I'm looking for advice on effective options trading strategies for a low-budget account. I prefer not to allocate more than $50 to a single position. In your experience, what strategies have proven successful for smaller accounts?
How do you choose stocks for options trading, especially when major companies have underlying prices that may be too expensive premium for a $50 single position? I appreciate your insights and expertise on this topic.
Additionally, what are your recommendations for selecting minimum expiration dates and ideal Implied Volatility (IV) percentiles for both short and long positions?
Thank you
Advise Options Strategy for $50 Positions: Expirations, IV Percentiles, Premium and Stock Selection
byu/TerribleTeacher7650 inoptions
Posted by TerribleTeacher7650
1 Comment
If you want cheap contracts go for cheap stocks with low IV (like AT&T, which is trading at $21 and has an IV of 20). Do research on the company as if you’re an investor, see what their upcoming events/developments, and try to assess what do you think the stock price would be in the expiration and based on that choose the strike. far OTM calls will be cheaper naturally but usually won’t end in profit, so don’t involve in them unless you’re bullish as a matador. You can either play on the stock rising up moderately and how much it would be worth on expiration, or if you believe there will be a spike a lot before that, even if it doesn’t pass the strike price (that way theta affects you less)
Try to buy as far out expiration as you can afford.
For example AT&T has a LEAPS call with 500 DTE and strike of $27 priced at 50 bucks. I haven’t done my research on the company yet so I don’t advise on buying it or something but I’m just saying it’s not so crazy for a company that’s up 25% YTD and that has seen that price already to go up another 25% in a year and a half