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Buying SPY options not a fool's game?


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#1 diogenes227

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Posted 03 November 2017 - 02:45 PM

Wrote this up in answer to a discussion on another forum.

 

From the link;

 

 

There are only three things that can happen if a trader BUYS an option – the option goes the trader’s way, the option goes against the trader, the option goes sideways losing on time decay.

 

Two out of the three are bad for the option buyer.

 

So is it a fool’s game?

 

Doesn’t have to be. Not for day traders.

 

At the time of writing, up $20k on $25k in trades.

 

For the discussion and a chart:

 

CALLING ALL SPYs

 

bowrie.gifsmile.png


"If you've heard this story before, don't stop me because I'd like to hear it again," Groucho Marx.

I spent half my money on gambling, alcohol and wild women. The other half I wasted, W.C. Fields.

#2 Geomean

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Posted 03 November 2017 - 03:39 PM

Outstanding!


Opportunity knocks on your door every day-answer it.

#3 NAV

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Posted 04 November 2017 - 05:01 AM

Wrote this up in answer to a discussion on another forum.

 

From the link;

 

 

There are only three things that can happen if a trader BUYS an option – the option goes the trader’s way, the option goes against the trader, the option goes sideways losing on time decay.

 

Two out of the three are bad for the option buyer.

 

So is it a fool’s game?

 

Doesn’t have to be. Not for day traders.

 

At the time of writing, up $20k on $25k in trades.

 

For the discussion and a chart:

 

CALLING ALL SPYs

 

bowrie.gifsmile.png

 

 

Why sweat so much with an insrument which has time decay, implied volatility implosion etc ? You might avoid the time decay to certain extent by deep in the money. But how will you avoid implied volatility implosion ? Options are very inefficient instruments for directional trading.

 

Just trade the e-mini futures. You get the same leverage and it's much more efficient, i.e lesser slippages and lesser bid/ask spread. Don't have to worry about decay or implied volatility.


Edited by NAV, 04 November 2017 - 05:04 AM.

It's not the knowing that is difficult, but the doing. 


#4 12SPX

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Posted 04 November 2017 - 01:35 PM

Wrote this up in answer to a discussion on another forum.

 

From the link;

 

 

There are only three things that can happen if a trader BUYS an option – the option goes the trader’s way, the option goes against the trader, the option goes sideways losing on time decay.

 

Two out of the three are bad for the option buyer.

 

So is it a fool’s game?

 

Doesn’t have to be. Not for day traders.

 

At the time of writing, up $20k on $25k in trades.

 

For the discussion and a chart:

 

CALLING ALL SPYs

 

bowrie.gifsmile.png

My favourite subject!!  Buying options is silly and even harder day trading them, which the last time I did that was about 1988!  Selling out of the money calls and puts is the  best way to play and have done so since, time decay is a wonderful thing, especially when on average 88% of all options expire worthless!



#5 diogenes227

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Posted 06 November 2017 - 09:55 PM

From the link:

 

 

The key, as always, is an entry signal the trader is comfortable with.

 

Had five buy signals as SPY trended steadily up during the day. With each buy at $5k, the trades on the weekly 258 calls (expiring Friday) totaled $25k, and netted about $3150, or 12.6% for the day trade.

 

Buying Spy Calls...A Day-Trade Rinse and Repeat...yes.gif


"If you've heard this story before, don't stop me because I'd like to hear it again," Groucho Marx.

I spent half my money on gambling, alcohol and wild women. The other half I wasted, W.C. Fields.