chart trading for options

bbmac

Veteren member
3,584 788
hi fellow traders

I am currently looking to develop an 'end of day' (eod) trading strategy for trading put and call options on us stocks. The sytem will basically filter potential stocks using some sound Fundamental analysis (FA) and then look for the trade trigger using some good Technical Analysis (TA.) As far as the TA is concerned, I have been playing around using a simple moving average and price crossover system, only traded when confirmed by MACD and slow stochastics.

Does anyone have any advice reagrding what the optimum/most effective/profitable settings would be for the SMA, MACD and the Slow stochastics?

Also any input into the FA would also be greatly received. I will gladly pm or email contributers with my other thoughts and the system as a whole when I have experimented with any advice/ settings for the indicators as mentioed.

thank you.
 

RogerM

Established member
752 6
bbmac - I strongly recommend that you develope a system that identifies potentially winning trades first, and then test it out with straight forward stock longs/shorts. Only when you have a winning system should you start to use calls and puts.

Winning at straight purchase of calls and puts is the hardest way to win at options. They are usually far better traded using a combination of long and short strategies that put a floor under potential losses, using spreads, backspreads, ratio spreads, synthetics etc.

Just my two penn'orth! :)
 

TheBramble

Legendary member
8,395 1,170
RogerM said:
Winning at straight purchase of calls and puts is the hardest way to win at options.

Damn right!

If you develop a system that works then WRITE them - don't BUY them!

You've only got a 1:7 chance of success when you buy options as a bare trading strategy.
 

Robertral

Well-known member
446 4
TheBramble said:


Damn right!

If you develop a system that works then WRITE them - don't BUY them!

You've only got a 1:7 chance of success when you buy options as a bare trading strategy.

Where did you get this "1:7 chance of success" figure?
 

TheBramble

Legendary member
8,395 1,170
Robertral said:


Where did you get this "1:7 chance of success" figure?

Come on Robert, you're more of an expert than me at this stuff; work it out.

What can happen in terms of movement and speed of movement over time?
 
 
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