Best Option Strategies For ThinkOrSwim

[lostcoastsurf]

I'm brand new to options, wanted to start learning how to day trade options on a smaller time frames. Would there be a way to post a label on the chart showing the break even line or price for your current open options position? How about the profit/loss? Thanks if it's obvious, or even if it's not, did a search and couldn't come up with anything.

 

[lostcoastsurf]

Active Trader stopped working and went blank this morning.
So I have been using Active Trader to trade options for the last month. Had no Idea I wasn't supposed to. For me, it is the best way as I day trade options. My issue is that my Active Trader stopped working this morning which cost me over a thousand dollars. Has anyone had their active trader stop working? If so, Did you fix it and how?

Here's a good video from a guy who uses the active trader tap for options and how he sets it up.

I got the video from this post https://usethinkscript.com/threads/active-trader-template-work-for-option-trading.4486/

 

[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.

 

[Sergio123]

I take back about not using indicators. Bollinger bands combined with IV for confirmation is useful. When the bands narrow I focus on buying long options as the price should be relatively cheap. When the bands widen I focus on selling options to collect larger premium with higher volatility.

 

[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.

 

[mrP]

If this is a "Fast Money" fan group, ignore this post.
I don't "trade options" or spreads. I buy directional options when price chart of the underlying stock/etf has the pattern/quality desired. Find "underlying" candidates with high volume, low bid/ask spread such as 1cent. In that small group, find same qualities for OPTIONS, as well as Strikes every $1 and every Week. Market should not even blink if you submit order for 100 contracts. Markets/charts are fractals. Look long enough, and you will see your favorite DIRECTIONAL Daily/Weekly pattern show up on 30minute or 3 minute charts. Spend some time with ThinkBack. And learn to right-click on an option in Trading Tab, and copy/paste symbol into Chart to see how the option acted in "shorter than Daily" charts. And you can look at "expired options" from weeks ago by changing the date after you paste it. All other things being equal, for directional options the best returns are usually close to Expiration (Thursday & Friday). And I generally agree with dsvitale post above. Best Wishes.

 

[quantumomegallc]

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.

And this is how the big boys do it. Jonathan Rose has a good video on Youtube on how to do this.

Also type Jonathan Rose Gamma Scalping in Youtube's search bar and you'll get like 5 or 6 videos from him.

 

[drasp]

look into the most proven and easiest strategy there is. Its called the wheel strategy. Only used for bull markets tho so don't get too excited.

You sell a put, if it doesn't make money you execute the option, and ride it long. Then you sell at some defined point.

disclaimer:
there is still risk with this strategy, and your account can blow up, make sure to understand this before you try it.
You have to have enough money to be able to purchase 100 shares of whatever it is you want to buy
Id suggest sticking to DOW 30 stocks only, don't get into high risk growth or penny stocks.

 

[quantumomegallc]

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

The flip side of this coin is Gamma Exposure (the reason Market Makers re-balance Delta at market open/close). Expiring Gamma (Theta) is why people sell options to hedgers who buy straddles and then scalp Gamma to get back Theta.

I take back about not using indicators. Bollinger bands combined with IV for confirmation is useful. When the bands narrow I focus on buying long options as the price should be relatively cheap. When the bands widen I focus on selling options to collect larger premium with higher volatility.

More accurate are the GEX (and derivative gamma scalp formulas) levels themselves. I managed to chart them for TOS (roughly) and they're pretty accurate - often to a penny. You can see the gamma squeezes for on the price charts, and pick off target levels based on stdev away from the mean.

 

[DB01]

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.

What sort of monthly/weekly whatever, profit percentage are you seeing and how big of an account are you trading?

 

[PapaBear]

The flip side of this coin is Gamma Exposure (the reason Market Makers re-balance Delta at market open/close). Expiring Gamma (Theta) is why people sell options to hedgers who buy straddles and then scalp Gamma to get back Theta.


More accurate are the GEX (and derivative gamma scalp formulas) levels themselves. I managed to chart them for TOS (roughly) and they're pretty accurate - often to a penny. You can see the gamma squeezes for on the price charts, and pick off target levels based on stdev away from the mean.

Hi, interesting I have been looking into GEX levels, if you have found a way to chart them would, you care to share? I have currently only a GEX column I added to my doe spx options chain (something I found in an options post on website here) that I watch with different strikes to see which prices are likely to be a magnet for price action.

 

[drasp]

Hi, interesting I have been looking into GEX levels, if you have found a way to chart them would, you care to share? I have currently only a GEX column I added to my doe spx options chain (something I found in an options post on website here) that I watch with different strikes to see which prices are likely to be a magnet for price action.

https://squeezemetrics.com/monitor/dix

I think you'll find this website helpful

 

[PapaBear]

https://squeezemetrics.com/monitor/dix

I think you'll find this website helpful

I am looking for something that will allow me to take the high gex levels and plot them basically as pivot points on my chart for spx and then trade between them as support and resistance, that site is quite pricey, do you pay for that service?

 

[quantumomegallc]

Hi, interesting I have been looking into GEX levels, if you have found a way to chart them would, you care to share? I have currently only a GEX column I added to my doe spx options chain (something I found in an options post on website here) that I watch with different strikes to see which prices are likely to be a magnet for price action.

Another guy Dr. Harlin has some similar indicators but I think mainly oscillator types.

 

[HODL-Lay-HE-hoo!]

Hopefully this is on topic... enough... if someone could please enlighten me on the following.

1. GAMMA: Can direction be inferred by option gamma as seen in the option chain or in various studies in this forum?

2. IV: Is Implied vol, IV rank, IV % (plotted intraday) useful as confirmation of direction?

3. Does anyone (reading this) use conditional orders to place option trades for SPY or others of the like? (I know its not full auto just curious if this is part of anyones daily/weekly routine?)

 

[quantumomegallc]

If this is a "Fast Money" fan group, ignore this post.
I don't "trade options" or spreads. I buy directional options when price chart of the underlying stock/etf has the pattern/quality desired. Find "underlying" candidates with high volume, low bid/ask spread such as 1cent. In that small group, find same qualities for OPTIONS, as well as Strikes every $1 and every Week. Market should not even blink if you submit order for 100 contracts. Markets/charts are fractals. Look long enough, and you will see your favorite DIRECTIONAL Daily/Weekly pattern show up on 30minute or 3 minute charts. Spend some time with ThinkBack. And learn to right-click on an option in Trading Tab, and copy/paste symbol into Chart to see how the option acted in "shorter than Daily" charts. And you can look at "expired options" from weeks ago by changing the date after you paste it. All other things being equal, for directional options the best returns are usually close to Expiration (Thursday & Friday). And I generally agree with dsvitale post above. Best Wishes.

Quantitative research I've run across stipulate that 5m and 30m timeframes are the two most popular for measuring volatility.

 

[MerryDay]

mod note:
please keep the discussion focused on open source code that is available to the OP and all viewers of the forum.