The problem with options strategies is that they get way too
complicated for the average investor and they just give up. I have
studied every single one until my head hurt! and as a simple guy, I
wanted a simple strategy. Put spreads. Removing most
indicators, here is a simple chart example: CVX - stock oversold as
is the market, slo sto crosses up. low of the last move was 152.5
so you: sell 152.5 PUT, BUY 147 PUT, you can define your risk based
on the number of contracts and your time to expiration. and your
selling of the put brings in $ to pay for the put you bought. Risk
is low and defined. The stop is below the low of course, but I
would not wait that long. Very successful as long as you have an
opinion on market direction. You can do the same from above in the
opposite way. Your profit comes in time decay as both options lose
time and value.
Posted by fredsaid on 12th of Sep 2022 at 09:53 pm
Good post. Selling options has always proved better for me
than buying them. Problem with selling options or option
spreads is that the margin requirements seem to be higher i.e. you
need more money to make money (as usual). Selling covered
calls (bear direction) and puts (bull direction) is a nice strategy
as well when you own at least 100 shares of the underlying
stock.
Posted by Orangeman on 12th of Sep 2022 at 05:50 pm
Also, you can fancy this up by making the lot sizes
asymmetrical, but that quickly gets you back into headache
territory.
Advice: KISS and go slow/small.
The problem with options strategies
Posted by brophy on 12th of Sep 2022 at 04:44 pm
The problem with options strategies is that they get way too complicated for the average investor and they just give up. I have studied every single one until my head hurt! and as a simple guy, I wanted a simple strategy. Put spreads. Removing most indicators, here is a simple chart example: CVX - stock oversold as is the market, slo sto crosses up. low of the last move was 152.5 so you: sell 152.5 PUT, BUY 147 PUT, you can define your risk based on the number of contracts and your time to expiration. and your selling of the put brings in $ to pay for the put you bought. Risk is low and defined. The stop is below the low of course, but I would not wait that long. Very successful as long as you have an opinion on market direction. You can do the same from above in the opposite way. Your profit comes in time decay as both options lose time and value.
Good post. Selling options has
Posted by fredsaid on 12th of Sep 2022 at 09:53 pm
Good post. Selling options has always proved better for me than buying them. Problem with selling options or option spreads is that the margin requirements seem to be higher i.e. you need more money to make money (as usual). Selling covered calls (bear direction) and puts (bull direction) is a nice strategy as well when you own at least 100 shares of the underlying stock.
Also, you can fancy this
Posted by Orangeman on 12th of Sep 2022 at 05:50 pm
Also, you can fancy this up by making the lot sizes asymmetrical, but that quickly gets you back into headache territory.
Advice: KISS and go slow/small.
https://www.optionsplaybook.com/option-strategies/call-backspread/
optionsplaybook.com
Call Backspread | Back Spread Options - The Options Playbook
A call ratio backspread is a very bullish seasoned option strategy involving the sell and buying of calls, at different strike prices, that expire in the same month.
Call Backspread; See? My head
Posted by brophy on 12th of Sep 2022 at 07:08 pm
Call Backspread; See? My head is hurting already. Keep it simple.