Best Option Strategies

Mightymorphinchris

Active member
Find the best options scalping strategy
In my opinion it would be one that I'd be looking to multiple time frames. The reasoning behind that is if the trend is moving in a direction for a longer period of time then you are more likely to come out profitable. Scalping options can cause you to either make or lose a lot of money really fast (since you'll likely pick options with a very short time to expiration). Because of the high risk high reward setup you want to do whatever you can to minimize potential downside. One of the ways I personally do this is by picking setups that have a potential trend in the direction I'm trading on bigger time frames, that way if I miss my exit on a really short time frame I still have a chance to get out alive without losing all of my money.

So, what does that look like? For me, I enter on short time frames (1m, 2m) when a large time frame (15m) is at the beginning of a trend and I exit when a slightly larger time frame (5m) signals reversal. You should also implement other rules such as what percentage you take profit, if it becomes overbought or oversold on your short timeframe you may want to exit or if the trend reverses right away you'll want to cut your losses early.

Cutting losses early and taking profit appropriately is going to be crucial to your success as a couple of big losses can ruin many big gains and just because you're in profit one minute doesn't mean you'll keep them for long since you have time against you (and potentially volatility) when buying short term options.
 

rad14733

Well-known member
VIP
Does anyone have an indicator/study that works best for them when it comes to Options Trading ?
Thanks.

@Tuna7020 What style(s) of Options Trading are you interested in, and do you have a current setup that you are using...??? I mainly scalp and day trade Options based on momentum so I use indicators that monitor the underlying symbols for confirmed trend reversals and increased momentum... TTM_Squeeze and RSI are good indicators, as well as many others... I have used several setups successfully over the years... What is most important is what combination of indicators works best for you... I'm sure we can come up with something once we know more about your trading style(s)...
 

Tuna7020

New member
@Tuna7020 What style(s) of Options Trading are you interested in, and do you have a current setup that you are using...??? I mainly scalp and day trade Options based on momentum so I use indicators that monitor the underlying symbols for confirmed trend reversals and increased momentum... TTM_Squeeze and RSI are good indicators, as well as many others... I have used several setups successfully over the years... What is most important is what combination of indicators works best for you... I'm sure we can come up with something once we know more about your trading style(s)...
Ohh wow. Same here. I usually day trade but swing occasionally if the charts are looking promising. I usually use RSI,MACD, Volume and VWAP. Just got into TTM Sqeeze recently (still trying to figure out how it works). I agree with you. The key is finding the best combinations that works for you. What time frame/s do you use ?
 

rad14733

Well-known member
VIP
@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

New member
@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

Well-known member
VIP
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

New member
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?
 

METAL

Active member
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

New member
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.
 
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Sergio123

New member
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!

Active member
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

Active member
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

New member
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

New member
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

New member
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

New member
VIP
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.
 
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