Greetings, and welcome to the BEFRIEND THE TREND Short-term Options Trading Thread!
INTRODUCTION: This thread is a spin-off from the BTTT main thread, where I post my daily stock trades. The main thread can be found here: Subject 21685 In this new thread, I want to experiment with some very short-term options plays. It has occured to me that many traders have been prohibited from using their short-term (daytrading) strategies because of the new "Pattern Day Trader" rule which requires a minimum capital of $25k before one can complete any more than 3 daytrades in any 5-day period. But this rule does not apply to options. I am therefore hoping that my experimentation here can become a resource for such traders who are under-capitalized, but are not comfortable in present market conditions with holding trades overnight.
STRATEGY: to position ourselves in ITM or ATM calls and puts (no hybrid trades) with near-term expiration which trade per underlying issues that I anticipate will experience a reasonable move in price within the next 1 to 3 days. Stocks will be screened for high volume and volatility. Trades will be made on the basis of technical analysis (see the main thread). Most positions will be exited by EOD, if not within hours of opening the trade. Some may be kept overnight.
BIG DISCLAIMER: While not new to stock trading, I am relatively new to stock options trading. Thus this thread will simply be, for now, an experiment. I will be using real money, and all trades will be posted here (though not always in real-time), but position size will remain small until I gain a sense for how these markets trade. This thread is intended primarily for my own benefit. If others find it helpful, so much the better.
USEFUL LINK: cboe.com
Good luck! God bless! And happy trading! |
