Something interesting noticed, if going to play lotto plays like far OTM calls/puts for earning's they need to have as little time on the clock as possible like buying the week of, or following week.
- I looked at FDX $240 strike with 9/27, 10/04, and 10/11 dates.
- Only 9/27 actually made money or 100% return, I wonder if 9/20 made money, prob would have to close first thing in morning or extrinsic value depletes within just hours.
- This really makes me think playing earning's the best strategy for picking direction are debt spreads, or possibly even credit spreads if feeling okay with spread loss so prob not.
- Debt spreads aiming to capture intrinsic value like FDX bto $280p sto $260p would've been $750 to $2800ish
Debt spreads are really powerful for the short term, longer timeframes and they get tied up too badly vs diagonals which are more effective because they're more flexible.
There's a sweet spot between too volatile of a ticker, using a diagonal which will get blow through twice up and down before even expiration, so the volatility of the company matters greatly deciding which options structure to use!
CONCLUSION: Why use diagonals or slower trade on volatile ticker, when can run debt spreads capturing few trades which otherwise wouldn't have worked on slower safer companies. For example, CMG is great for diagonals imo, but Tesla would be great for debt spreads imo.
Right Structures For Right Companies
byu/breakyourteethnow inoptions
Posted by breakyourteethnow
2 Comments
You traders put so much work for ^lotto’s !
If only you put that much thinking into good trades , most will probably be making some money.
In my book, you are overthinking a lotto. I treat it like black jack just for fun, even though I’m prepared to lose my small bank roll.
Your blind darts are meaningless without data.