$SPY #Options #DayTrade — Friday’s 392put up 340%

This chart is set to display return per $1,000 in play in the white flag on the right axis (the #1Kdaytrade on Twitter), and $10,000 in play in the green flag on the right axis (the #10Ktrade on Twitter).

Mid-day today has already been spectacular — up 289%. At the close, up 340% for the day trade.

PREVIOUS POSTS ON OTHER DAYS (click to see details):

$SPY #Options #DayTrade — today’s 386 Call up 265%

Today’s #Options #DayTrade — $SPY 393Put up 164%

Today’s #Options day trade — $SPY 389call up 65%

TODAY’S 390CALL UP 105% ON THE DAY TRADE

All signals and trades in these (strikes and expirations change daily) are based on this simple:

TRADING STRATEGY

There are so many options strategies in the stock market the head spins — a straddle, a strangle, a naked and/or a covered put and/or call, a calendar, a condor, an iron condor, an iron butterfly (isn’t that a rock band?) and any combination of any of these for hedging purposes, for capital appreciation or preservation, for gambling. Mind boggling.

But buying options…

Buying options, just plain buying a call or a put, everyone will say is a “fool’s game.”

Regardless of whether a trader buys calls or puts on index ETFs like SPY or QQQ or IWM, or buys options on stocks, there are only three things that can happen — the option goes the trader’s way (good), or the option goes against the trader (bad), the option goes sideways with price decay over time (also bad).

Two out of the three possibilities for the option buyer are losers. What fool would want to play that game?

But is it really a fool’s game, like everyone in options trading says?

For day traders it doesn’t have to be. If the trader is persistent, discipline and experience, it almost never is.

Let’s take SPY options as the prime example — very liquid across multiple strikes, tight spreads, hardly any time decay on a trade for only a day, a stop-loss is close by and immediate, and the profits, if there is a trend for the day, can be substantial, even rather astounding.

(Also great for day-trade scalping with the weekly calls and puts on various liquid stocks. Must be stressed the key to trading the weekly stock option is liquidity in order to avoid spreads too wide to turn around a profit during a single day.)

One last note: It cannot be stressed enough that individual traders have an entry signal of their own that they are comfortable taking in order to settle emotions (different for everyone), and again it must be said — the key, as always, is persistence, discipline, experience, and an entry signal the trader is comfortable taking.