[ 3 / biz / cgl / ck / diy / fa / ic / jp / lit / sci / vr / vt ] [ index / top / reports ] [ become a patron ] [ status ]
2023-11: Warosu is now out of extended maintenance.

/biz/ - Business & Finance

View post   
File: 66 KB, 1024x557, Short-Straddle-Options-Trading-Example.jpg [View same] [iqdb] [saucenao] [google]
15896518 No.15896518 [Reply] [Original]

Are short straddles the most OP options strategy?
If written far enough out the money, they can have a 95%+ success rate

>> No.15896521

>>15896518
Also if the position moves too far against you, you can close it out early and make back your money in short order

>> No.15896532

>>15896518
Yes
t. quant

>> No.15896608

>>15896518
If they have a high success rate then they are expensive. There is no free lunch in finance (except in case of arbitrage).

>> No.15896644

>>15896608
The option price itself is pretty cheap because it's far out of the money and is unlikely to get struck (you write both a call and a put say 20-30% OOTM)

>> No.15896671
File: 222 KB, 1349x695, cboe meme.png [View same] [iqdb] [saucenao] [google]
15896671

>>15896518
>they can have a 95%+ success rate
>>15896521
>you can close it out early and make back your money in short order

Learn to trade options form ex floor traders
https://www.youtube.com/user/tastytrade1/videos

Why selling options has profits
https://www.tastytrade.com/tt/shows/market-measures/episodes/actual-vs-implied-moves-07-16-2019
https://www.youtube.com/watch?v=amao0pJE1XI
I would start by selling a put on cheap stock you would own anyway.

You ever done any options trades?

>> No.15896683

>>15896671
Several as a matter of fact
Large cap blue chips like JNJ and BAC don't move around that much and are good candidates
Bear in mind you'll need a good broker who will actually be able to make your trades that far out of the money (etrade and charles schwab are no gos-I'd recommend going through a clearinghouse)

>> No.15896684

it has nothing on THE IRON CONDOR

>> No.15896699

>>15896684
Condors involve buying as well which eats into your profits
Short straddles involve writing only so you keep maximum profits right away

>> No.15896742

>>15896644
>The option price itself is pretty cheap because it's far out of the money and is unlikely to get struck (you write both a call and a put say 20-30% OOTM)
Isn't this technically a strangle not a straddle as the strike prices are different both being OOTM?

Unless implied volatility is high you may collect very little premium.
Do you wait for spikes in IV?

Also if implied volatility expands the price of both the put and the call you sold can go up.
Have you ever had that happen? If so how did you manage the trades?

What has your average return been?
for example 40% in 4 days etc.

I just buy calls and puts looking for swings and sell puts on stocks I want at high IV periods.

>> No.15896749

>>15896683
>Bear in mind you'll need a good broker who will actually be able to make your trades that far out of the money
I use interactive brokers.
How many days to expiration do you typically sell at?

>> No.15896755

>>15896518
>it only has 5% chance of causing me huge losses, therefore it can't happen
Short term option markets are pretty efficient. You're trading huge downside risk for pennies.

>> No.15896769

>>15896742
Yes, actually a strangle
average return has been 15% over 90 days(ish)
Returns are typically small but steady, if the price of the asset rises to within 5% I usually consider closing it out (my alerts are set at that too)
Fair warning though-the returns are small for a reason, I don't write more than a few contracts at a time
If you write more contracts you get to keep more premium but you can get "wiped out" optionsellers.com style on a black swan event

>> No.15896779

>>15896755
Always monitor, keep your positions small and close it out if it starts to run away from you and there's nothing to worry about
People get greedy and write too much, then they get caught in a short squeeze and go running to wsb

>> No.15896812

>>15896769
>Yes, actually a strangle
>average return has been 15% over 90 days(ish)

Once I build my capital up I am going to write a bot to mechanically trade this model starting with call and put spreads in the beginning.

Good to hear its working for you.

I'll have to look into have happened with optionsellers.com

>> No.15896844

>>15896812
https://www.bloomberg.com/news/articles/2018-11-19/hedge-fund-s-accounts-liquidated-amid-energy-market-volatility
for future anons

>> No.15896856
File: 53 KB, 1280x720, james_cordier.jpg [View same] [iqdb] [saucenao] [google]
15896856

>>15896844
Great kek was had that day, but yes manage risk
https://www.youtube.com/watch?v=VNYNMM0hXXY

>> No.15896926

>>15896856
You got any youtube channels/sites you recommend?

>> No.15896951

>>15896926
ukspreadbetting and beststock strategy are pretty good, but you learn best from your own research

>> No.15897191

>>15896951
>ukspreadbetting
this ones new to me I'll check it out

>> No.15897224

>>15896518
success rate != expected value

>> No.15897305

>>15896683


>>15896699


>>15896769


>>15896644
Thank you anons this is what I came on biz for I'm tired of hearing about shitcoins