/biz/ - Business & Finance

you have to link to your old posts or this doesnt make any sense

>>16485300
I can do that for now

>>16474675

BUY LINK

>>16485300
first thread

>>16485300

>>16454405
first thread

>>16485290
1) Say you're trading a weekly option, on average, how far out from expiry do you like to start a trade.
2) How close to expiry do you wait until you take profits(Is there a profit target % or $ you routinely aim for and when you hit it you're satisfied?)
3) I tried paying around with options a few months ago, but looking back I was always buying premium and just watching it decay one way or another. Is being net credit the only way to go so you can just let time do its thing?
4) Did you balance trading with a full-time job until you were making enough to live on? When you felt comfortable saying to yourself "I can make a living on this", about how big was your account and what percentage gain on it were you making per year.(You can be vague if you want)

I was screwing around on TOS paper trading today and your Prob ITM%x spread width strategy makes a lot of sense, and works in practice. Appreciate the threads.

>>16485743
1. That's relative to the premiums pricing and if it's a neutral trade to begin with. By neutral I'm referring to simple pricing calculations such as Credit received being =/+ Strike width x Prob.ITM. As well as other Greeks and IV and a few other aspects with my methodology. I'm a probability trader so my answer is only applicable to the strategy's I adhere to. To answer your question, It's really up to my interpretation as I'm viewing the contracts available, relative to the time till expiry. Definitely more than 5, It's all relative though. I do trade monthly's more than weekly's.

2. This is something you develop on your own, but a fair return is relative to what you're risking, and the amount of contracts / position size. 15-20+ is a fair return, but again, it's how you're interpreting that trade and gauging risk.

3. Being an options seller is always more profitable than being an options buyer, this is fact. I sell options almost in entirety, but that's of course relative to your methodology. You have to find a strategy that works for you and do as such, regardless of debit/credit spreads. I'd recommend to trade for credit and use decay aspects to your advantage

4. I did trade with a full time job, I did paper trading as well before hand (which everyone should do before trading). And yes there is a transitioning phase (at least in my methodology) where my probability averages out as it should along increases in position sizes. To the point where I am receiving enough to where I don't need to work regarding just expenses. This is a concept already explained online many a times, it's just finding methods that work are hard. Regarding actual $ amounts they were larger figures $25-40,000. Not that you need larger figures to be profitable.

5. You will become profitable if you stick to your strategy and back test it. I'm happy I can help in any way, appreciate you coming to the thread.

Small bump

Bumping because it's nice to see a non-Pajeet or /pol/ bait thread which anons might actually learn something from.

>>16486523
Thanks bubba, must be a quiet night.

>>16485917
I'm assuming you mean you start at least 5 weeks before expiration right? I was going full retard and buying them within a week of exp.

How much time a day do you actually spend trading? Is it a swing trading kind of deal where you keep track of active trades for a couple weeks and just keep an eye out for new ones? This would be the most realistic way to transition out of a full-time office job in my mind.

How do you find tickers that are suitable to trade? Do you have some kind of scanner? What general parameters are you looking for? All I can think of would be high IV relative to historical or something like that and then playing the decay. I can also see myself looking at a chart and determining the most likely course and then placing a directional option trade based on that, but what else do you look for when you're trying to find an option that you can make a trade out of?

Also, if you're starting out with 5k-10k as an account. What should your position size look like? Is using 5% or more of the account just asking for trouble? It seems like commissions would eat up a small account if you were only using 1-3% for sizing.

>>16486858
1. The expiration is relative to your trading style as I said before, but no you can trade with 5 days till expiration or the full weekly's length.

2. 2-3 Days a week I spend a few hours of the day recognizing my portfolio, balancing it, checking trades, measuring risk, and capitalizing on profits if need be regardless of my current limit orders. As you develop a trading style, you'll realize how much time is actually needed to do what you must to keep your portfolio regulated.

3. I do use scanners, I can't give out all of my details but High IV, tight B/A spreads, High Open Interest, Volume, and referencing IVH / IVP. As well as of course using the neutral trade calculation of Credit received being = / + Strike width x Prob.ITM for contracts within the security help me decipher what security I'm interested in or should even bother trading. It's not like I think about it though, I have essentially a step by step process in which any deviation from said process results in me moving on to the next security. That's just trading with a methodology, and in my opinion, the only way to consistently trade.

4. A $5-10,000 Account should be trading position sizes (with my strategy) of 2-4%
A $15-30,000 Account should be trading position sizes (with my strategy) of 1-3%

You should recognize if commissions are really eating up that much of your trades. If so, consider a large account, or a brokerage with lower commission rates. Commissions should be the least of your worries though. Slippage itself can do reasonable damage as well if not recognized, though it's a lot easier to control.

not interested but bumping anyway

>>16486761
Keep persevering.
/biz/ needs more threads like this

If you've got (non-insider) information that a smaller company will likely dump following some bad shit in their annual report in a couple weeks, what would you look at when considering an options play?

>>16487562

It depends on the IV and a couple factors but really you can play it as a directional trade with a put or if you want to play it safer you could Sell a Call spread or Buy a Put spread. Really there are multitude of spreads to actually utilize, but you have to match the technical's of the contracts to a certain spread setup. Credit spreads are just simple to understand and manage if you wish to adjust the trade.

Good to have you back options bro.
Lets say you're on the hunt, looking for a new stock to slap an option or two on. What is your criteria for determining what is a good choice, other than IV and probability of profit, and how do you determine what type of option to pick up (basically, how are you analyzing stocks to assume they'll go up or down)? To keep things simple, we'll also say you have an empty portfolio.

>>16485290
I have $4 $DB puts expiring in like 2022. Idk what I’m doing kek

>>16487814
Going to bed now friend I apologise, there will be a new thread tommorow, please re paste it there and I'll answer your question.

>Being an options seller is always more profitable than being an options buyer, this is fact
why OP?

>>16485290
Nice work OP! Raising the Iq level around here.

But I got to ask, What's the obsession with the snake in hat? O.o

>>16485290
bump for actual /biz/ topic. Shitskins too low IQ to know how to use it though. I prefer covered calls myself.

>>16485290
Difference between options and warrants?

>>16485290
How the fuck do I execute an option

>>16485290
Nice thread. I recently started trading options and only do directional plays since that's what I'm mostly good at. Options seem like a nice simple way to magnify my gains with some leverage without blowing my account up in a flash crash. Pic related am I doing it right?

>>16488967
This is based off of probability's that a majority of contracts expire OTM, in turn giving net credit spreads a winning edge. There are other factors if you're really interested that are explained online if you don't believe me, but that's partially the concept.

>>16489071
I'm not really sure, I have a folder on my computer with reptiles with hats and I can't recall where it came from. Either way that's where they're from haha.

>>16487814
With probability trading I actually don't really perform direction analysis, I just rely on probability of contracts expiring based off of distribution curves, especially since IV has a greater impact on the prices of contracts than the underlying security's price movement, this is a fact and you can test it out on a brokerage platform if you'd like by modifying security prices vs modifying IV inflation or deflation. I can perform directional analysis with technical indicators for certain spreads but really direction is meaningless in a sense.

Regarding your first question about criteria, it's based off of my scanners and what you mentioned, as well as the simple calculation i'll always refer to, Credit received being = / + Strike Width x Prob.ITM (For each spread) This calculation has to be done for each security to even see if a spread is worth being sold, and really does put you on the winning edge if you're trading probability. Not sure if that's specific enough, if not rephrase your question. If you wanna know more, check out probability trading online and understand the concept, and in turn you'll know what you're looking for.

>>16489875
As long as you're turning a profit with your method, the spread is regardless. Hope you are successful with what you are doing. Covered calls aren't my thing really but that's just because I follow a strict regimen. Do elaborate on your steps to deciphering which trade to take if you'd like.

>>16489888
Options are listed on public exchanges, while warrants are issues by the security.

>>16489893
Using your broker platform of course, not sure how else to put this. If you need to understand how to navigate your UI in your broker platform they should have resources available online for you.

Nice info

>>16487880
I can tell haha, why did you even purchase the Put?

>>16485290
Here's one. Say I have $1000 and I want to buy some calls on a stock that expire in 3 months. Also assume that I am planning to sell the calls within a couple of weeks as soon as I'm in some decent profit, i.e., I will not hold the calls very long if at all possible. If I buy OTM then I get more contracts thus giving me more leverage and more potential gain. If it's a pure directional play and I'm going to use the entire $1000 to buy regardless, what's the advantage of buying ATM like most tutorials suggest? Is it as simple as less leverage and less chance of losing your premium or is there something more subtle to so with IV or theta that has a significant impact here? Remember I only plan to hold these 3 month calls for a week or two assuming they go my way; the 3 months is just a safety met.

>>16490720
Robinhood layout always seems to confuse me. What's your basis for directional analysis? Besides the overall current bullish market regarding SPY.

>>16490889
You're not wrong, ATM calls are less prone to losing premium since they're relative to the current price of the security. So yes, less leverage. The likelihood is just based off of distribution/IV. If it's a directional trade, regarding the strike price being ATM/ OTM/ ITM, you have to consider the expected move you believe might happen in reference to your strike price / premium payed.

Both of your scenarios have pros and cons as you can clearly see, as you even said. Do reference IV and Theta as well since they will impact the worth of your contract regardless of the security directional movement.

>>16490924
>What's your basis for directional analysis? Besides the overall current bullish market regarding SPY.
Well, I limit the scope of my trading to indexes and the respective derivatives. The reasoning is while any individual stock has a non-zero chance of catastrophic loss of principal in the event of bankruptcy or the like while indexes like the S&P have almost zero chance of this and should the S&P go to zero we all have Bigger Problems. Secondly, I believe that in the long term the global economy and thus the S&P will expand thus pushing the numbers higher. I believe thirdly that, in the short snd medium term, the S&P will fluctuate up and down providing ample trading opportunities. In short, when the numbers fall I buy. When they go up I sell. Should they fall and keep falling I buy more and more until I'm tapped out then I wait. Options are time limited so they are not a core part of my investing strategy though they are fun so here we are. This overall trading philosophy has been very effective by the way.

>>16490982
>Well, I limit the scope of my trading to indexes and the respective derivatives.
Good man

>Options are time limited so they are not a core part of my investing strategy though they are fun so here we are
They can be if you adjust your trades properly and ladder them.

I see what you're getting at, not my preferred strategy since I like a little more physical number values reflected likelihood and probability in contracts, but you understand the concept. If it really does work for you have you have a 51%+ win rate (Assuming more so) Then try larger position sizes, or a different methodology. Not trying to convert you to options trading in entirety but I kinda am. Can't help it, from my perspective it's the best means of trading. I'd like to know more about your methodology as long as it's not just TA, I have some of my own TA methods regarding candlesticks that are unique to myself but if it's something along the lines of that please do share.

>>16490973
>>Do reference IV and Theta as well since they will impact the worth of your contract regardless of the security directional movement.
Shit, it's obvious now, optionsbro. I was lookong at theta as just an absolute number but, duh, it's only valid in context of the premium. As one goes further out of the money, theta increases exponentially compared to the premium. After reading your post I ran a couple of chains forward mentally and it was obvious how time value would decrease much faster for an OTM option than for ATM or ITM so theta would by definition have to be exponentially higher for the same expiration date. Then I checked in Robinhood and sure enough. That's the downside of going OTM. I need to look at this graphed out to get a good feel for it though. Any recommendations for software? And thanks. I know this is babby tier stuff but thst was the last really outstanding question I had to lock this whole thing in and it was eluding me.
>>16491013
My strat is not any TA like bollinger bands or moving averages or whatnot; it's basically a systematic deduction based on my own understanding and way of looking at the numbers. Like I said, I believe in the long term the numbers will increase. The S&P will easily top 30,000 in the coming decades so asking whether 2500 or 3000 or 3500 is a good buy in the face of it all loses some significance. But I want more than the market wants to give thus leverage and judicious buys and sells at local maxima/minima. It's complicated and probably a long way from what you do so you'd find it boring. If you wanna know more post a proton mail address or whatever and I'll send it there. Way too much to type out on my tablet.

>>16491257
>Shit, it's obvious now, optionsbro. I was lookong at theta as just an absolute number but, duh, it's only valid in context of the premium. As one goes further out of the money, theta increases exponentially compared to the premium. After reading your post I ran a couple of chains forward mentally and it was obvious how time value would decrease much faster for an OTM option than for ATM or ITM so theta would by definition have to be exponentially higher for the same expiration date. Then I checked in Robinhood and sure enough. That's the downside of going OTM. I need to look at this graphed out to get a good feel for it though. Any recommendations for software? And thanks. I know this is babby tier stuff but thst was the last really outstanding question I had to lock this whole thing in and it was eluding me.

1. This or Swim hosted by TD ameritrade and Tasty Trade are my two recommendations. Nothing is babby tier friend, everything is essential to the process so it's all important, no such thing as a stupid question.

2. I'm interested in your outlook about the market and I'm bullish as well. I don't have a proton mail but there was a discord group mentioned last thread, if you'd like you may be a part of that, just send him a friend request. Just general discussions or questions are always welcome.

>>16492276
>Tasty Trade
I meant Tasty Works.

>>16485290
Does Robinhood work? I bought a couple of options for funsies, the bid is at 0 tho.

Also, bump for (finally) quality /biz thread.

>>16492434
1. RobinHood as a platform functions as should. I don't see how anybody can trade stock options on a phone but maybe that's just me. The limited UI (User interface) and general layout isn't really friendly to a more experienced trader. This is just from posts of robinhoods UI that I've seen. I mean sure no commissions are great but It's definitely geared towards directional traders without management to spreads and feels more like gambling. Use a computer application for sure, It's better in pretty much every aspect.

2. Thanks bud, more threads to come.