what kind of strategy do you use?

[Alekseymelt]

i use a lot of option trades personally, on average each one of my positions is about $10k and i always buy in the money but i was wondering what are some strategies that everyone on this board uses?

the way i use my strategy is i always buy 1-3 strikes down if im buying calls or 1-3 strikes up if im buying puts, the number of strikes also depends on how far out im going especially if im betting on earnings

i also use spreads 20 of the time if im only going out one month

[AlisonRhyn]

i also use spreads 20 of the time if im only going out one month

and how i go about in picking is i go strictly by candle sticks when it comes to option trades. such as lets say GD is at about 90, and i expect it to go to 95 in the next 30 days, i would buy jan or feb 85 or 90 calls. in some cases, i might even sell the 100 calls

another one is im expecting BZH to go to $2 in the next 2 months so i bought the march 10 calls. since theres a short restriction on it, im not bothering to use spreads.

on avg im making 20-30 per month


other times i make a lot of gambes such as over the summer in july, i was buying the august 10 calls on nfi at 5 and cashing out at 10-15 when the stock barely moved. do a lot of you guys gamble on volatility or do you mainly use a strategy like ive been using involving candle sticks?

[AmandaSa]

Wow, that sounds really aggressive.

Do you have any open positions now so we could follow along?

[Angewygom]

Also, it sounds like your positions involved trading options, and not the underlying stock. Did I get that right?

[AndrewRig]

Forgive me but this is gonna come across as belligerent.

Taking your last statement first, in July the Aug 10 calls never traded near .05, in fact they were in the money until the 31st, when the underlying moved down from 12.56 to 9.64. so they opened up the 31st at 2.85 and closed at .80. And there were no 10k positions moved on the Aug 10 calls any time in July or August. Not even close.

That said, I'll address your strategy of using 1-3 strikes in the money positions. Your surrendering any delta by doing this, and if you're not holding the underlying, therefore not a hedge position, I don't see any benefit in taking the option position versus the stock. In fact you are increasing your risk with no upside. Just the opposite of good options strategy.

I'd love to hear the reason for 20 spreads if you're going out one month, why not 100. One month out seems capping your upside and taking a risk reduction position would be a better play.