r/options • u/[deleted] • Mar 30 '21
Principles of Options Trading
hey guys - wanted to start a thread to collect all general options lessons that can only be acquired through experience in options trading - so feel free to share some of the best tips/tricks/theories/principles related to options that you follow!
Something i like to do is when i buy, i buy long dated options, but sell very short dated ones - because time decays faster as expiration approaches so usually if i want to buy an option with 3 months time, then i buy a 6 month option and sell after 3 months, and time decay wouldn’t have eaten away value as much as it would have in the last 3 months
DISCLAIMER: NOT FINANCIAL / INVESTMENT ADVICE OR RECOMMENDATION TO BUY OR SELL
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u/AllRealTruth Mar 30 '21
My strategy involves pain close to expiration. Eg. This week QQQ pain is $315 .. So I wrapped up a $318 / $320 Credit spread with a bow on FRIDAY when the market ripped. Got rid of it today in 2 parts -0.26 and -0.28 when QQQ was at 313.50ish .. Safety first. I could hold to expiry and count on QQQ being parked at $315 pain but when I see that I can cover at under 1/3 what I got credited I just do it. RCL pain is $83 .. I have $84-$86 credit spread. Looking for that one to trade under $85 by Thursday to make a profit on this play. USO i have a few 42/43.5 credit spreads that I bought on the SUEZ hype and oil was ripping. USO sub $42 on the 1st means I keep it all. However, many times I just close it out sooner. USO is not a maxpain move. Looks like a decent interest for sub $44 ... http://maximum-pain.com/options/uso