$SPY #Options – #DayTrading today’s calls for a 50% gain

The SPY 307 in-the-money call, expiring today, netted 50% for the day trade despite the initial entry being stopped out once at breakeven.

See tweet time stamps and the chart below.

FIRST TRADE ENTRY

SECOND TRADE – REENTRY

FIRST PROFIT TAKING

CLOSE OF DAY TRADE

THE 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.

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 scalping on any time frame intraday but that, as they say, is another story.

Again, the key, as always, is persistence, discipline, experience, and an entry signal the trader is comfortable taking.

Today, again, was a fine day for the strategy.

(click on the chart for a larger view)

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