How deep in the money (how many strikes) do you trade ?
It's on the charts.
One strike, in the money. For instance, the SPY opened at 258.97 today. So it was going to be the 259 put or the 258 call (you can usually see what it's going to be in the pre-market). Bought the 258call on the open and put in a breakeven stop. Once the stop was hit, SPY was on it's way down through its open and the put was rising above its open, so the play became the 259 put (see the chart on the blog). Bought the first 50 contracts and after that it was scale in bigger by selling the bounces on SPY and adding contracts on the rollover of each SPY bounce under the SPY open all day. Eventually reached 200 contracts. Same weekly 259 strike all day.
Great thing about the SPY, 53,000 of those contracts at that strike traded today so it is not hard to blow out 200 contracts anytime.
Monday was a much clearer day since SPY opened at 258.29 and trended up all day so it was just buy the dips all day until the close.
The open is the easiest line in the sand for which way to go, as well as the stop.
Friday was a different day but sometime you just get lucky.
I'm still working on how to reasonably sell into one of those huge spikes like the 8k spike mid-day today.
"If you've heard this story before, don't stop me because I'd like to hear it again," Groucho Marx (on market history?).
“I've learned in options trading simple is best and the obvious is often the most elusive to recognize.”
"The god of trading rewards persistence, experience and discipline, and absolutely nothing else."
