re: Options Trading Thread

I am on the same page as this as there will be a vol spike tomorrow and some price movement depending on targets guidance so will take a position in the afternoon tomorrow, albeit not with a tax advantage account but wouldn't mind holding WMT for the long term if price dropped to right price.

Today feels like a great day to sell OTM UVXY call spreads with some time.

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Jag on a separate topic, what do you typically use for profit taking range on 0-1 DTE SPX? I see TT suggest 50% but I was viewing the range based on market sentiment for the day and if tracking as expected based on entry then let risk ride to expiration.

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Yes, TastyTrade/Sosnoff typically suggests taking 50-60% of max profit as a general rule on almost all of the net short option strategies - Kirk Du Plessis of Option Alpha generally follows the same profit taking targets (although last I checked, he didn’t engage in daily or even weekly options trading). But because I tend to sell large lots of low delta SPX options, by the time my 0-1DTE trades reach that 50-60% profit range, they’re usually on the verge of dying anyway. So yes, I tend to take them to expiration.

As Dragginass mentioned, SPX is cash settled and I can’t be assigned (as I could with SPY), so my “management” is deciding how much of a hit I’m willing to take upon expiration if something unusual/unexpected happens and my up or down range is wrong - I typically leg in to synthetic strangles by selling the put and call sides separately.

Again, my strategy with these (hand grenade ) day trades is to shoot for a very high win rate and recycle my buying power reduction in less than 24 hours.

For UVXY, I don't actually care about delta. The delta is weird because UVXY is a naturally decaying mechanism, so the goal is to just take advantage of that decay factor.

What I do is wait for a spike, like today, and sell at the money calls (near strike) and then buy the furthest call out possible, and I give a lot of time. So today I sold the 18/33 UVXY call spread, expiring October 20th, for $1.80. now that does not sound like a ton of premium, but putting on the position enables you flexibility to roll, add, etc. Time is in your favor

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just getting used to the risk profiles on these 0DTE's as I traded t

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I'm not sure what that is.

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just getting used to the risk profiles on these 0DTE's as I traded them for the 1st time yesterday in small lots thru expiration but this mornings trade went to 65% profit quickly so I closed out to reduce the risk

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That’s actually VERY smart. Especially with 0-1DTE options, stay small and take profits as you get used to the typical daily trading ranges on SPX/SPY. There’s an incredible amount of gamma or tail risk on these things, and it’s too easy to turn a decent profit into a nasty loss in a relatively short period of time.

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When you say low delta's what range are you looking at? I have been doing ~.12-.20 on short

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Because I’m trading large lots on SPX (usually 40-50 per side) and taking them to expiration, it’s very seldom that I go over 5 delta on short puts or calls. If the market has made an outsized move up early in the session (say approaching 1 std. deviation), I can say that the probability of that move continuing is quite low. In cases like that, I might go as high as 10 delta on the short call side - but wouldn’t go that high on the short put side. Why? Because true significant melt downs are more likely and common than significant melt ups. So we can say with relative certainty that there’s a greater likelihood that a 500 point (DJIA) down day could turn into a 1000 point down day as the session wears on, than the likelihood that a 500 point up day could turn into a 1000 point up day. It’s still possible, but the probability is quite low vs. the downside.

I’ll try to find and post the chart that TastyTrade had about the percentage of time that the market has made intraday moves at or above 1 std. deviation. I found that chart to be more valuable to my trading style than anything I’ve seen recently.

That’s a gut wrenching feeling… believe me, cause I’ve been there more than a few times.

I had 4420 short puts today, and even at that level I was keeping a close eye on the market when it touched 4432 with less than an hour to go.

But at least you were quick enough to roll out the expiration. I’m on Think or Swim. But I saw that the Fidelity platforms crashed in the last hour. That would be a sick, sick feeling.

Yes agree it would have been a miserable hour if on Fidelity, I am on ToS as well and really like the platform.

Also agree with Omaha, hopefully this is a lesson learned to look back on and can get out of position tomorrow.

Took TGT 114/110 puts late so will see how that plays out but sort of wishing I would have taken the call side but shall see if it drops that far since already at 52 week low and expected swing was +\- ~10.5

Going to be an easy win for Target