Thanks for the input. Your strategy helps me to understand I have much more to learn.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.
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.Thanks for the input. Your strategy helps me to understand I have much more to learn.
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.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
And this is how the big boys do it. Jonathan Rose has a good video on Youtube on how to do this.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.
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.Thanks for the input. Your strategy helps me to understand I have much more to learn.
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.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.
What sort of monthly/weekly whatever, profit percentage are you seeing and how big of an account are you trading?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.
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.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.
https://squeezemetrics.com/monitor/dixHi, 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.
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?
Another guy Dr. Harlin has some similar indicators but I think mainly oscillator types.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.
Quantitative research I've run across stipulate that 5m and 30m timeframes are the two most popular for measuring volatility.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.
Join useThinkScript to post your question to a community of 21,000+ developers and traders.
Start a new thread and receive assistance from our community.
useThinkScript is the #1 community of stock market investors using indicators and other tools to power their trading strategies. Traders of all skill levels use our forums to learn about scripting and indicators, help each other, and discover new ways to gain an edge in the markets.
We get it. Our forum can be intimidating, if not overwhelming. With thousands of topics, tens of thousands of posts, our community has created an incredibly deep knowledge base for stock traders. No one can ever exhaust every resource provided on our site.
If you are new, or just looking for guidance, here are some helpful links to get you started.