YouTube channel doesn’t necessarily mean they are a professional or someone you should listen to. That also applies to blogs, including … Read more
I’m just a student of Paul’s Vega Option’s method. But as I see it, the Vega Options strategy has three steps: One of the keys to successfully trading this strategy is understanding where your current portfolio is in this three-step process, so that you can have a clear understanding of what is driving your trade. … Read more
One of my favorite and most profitable strategies is buying a directional Diagonal spread for a debit and then rolling that Diagonal into a Calendar spread when the opportunity to get to zero cost arises. Simple! No? Ok, let me translate that for you! It means when I can sell the Vertical spread that ‘converts’ … Read more
In the world of retail trading, selling credit spreads is a very popular strategy. Mostly, credit spreads are taught as so-called income trades. According to the gurus, income trades are “non-directional” trades–i.e., theta-driven positions that don’t really depend on the direction of the underlying. Rather than trade based on where they think price will go, … Read more
The title of this post is a little deceiving, it should read ‘Risk On…Risk Reduced’. The only truly ‘risk off’ trade is an exited trade! If that’s not clear what I mean by that it should be clear after you’ve read the post. Over a period of just less than 48 hours I made 7 … Read more
This post is about the smaller account that I manage for somebody. The positions are smaller and easier to understand than my positions which don’t seem that helpful for demonstrating good trading techniques! 😄 On twitter I refer to it as the PDT account. PDT is short for Pattern Day Trader and if you don’t … Read more
There are plenty of references to the RS+ trade on the blog and in my twitter feed. It’s certainly one of my favorite option structures. Basically, a RS+ is a version of a 1×2 (or 1×3) Ratio Spread in one expiry plus 1 (or 2) long options in a later expiry. It could also be … Read more
Over the years I’ve developed my own methods of analyzing price action and that has helped me stay on the right side of the trade most of the time. Of course there are going to be failures along the way that aren’t necessarily due to a misreading of the chart but rather a news events … Read more