Order/Ex Management
There are also quarterly options, which expire at the close of business on the last trading day of the month in March, June, September, and December. And of course, there are the standard monthly options, with which you may be most familiar.
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Just take a quick look at this screenshot of SPY calls click to enlarge. Click to Enlarge.
Best directional SPY options trading strategy
That sounds great, right? You can buy it of course, but then you have risk the other way. Either buying or selling the straddle could work spectacularly well, or could prove disastrous. See related : Key Benefits of Weekly Options. Regular December expiration expires a week later, on that familiar third Friday.
SPDR S&P (SPY) Options Chain - Yahoo Finance
You would have an extra week with that trade, with the later expiration date…hence the extra premium. On the buying side, it gives me time for my thesis to play out assuming I have some sort of thesis to begin with. Right now, that brings me to regular January expiration, with just under seven weeks to go. If I buy, it gives me some time to buy and sell SPY stock against it. Go much further in time and a lot has to happen to move the needle on a Delta-neutral options play i.
So to me, the five- to seven-week range provides the perfect sweet spot. But by all means, use the myriad time choices on the board to find what suits you best. By Adam Warner, contributor, InvestorPlace. Get an edge on the markets with our daily trading newsletter, Trading Insights, and receive timely trade ideas covering stocks, options, futures, and more to keep you on the right side of the action. I like to enter my trades around pm EST when more often than not trading is flat; the news from the morning has already been traded on, and many traders are taking a lunch break.
By or the SPY is moving and shaking again. I make only one trade per day. If I am trading more than that most likely I am either cocky and think I can make more money or I am trying to fix a loss trade—both are bad ideas. If the conditions are right I scale into a trade up to 4 times the dollar-cost average. I only scale down, never up—meaning I buy more as the price drops, and when I close the trade I sell everything I do not scale out.
Doing so protects me in the case of an upward spike in the market and frees me from being glued to the computer screen.
I do not set stop losses. The SPY is not crazy volatile and almost always I have some money left if a trade goes against me.
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Plus, I never risk more than I can handle losing. Stop losses are bad because sometimes the market really has to fall before it can pick back up. I rely on my gut to time my exit one of the reasons I have not automated this trading style. If a trade goes against me I simply wait for an uptick and use that opportunity to close the losing trade.
Almost every day some buyer comes in and pushes the SPY up or down faster than normal in one big trade, but if not I sell at and go all cash. I have set these rules for myself over many years of day trading. From the start of the day the market was bullish—notice how the chart is pushing up rather than down—so I was looking to trade calls. Notice that the MACD histogram bars clearly resemble rolling hills. I benefitted from a big seller coming in right before I entered the trade, pushing the SPY down. If this event had happened later I might have scaled in and purchased more calls, but on this day one open and one closing trade did the trick.
Most winning days play out just like this example. I just painted you a pretty rosy picture of how you can generate outsized returns day trading. The thing is, every day is different and a few bad days will certainly wipe out your account. But if you adhere to the overflow method you can use day trading profits to juice the returns of a less risky trading strategy. Day trading is also a good way to stay engaged with the market every day and sharpen your trading skills.
Such experience and knowledge make you to a better credit spread trader or buy-and-hold investor.
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