Edited to add TLDR- I'm making money consistently without technical analysis of my options trades. Convince me it's worth investing the time to learn.
I never use much technical analysis to plan my options trades. Is there really any benefit to spending the time to expand my knowledge on this topic?
This is how I currently make trade decisions: I only sell cash secured puts and covered calls, and I used them to boost/build my long-term positions, so…
- I ask myself if I want to buy the shares or, if I own them, if I'm willing to sell them.
- I decide how much I want to pay for them or what price I'll accept if I sell.
- I look at share prices, dividend yield, ex dividend dates.
- I consider the amount of space that particular position is taking up in my portfolio and whether I need to expand or reduce the number of shares I own.
- Sometimes I look at analysts recommendations for the underlying (taking the advice of professionals who get paid to know more than I do).
- I calculate annualized return on the capital or the value of the shares I'm using to to secure/cover the position and aim for 10-25% annualized returns on each option trade.
This seems like enough to me. But I wonder if I'm missing an opportunity to bring in more income.
Do I really need to understand "The Greeks"?
byu/patsay inoptions
Posted by patsay
11 Comments
I ain’t reading all that, I’m happy for you tho. Or, sorry that happened.
Now go start studying.
Just learn it? Instead of writing this post? 😂
you could have learned them in the time it took to write this post lol they aren’t that complex
Resound: YES
Plenty of people drive their cars without understanding the technicals of the cars’ systems. When things go wrong, most don’t know how to diagnose the problem. Those who do are back on the road in no time.
So, sure, go your own way.
If you want to be successful long-term, look to the most successful traders in the world. Find out what they know.
Yes.
The concepts are important, the names are less so although even those are not too complicated to learn. The only two Greeks that I would say are crucial are Delta and Theta.
(D)elta = (D)irection
(T)heta = (T)ime decay
Are you kidding? I’m Greek, and I can’t understand any of it, so you have no chance.
The greeks aren’t related to technical analysis FYI.
By the sound of it, you’re only a) buying shares or b) selling covered calls.
In that case you don’t need the Greeks. The only place the Greeks will help you is:
A) maximizing the premium on selling your covered calls (Delta)
B) helping minimize the risk of your shares getting called away (Theta)
If you don’t care about maximizing or minimizing those, then you don’t need to learn about the Greeks.
If you are going to trade options you need to understand them. It would take you a couple of hours to learn the basics of the Greeks. Without a doubt, you are missing a LOT of opportunities by not understanding how the Greeks relate to options pricing. I am doing earnings release trades and it is essential to understand the potential IV (Implied Volatility) crush and what will happen after the release based on VEGA. Understanding Delta is important when deciding on a strike to trade. For my earnings trades I am shooting for 40%+ overnight returns so yes, there are opportunities you are missing.