rnix- I imagine
that tumbler is using ATM options because the point moves are then
very close to the point moves in the SPY ETF itself and are easier
to predict and less volatile than call options way out of the
money. Sure out of the money call options can move a larger %
if you have a big move, but to me they are move of a gamble, I
prefer the ATM options, plus we are getting leverage as it is, I
don't need more.
If I were playing the system via options, for me personally I
would have to choose options that expire probably 2 months out,
just in case the trade was held for a while, going only 1 month for
a few weeks out might not be enough time. For example if it's
the 1st day of the month and options expiration is 3 weeks later, I
would not be buying the SPY options for that month for a new trade
entry, I would at least go to the following month.
However I suppose if someone ever ran into a problem where you
were afraid that that your options would expire while the trade was
still on, you could sell then and buy the following month.
For disclosure purposes, I have not played the system via
options, I have simply played the system via SPY and SSO (on the
4th entry).
In the near future I may play the system with an automated ES
version that I am developing, which scales out and into trades, but
more work needs to be done with it.
I have used options but ATM or slightly in the money 2 months
out...but only after the first buy signal on the SPY system.
Concurrently I used SPY. I was very lucky on the 3rd and 4th
entry but I did not wait for a sell signal to dump the
options. When I made a considerable profit I counted my
blessings, sold out and let the SPY ride. I did pick up 20
contracts on the second sell signal Friday and will not hold them
long. I guess it is really up to your own comfort
level. So I use SPY primarily and "play with" options if
it looks very very promising on the second to fourth signal.
So far, so good, but again I stay within my own comfort zone.
Spreadsheet Updated
Posted by tumbler on 29th of Jul 2011 at 04:10 pm
Spy System using options spreadsheet updated with multi-entry #2.
Spy System using options
Another Option Strategy Question
Posted by rnix on 31st of Jul 2011 at 09:01 am
Tumbler, thank you for presenting. Can you please explain whyyou're choosing ATM options and how you decide how far out you pick expiration date?
rnix- I imagine that tumbler is
Posted by matt on 31st of Jul 2011 at 07:40 pm
rnix- I imagine that tumbler is using ATM options because the point moves are then very close to the point moves in the SPY ETF itself and are easier to predict and less volatile than call options way out of the money. Sure out of the money call options can move a larger % if you have a big move, but to me they are move of a gamble, I prefer the ATM options, plus we are getting leverage as it is, I don't need more.
If I were playing the system via options, for me personally I would have to choose options that expire probably 2 months out, just in case the trade was held for a while, going only 1 month for a few weeks out might not be enough time. For example if it's the 1st day of the month and options expiration is 3 weeks later, I would not be buying the SPY options for that month for a new trade entry, I would at least go to the following month.
However I suppose if someone ever ran into a problem where you were afraid that that your options would expire while the trade was still on, you could sell then and buy the following month.
For disclosure purposes, I have not played the system via options, I have simply played the system via SPY and SSO (on the 4th entry).
In the near future I may play the system with an automated ES version that I am developing, which scales out and into trades, but more work needs to be done with it.
Spreadsheet Updated
Posted by Robert50 on 1st of Aug 2011 at 06:29 am
I have used options but ATM or slightly in the money 2 months out...but only after the first buy signal on the SPY system. Concurrently I used SPY. I was very lucky on the 3rd and 4th entry but I did not wait for a sell signal to dump the options. When I made a considerable profit I counted my blessings, sold out and let the SPY ride. I did pick up 20 contracts on the second sell signal Friday and will not hold them long. I guess it is really up to your own comfort level. So I use SPY primarily and "play with" options if it looks very very promising on the second to fourth signal. So far, so good, but again I stay within my own comfort zone.
Strategy
Posted by turps on 30th of Jul 2011 at 10:28 am
Tumbler, I'm new to options so could yopu give a little insight into your options strategy with the spy system.
I think you are buying ATM options one month out? when do you look to roll into the next month out?
Found it
Posted by turps on 30th of Jul 2011 at 06:38 pm
Tumbler I looked back to see that you do ATM with 50-80 days to expiration.....so never mind I was being Lazy