re: Options Trading Thread

Man, I understand the volatility of TSLA all too well. Currently have a few iron condors on it and the price of those swings violently, all over the place

I’ve been trying to fine tune my approach, especially when doing short iron condors or synthetic strangles on 0-1DTE SPX positions. Unlike the 45DTE contracts, I’ve found that the standard +/-15 delta on the short sides exposes me to too much tail risk - even though that’s where the bang for the buck is. The issue I have is that losing trades tend to be rather painful and it takes awhile for the winning trades to rebuild that loss.

Essentially I’ve been selling large lots of low delta contracts for smallish credits (Sosnoff would call them “junk contracts” and probably laugh at me). I’ve yet to find reliable momentum indicators for 0-1DTEs. But I do look at support and resistance levels from the 20 day exponential moving average, as well as RSI/stochastics. And I try to pick strikes that are above (for the short calls) and/or below (for the short puts) those levels, while also staying under my desired delta limits (typically below 5).

To be honest, I don’t pay as much attention to the credits as I once did. I just take what the market gives, based on the above criteria. If/when the VIX rises, I’ll simply make more money off that same criteria. My main goal is to have a VERY high win rate and to accept losses when they eventually happen. But thus far in 2023, the above has yielded approximately 1.5% per trade and close to 99% win rate. I try to trade about 4 days per week, so you can see how picking up nickels and dimes (with a high win rate) does add up nicely.

Also, it’s being able to “recycle” my buying power reduction within 24-48 hours that makes this strategy attractive to me.

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Jag_Warrior

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Thanks for the detailed explanation. I am not far off the same strategy, as I have been looking at ~5 delta ranges which have pretty low premiums in this low VIX period however even these seem to be getting pretty close to requiring a roll on most days (hence my stress level goes up). I have been playing IC's so by roll I mean only one side of the spread.

What I have been trying to figure out is what constitutes too low of premium to risk ratio, for example yesterday at 5 deltas was only .15 - .25 credits per contract at a 5 or 10 strike width so for 500 risk to earn 15 (3% return on capital risked excluding fees & commiss.)

I also agree, the gambler in me likes the ~15 deltas b/c the payout is greater but seems you have to be better at directional estimating or a great trade manager with a clearly defined set of rules for rolling or closing once a certain threshold/circumstances incurs. As I learned 3 weeks ago, waiting until late in the day to try and roll with strikes in the money can be very expensive and wipe out a week (or two) gains.

Thanks for the back testing info on VIX. That is interesting

Looking like a good day to add uvxy short calls

Anyone looking at any earnings plays? I was looking into MU for tomorrow but premiums a bit lower than hoped

I added 18/25 short call verticals on uvxy. November expiration

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I added 18/25 short call verticals on uvxy

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Why not puts for uvxy with VIX on the rise with change in market sentiment?

I rolled half the position when it got to 71 at a .00 credit (breakeven) down to 4225/4220P and closed out this morning at open.

Took Omaha's suggestion and picked up some SCV on MSFT at 320/325 for 9/29 exp for a small credit.

As you mentioned I will be treading a little lighter as the swings could be a bit large. Will see what happens when it retest 300 here in a bit.

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As you mentioned I will be treading a little lighter as the swings could be a bit large. Will see what happens when it retest 300 here in a bit.

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Certainly didn’t take long for that morning rally to go poof! Looks like SPX is struggling to hold 4250. Other than some synthetic strangles on Tuesday, I’ve mainly been selling low delta SPVs this week. I’ve been hesitant to sell calls, as I’ve been expecting something of a short term oversold bounce… which hasn’t come yet. Really just more downside action.

I agree with you and think there will be a few days of strong upward retrace, so have been waiting to see market direction around 15-30 minutes after open and try to put in positions for call side at least 1% higher for SPX and 1.25% for NDX since the latter I am learning seems to swing a bit more quickly. Deltas are definitely low in this range but that hasnt always meant safety for me