This is an attempt to chalk out a directionless approach to earning from Options.
I have worked on a rough template of a method. Will evolve it and make it ready for "full-sized deployment" in due process.
Primary Objective: Keep it very simple and hassle free. Rest will follow. :thumb:
Template:
Buy 100 points OTM options on either side when option prices have "shrunk".
Consider the following:
Setup 1:
On Thurs and Fri prices have not rallied. Then weekend. So we have 4 days of price erosion. Then purchase on Monday after opening volatility has settled, simple.
Setup 2:
Sat, Sun, Mon, Tue and Wed. Five days of price erosion, then buy on Thurs 11 a.m.
The above two setups happen almost every week.
Now the more important part: EXITS
To begin with, we need to first set the defense. This is a little more interesting.
After all the waiting, comes a rally. And at EOD we want to exit.
Logic: After this rally the prices will not sharply increase. Unless, there is a rally back to back, which is much to ask for. In that light, this is the best you could get from this trade. So, take whatever profit or loss. Mostly, it will be near breakeven. However, lets trade and see what assumptions need to be reassessed.
Ty.
I have worked on a rough template of a method. Will evolve it and make it ready for "full-sized deployment" in due process.
Primary Objective: Keep it very simple and hassle free. Rest will follow. :thumb:
Template:
Entry:
Buy 100 points OTM options on either side when option prices have "shrunk".
Consider the following:
Setup 1:
On Thurs and Fri prices have not rallied. Then weekend. So we have 4 days of price erosion. Then purchase on Monday after opening volatility has settled, simple.
Setup 2:
Sat, Sun, Mon, Tue and Wed. Five days of price erosion, then buy on Thurs 11 a.m.
The above two setups happen almost every week.
Now the more important part: EXITS
To begin with, we need to first set the defense. This is a little more interesting.
After all the waiting, comes a rally. And at EOD we want to exit.
Logic: After this rally the prices will not sharply increase. Unless, there is a rally back to back, which is much to ask for. In that light, this is the best you could get from this trade. So, take whatever profit or loss. Mostly, it will be near breakeven. However, lets trade and see what assumptions need to be reassessed.
Ty.
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