/biz/ - Business & Finance

>>10263129
no prob bud
>I have no intention of exercising these options
no one does, really. maybe hedgies sometimes do it.
>just selling them on a strong green day
this is where going too deep OTM will fuck you raw. deep OTM contracts have a TON of theta. theta will eat at your gains even if it moves up relatively quickly. also (referring to the JPM ones again), your deltas are VERY low (another side-effect of going too far OTM). delta is the amount the option premium will gain from a 1 dollar move in the underlying. it gets larger as you approach your strike, but since your strike is so far away, that may or may not happen (notice the orange and blue lines on the probability graph).

imo, for OTM plays, you should look for contracts that have deltas of around 30-40. anything beyond that, and youre fighting against theta (which gets worse each passing day). since your deltas are not big enough to offset this, its very likely they will expire worthless (95% likely in fact)

heres a pic of what i would consider to be a more reasonable play (the 110 strikes, though i normally go ITM, as you get what you pay for w options desu). notice the delta is 35 and theta is (proportional %wise to the premium) much lower.

>>10263158
>those indicators have almost no correlation with predicting future movement.
i tend to agree, as by themselves, they merely analyze the current trend strength.

the point of his whole channel though is using analysis of current trends and comparing them w seemingly similar (on the surface) historical trends. he does very good videos imo, even if hes a dirty permabull. he never recommends using this as buy/sell signals on their own. just shows how two charts that look similar on the surface can have very different outcomes.