Options Trading

Greetings Traders,

I love trading options. There’s a certain satisfaction that comes from finding high probability plays, placing them, and then managing winners (and shrugging off the losers).

I trade small, defined risk spreads on highly liquid options like IWM, USO, SPY, and GLD.

I place trades in the 50 – 70% probability range and let the odds work out.  I don’t manage trades, adjust losers or fix trades.  Risk management comes at the placement of the trade.

The trades I make also take into account the needs of my portfolio.  Some trades may not be as good as a stand alone trade or may be strange given the current market environment, but they may fit my objectives to flatten out my portfolio delta risk.  I am always positive theta – collecting money through the daily whittling away of the value of short options.

  • I begin about 40 days to expiration placing relatively delta neutral, theta positive trades.  These include at the money calendar spreads and iron condors.
  • To adjust deltas during the cycle, I will use directional trades (debit and credit spreads).
  • About 15 days to expiration I may place butterfly trades as purely speculative plays.

I do use a couple of indicators to help me make trading decisions, but those are simply engagement tools.  I don’t place much faith in their predictive value.  Any indicator that works for you and helps you make decisions will work.  There is no perfect indicator and I believe that markets are generally random.  My success comes not with the indicators I use, but with the high probability nature of the trades I place and the management of my winning trades.

For an up to date listing of trade orders and filled trades, visit my mytrade page.  Please note that some trades listed on that page may not have been filled.

I would like to connect with you. If you are a trader who follows a system, uses liquid products, trades quietly, and is working on conquering the mental aspects of trading, reach me on Twitter.

Best wishes on your trading!

James

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This post is intended for educational purposes only. The facts and opinion stated do not constitute an offer on my part for the sale or purchase of any securities; nor is any such offer intended or implied. Options involve risk and are not suitable for all investors. Click here to review the Characteristics and Risks of Standardized Options brochure before you begin trading options.

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