Ed Downs Member Posts: 11 Joined: 2/12/2013  User Profile | Thanks for engaging the options discussion. Most option players, and especially those trained by outfits like Think or Swim, look at the option market as an opportunity to sell premium. It doesn't matter what the stock is doing, only what the options in the spread are doing. And, if you pick the right spreads, you can definitely capture premium from the market as long as the stock stays in a certain range, and if you continually adjust the position. It's a good bet and people make money doing it. The advantage we have with OmniTrader is we can apply directional options strategies to Signals. Some Signals, like "breakouts" do well with naked puts because price will usually stay at or near the breakout level. "RTMs" do well with Debit or Credit Spreads because the implied volatility is significantly neutralized (since you are buying one option and selling the other in the same instrument), which means you won't pay a high premium to enter the trade. I am personally working in options right now, and plan to provide examples of replacing trade plans in our existing Strategies with option versions. John is 100% correct about Delta Neutral. Thanks for the clarification. Our non-directional trade plans are designed to capture premium based on assumptions about where the stock is going to go (or not go). But they aren't designed to continually adjust positions the way people do with Delta Neutral trading. You actually can generate Signals in OmniTrader that are "neutral". The important factor in such a Strategy is using Filters to make sure the stock is either likely to move or not likely to move (straddle vs strangle). The Signal in this case would only be intended to fire the trade, without regard to direction. | |
