1- I focus on selling the S&P Futures options deep OTM weekly naked puts. I like the S&P for the liquidity, the relatively low volatility, the large documentation on it, the long history that allowed me to backtest it deeply and because it is less prone to sudden spikes like individual stocks. I also think chasing too many stocks is hard, I cannot deeply study and understand too many stocks, my knowledge would be too shallow. I sell only puts because OTM calls are underpriced and OTM puts over priced on the S&P futures. You get about 3X more premium for same deep OTM distance on puts than on calls.
2- Entry/exit on support/resistance levels.
3- Take a trade only with confirming majority large blocks and money flow in direction of my intended trade.
4- Avoid opening a position before major news, either macro or earnings of a mega cap that can spike the IV and inflate the premium.
5- Always having a close eye on the bond market, the U.S dollar and the VIX futures, if their correlation/anti-correlation with the S&P are disrupted I tend to take the closest support/ resistance for exit/ entry.
6- Watching the divergences between the price and MACD/MFI, using them as an indication for earlier entry/exit.
7- I look closely to the momentum of the price and get out when it starts fading and price starts reversing.
8- Concerning the sizing, the method is, before entering the trade, to look at the risk graph and assess the drawdowns and ask myself if I can stomach them, reduce size until it is true.
9- For my stop loss, I always immediately place a GTC limit order as contingency order equal to 2X the premium they gave me, but I get out with a day limit order when market say clearly I'm wrong early, way before I reach the 200% loss, most often @ -50% (half the premium)
10- For profit taking, if market still collaborating I tend to get out if I reach 80% of the premium , if I see possible reversal, I'm immediately out
11- I tend to avoid holding a naked option position the weekends as it is not possible to trigger my stop loss in case of an unexpected event, the stop loss will get 'jumped over' Monday in case of market moving event
2- Entry/exit on support/resistance levels.
3- Take a trade only with confirming majority large blocks and money flow in direction of my intended trade.
4- Avoid opening a position before major news, either macro or earnings of a mega cap that can spike the IV and inflate the premium.
5- Always having a close eye on the bond market, the U.S dollar and the VIX futures, if their correlation/anti-correlation with the S&P are disrupted I tend to take the closest support/ resistance for exit/ entry.
6- Watching the divergences between the price and MACD/MFI, using them as an indication for earlier entry/exit.
7- I look closely to the momentum of the price and get out when it starts fading and price starts reversing.
8- Concerning the sizing, the method is, before entering the trade, to look at the risk graph and assess the drawdowns and ask myself if I can stomach them, reduce size until it is true.
9- For my stop loss, I always immediately place a GTC limit order as contingency order equal to 2X the premium they gave me, but I get out with a day limit order when market say clearly I'm wrong early, way before I reach the 200% loss, most often @ -50% (half the premium)
10- For profit taking, if market still collaborating I tend to get out if I reach 80% of the premium , if I see possible reversal, I'm immediately out
11- I tend to avoid holding a naked option position the weekends as it is not possible to trigger my stop loss in case of an unexpected event, the stop loss will get 'jumped over' Monday in case of market moving event
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