- Options Strategy for Volatile market.
- Unpacking the success of Schaeffer's recent straddle trades
- Non Directional Strategies in a Volatile Market : options
I'm playing short term, close to the money strangles on particularly volatile tickers. I've had a particular interest lately on things with heavy after-hours and pre-market action. Do you have a source for this, there are some obvious ones out there Carnival Cruise but would love to hear other ideas. Also what would that metric be called So that I could screen for it. It's called implied volatility. Careful with wide spreads though. I like that - at least it feels targeted. You can buy a call or put and delta hedge by shorting or buying shares respectively.
The stock can go up or down and you'll still make money, assuming you keep you deltas neutral. The downside is that you have to pay theta and if the stock goes sideways you're gonna lose. This is called gamma scalping if you wanna research it more. I sell iron condors.
Options Strategy for Volatile market.
I try to win with time, a decrease in volatility, or the ticker staying range bound. I sold an iron condor on crude futures on Friday because the volatility was high enough I could cover a reasonable spread of prices for a week. Otherwise the only thing I've dared go non directional on lately is volatility because most things have been moving pretty fast. Here's a link to a post about the strategy.
Unpacking the success of Schaeffer's recent straddle trades
I've been using reverse iron condors for exactly this. The 'normal' option play for high vol is the straddle.
The problem with this is you can't control the breakeven. Using a reverse iron condor you can control the target breakeven almost exactly depending on options strikes , and because they're spreads you're relatively shielded from IV. If you want to learn about iron condors, tastyworks is the place to go. I basically decided that I wanted to do the opposite: They only sell positions they think are profitable - and they're right. This means if I buy positions that they say are not profitable I'll have a good win ratio.
BTW - I wrote a tool that calculates where the breakeven point for this should be based on a stock's past performance. DM me if you're interested - maybe I'll open it up for people. You could buy a straddle and sell a strangle within the expected move. Buying iron condors way OTM like 5 delta would be another way to go, with a profit target gtc order. Ive always thought of an iron condor as a credit spread. This would be opened for a debit and long gamma. Right - we usually say that we "sell" something when it's a credit spread, and "buy" when it's a debit spread.
I don't know if this truly qualifies as a non directional strategy, but I have been having success with put calendars on VXX. VXX really hasn't moved all that much this month.
The weekly IV is quite high. I'm doing some wide butterfly spreads. They act like a calendar spread but gain value as IV drops. Stay away. If u cant judge stock or market direct with the vix where it is dont use expensive non- directional plays. Wait til a valuation - earnings mismatch is clearly identified. Some of it is gathered from watching similar companies report or in oil I have been reading info on how many barrels of oil they are hedged at.
Non Directional Strategies in a Volatile Market : options
Oil companies report hedged positions. One area I need to research is trucking. Low fuel cost and high logistics demand has gotta help the industry. Use of this site constitutes acceptance of our User Agreement and Privacy Policy. All rights reserved. Want to join? Log in or sign up in seconds. Link post: Mod approval required.
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Long Futures - When you are bullish on the market and uncertain about volatility. You will not be affected by volatility changing. Long Synthetic Futures - When you are bullish on the market and uncertain about volatility. May be traded into from initial long call or short put position to create a stronger bullish position.
Short Synthetic Futures - When you are bearish on the market and uncertain about volatility. May be traded into from initial short call or long put position to create a stronger bearish position.
Long Risk Reversal - When you are bullish on the market and uncertain about volatility. Normally this position is initiated as a follow-up to another strategy. Short Risk Reversal - When you are bearish on the market and uncertain about volatility.