Best Option Strategies For ThinkOrSwim

[iebj3991]

Find the best options scalping strategy

 

[rad14733]

@Tuna7020 I primarily use the 2m timeframe but also monitor 5m, 10m, 15m, and 30m... I also use several different chart setups rather than merely relying on a single set of indicators... I have used Renko Bars in the past but am currently using Heikin Ashi candles to help with trends and to avoid knee-jerk premature exits...

 

[Tuna7020]

@Tuna7020 I primarily use the 2m timeframe but also monitor 5m, 10m, 15m, and 30m... I also use several different chart setups rather than merely relying on a single set of indicators... I have used Renko Bars in the past but am currently using Heikin Ashi candles to help with trends and to avoid knee-jerk premature exits...

Heikin Ashi charts are 'average of the price movement' right ? I currently use just the regular candle sticks and my fav timeframes are 5m,15m and 1h. Will look more into the Heikin Ashi candles. How do you set stop losses ? I know some people set them based on % loss but I do set mine based on my support lines...

 

[rad14733]

Heikin Ashi charts are 'average of the price movement' right ? I currently use just the regular candle sticks and my fav timeframes are 5m,15m and 1h. Will look more into the Heikin Ashi candles. How do you set stop losses ? I know some people set them based on % loss but I do set mine based on my support lines...

Heikin Ashi is commonly referred to as averaged but in reality it's more smoothed... Then some folks go even further and use smoothed Heikin Ashi, which I find redundant...

I usually set stop-losses at either percentage or price, whether fixed or trailing-stop... There have been times when I've set Stop-loss based on previous low of the underlying as well... Plenty of choices...

 

[Tuna7020]

Heikin Ashi is commonly referred to as averaged but in reality it's more smoothed... Then some folks go even further and use smoothed Heikin Ashi, which I find redundant...

I usually set stop-losses at either percentage or price, whether fixed or trailing-stop... There have been times when I've set Stop-loss based on previous low of the underlying as well... Plenty of choices...

Heikin Ashi is commonly referred to as averaged but in reality it's more smoothed... Then some folks go even further and use smoothed Heikin Ashi, which I find redundant...

I usually set stop-losses at either percentage or price, whether fixed or trailing-stop... There have been times when I've set Stop-loss based on previous low of the underlying as well... Plenty of choices...

Sounds good. Do you use any particular Scan criteria?

 

[MerryDay]

@Tuna7020 You can read more about options scan criteria here --> https://usethinkscript.com/threads/options-prices-as-of-stock-price.7734/

 

[bigverm23]

hey all. Newish to trading and specifically interested in scalping options. due to time limitations

I'm looking for recommendations for studies/indicators that are best used for scalping options, along with any recommendations on lower studies to pair with them. Thanks in advance!

 

[Joshua]

Define time limitations.

 

[MerryDay]

hey all. Newish to trading and specifically interested in scalping options. due to time limitations

I'm looking for recommendations for studies/indicators that are best used for scalping options, along with any recommendations on lower studies to pair with them. Thanks in advance!

https://usethinkscript.com/p/best-scalping-indicators-for-thinkorswim/

 

[bigverm23]

Define time limitations.

basically I dont really want to get involved, at least not right now, in swing trades because I'm in the office M,W,F's. So my thought was to try scalping on the days I'm remote.

 

[Joshua]

What type of minimum criteria would you look for in determining which options are suitable to be scalped in the first place, and how would you go about finding them?

What make you so interested in scalping? In fact, define scalp. Most trader-speak is loosely agreed upon slang, I want to be sure we're talking about the same thing here.

 

[bigverm23]

What type of minimum criteria would you look for in determining which options are suitable to be scalped in the first place, and how would you go about finding them?

What make you so interested in scalping? In fact, define scalp. Most trader-speak is loosely agreed upon slang, I want to be sure we're talking about the same thing here.

Scalping, for me, is playing an option for a quick profit, can be a matter of seconds to minutes but not to extend beyond the actual day in question. My goal is small gains daily to build my account over time and limit my risk. I'm also currently just paper trading on TOS so I can find my preferences and get comfortable with the platform. I'm using SPY only.

 

[Joshua]

Oh ok, sorry, it says only two months of trading experience in your signature, so I was a bit concerned for you in regard to scalping options. But if you're just paper trading, I am not so worried. As for indicators, I can't help you there, I don't use them. I only use chart indicators when developing and debugging scans. I do use $tick though I guess.

 

[Trader_Rich]

If I may, I'd recommend looking at tick charts rather than lower time frame charts. I often find that once I get signals on lower time frames that I have missed a significant amount of the move, or even get in at the very end of the move altogether. I'd recommend reading (and re-reading) the following threads and marry the two together

https://usethinkscript.com/threads/es-trading-strategy-on-thinkorswim.987/

https://usethinkscript.com/threads/rsm-indicator-for-thinkorswim.5407/

 

[adefrenza]

Gentlemen:

Do not try and scalp options. Take it from someone who has been trading over 30 years. It does not work. Normal market fluctuations will take you out at a loss most of the time and this strategy is not sustainable. If you want to trade options, use any system you want, but work off of a 1 or 2 hour chart. Those signals are much more reliable than scalping on a 5 or 10 minute chart. Try it and you will see it works better. Trade liquid stocks with decent volume and open interest and you will succeed.

Good luck.

 

[METAL]

Hey @everyone, I am curious and maybe this will help others as well. What is your best / most consistent OPTIONS trading strategy.
Please provide details if you have the time.. Thanks

 

[Sergio123]

Steer your position towards a targeted delta/gamma neutral position and adjust to generate income against it.

Positive gamma is long calls and log puts. Negative gamma is short calls and short puts. Positive Delta is long calls and short puts and negative delta is short calls and long puts.

So suppose you are sitting at 100 long shares of XYZ stock. I want to generate income against because its not doing anything....I would sell a .45 delta call option against it for premium which would offset my long shares and put cash in pocket then I would hedge the downside risk by buying 2 long puts at say .45 Delta at a long expiration date and sell 2 short puts at a closer expiration date to generate income on the put side. It should equate to more or less a slightly positive position with both downside risk covered and income producing.

Now instead of using stock shares you can use stock replacement by purchasing 2 long dated calls at .5 Delta and then you can sell 2 near term calls to generate more income instead of holding shares.

I am almost completely using stock replacement and don't even use indicators because all of the information about the future expected price is encoded within the options pricing.

Easy Peezy.

 

[HODL-Lay-HE-hoo!]

If you use the search function someone posted a strategy for day trading options (particularly spy) which consisted of adding a few spy calls and puts within one standard deviation (or 2? i dont remember). Wait for crossover on the underlying chart 10min then switch to the 2min chart wait for a crossover THEN switch to the 2min chart of the option itself (choose one from the watchlist) buy at crossover.... was the basic plot but he goes into much more detail (and provides the indicator setup) but it seemed like a solid strategy.

 

[METAL]

Steer your position towards a targeted delta/gamma neutral position and adjust to generate income against it.

Positive gamma is long calls and log puts. Negative gamma is short calls and short puts. Positive Delta is long calls and short puts and negative delta is short calls and long puts.

So suppose you are sitting at 100 long shares of XYZ stock. I want to generate income against because its not doing anything....I would sell a .45 delta call option against it for premium which would offset my long shares and put cash in pocket then I would hedge the downside risk by buying 2 long puts at say .45 Delta at a long expiration date and sell 2 short puts at a closer expiration date to generate income on the put side. It should equate to more or less a slightly positive position with both downside risk covered and income producing.

Now instead of using stock shares you can use stock replacement by purchasing 2 long dated calls at .5 Delta and then you can sell 2 near term calls to generate more income instead of holding shares.

I am almost completely using stock replacement and don't even use indicators because all of the information about the future expected price is encoded within the options pricing.

Easy Peezy.

Thanks for the input. Your strategy helps me to understand I have much more to learn.

 

[Sergio123]

Thanks for the input. Your strategy helps me to understand I have much more to learn.

Yes. To really understand options you need to understand the Black-Scholes equation and how stock prices can be modeled with stochastic random processes. I wish there were more pre-built functions in Thinkscript for it.

 

[dsvitale]

Hey @everyone, I am curious and maybe this will help others as well. What is your best / most consistent OPTIONS trading strategy.
Please provide details if you have the time.. Thanks

Brother.....that is not an easy question to answer. Everywhere on the net is an options guru who has the "Best" options trading strategy. Well, let me tell you that does not exist. Every trading strategy is profitable when employed at the optimal time. And that my friend cannot be answered in a blog. That takes hours of learning the strategy and then months to years employing it correctly. In my own options trading journey (which is over 15 years), I have made every mistake possible. But, let me leave you with this......simple is best, patients equals profits ( I promise). I might wait a month for a stock to hit ALL my parameters of my trading strategy. MOST important......develop a trading strategy and NEVER deviate. Now, there are those who are going to say...BS.....strategies most evolve.......ummm....sometimes......but that means the strategy was either flawed or not employed correctly. What I have found is the strategies are sound it is the trader that is flawed.