Anybody here NOT trading intraday? Experiences?

[Greyzy]

I'm new to this forum, but from what I've read so far I got the impression, that most forum members trade intraday. Since I plan to trade options based on decisions I make after the exchanges are closed (end-of-day trading) I'd like to know if anybody here is doing the same thing.

My expected holding times for the options range from 2-10 days (if the stock goes the "wrong" way) up to 30-90 days (if the stock keeps on moving in the "right" way). The total move in the stock would range from about 2%-5% until stop-loss to 10%-30% gain (same applies for calls and puts).

I'd be especially interested in sharing experiences regarding these topics:
- What kind of orders do you use to get in and out of the trades (limit orders, market orders)? (I am away at my daytime job and cannot trade while the market is open!)
- If you use market orders: Did you ever get an "unfair" price? Was that a thinly traded option?
- Do option orders to buy on open reflect the move that the stock makes on open compared to the last close?
- If you expect a stock move over a period of say 60 days, do you buy
a) a short term option and roll-over after a certain period or
b) a long term option that expires just after the 60 days or
c) buy an even longer term option?

Of course everybody is welcome to reply. I'd appreciate if you could give a brief description of the kind of trades you make yourself.

Thanks,
Greyzy

P.S. Would money management (position sizing, risk management) for someone trading options be discussed in this forum or in another one?

[mikeydabbles]

Welcome to the forum! from a fellow newbie, lol

Anyways, when I used to trade on my personal account I would not trade intraday, as I was in a position like yours, where I was not available to watch the stocks actively during market hours.

Here are my thoughts..

- Use limit orders! Although spreads are narrowing across exchanges and this is making market orders gradually more appealing, it is still wise to get in the habit of using limit orders for your trading. The reason, in my opinion, is two fold - First, you will ensure you get execution at a favorable price. Second, by forcing yourself to use limit orders, you are exercising your trading and risk management skills. Before placing a trade, you should distill it down to its component logic, and part of this is clearly defining entry and exit points. This is optimally done with limit orders, not market orders.

And as for your period, if you're buying options to speculate on price movement in the underlying, I suggest paying up for longer term options. The reason being, if you buy the shortest term options, yeah you will pay a lower price and can therefore lever up, but you're taking the losing side of the time bet, as option value erodes quickest in the final weeks before expiration. If you trade out with longer term expiry at least you don't have to fight this uphill battle. You will necessarily make less per trade on a % basis, but you give yourself the opportunity to have more winning positions than worthless contracts.


And as for my experience, I work for a prop firm on the CBOE managing book (trading options from a risk management perspective), but I have traded longer term speculatively for my own account in the past.

My favorite plays are in volatile industries that are susceptible to news induced price swings.

I hope this has helped even a bit, I'm sorry I don't have the time to go into more detail, perhaps I will return tonight with some recommended reading or websites for you to get more familiar with the practicalities of options trading and position management.

Best of luck,

MIKE

[aiki14]

Let me say I agree completely with Mikey on Limit orders. If you are not going to be there to watch place limit orders for buys and sells, use stop losses as well or you can get hurt with options if your stock goes south on the express.
I also agree with him on time, go out a little further, at least until you really are more experienced. Err on the side of caution as it were.

I use options for hedges mostly. Protecting long stock positions against market moves and to lock in profit.
I also use options to add some profit when a stock is not likely to have big moves. If you have a low beta dividend payer, you can sell out of the money options and enhance your upside.
And occasionally I will use options on a purely speculative nature where the leverage allows me to use less capital.
My recent plays have been VIX calls against QQQQ calls, today that was very profitable. That is a relatively inexpensive way to play the market volatility.
Hope this helps, and welcome to you and Mikey.