Wednesday, September 25, 13. Trading Apple Algos Using Weekly Options

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Virginia Lindsey
8 years ago
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1 Trading Apple Algos Using Weekly Options

2 Using Options with Signals Trade Signals provide a definitive edge Options allow us to taylor our risk Time decay adds juice to this edge

3 Primary Strategy During times of volatility we are net buyers of options During times of neutrality we are net sellers of options During unpredictable events we play both sides

4 Daily Success Formula Morning briefing - review news, upcoming events - Review open positions - assess sentiment and volatility - develop strategy for the day Stage high probability trades, react to signals Manage existing trades

sentiment and volatility - develop strategy for the day

5 Formula Continued Every trade we do the following Determine how long in the trade 2. Determine the target 3. Calculate the Risk vs Reward and breakeven 4. Protect against blowouts

6 Weeklies are Volatility Focused Theta - rate of decline in value with passage of time. - - Works against Longs Works for Shorts Gamma - rate of decay - increases exponentially as expiration approaches

7 Premium Is At The Money ATM options have the highest Theta and the most premium Generally it is best to be Long Gamma and Short Theta When the market is volatile, you want to be a Buyer When the market is consolidating, you want to be a seller

and Short Theta When the market is volatile, you want to be

8 We Prefer to Profit 52X vs 12X Weeklies exist for 7-8 days, listed on Thursday, expire on Friday Well suited for high flier stocks like Apple Especially during periods of volatility... - Things like earnings, product announcements, competitor SNAFUs, analyst dribble; which basically covers every day of the week!

Especially during periods of volatility.

9 Systems Supercharged by Options Active traders and swing traders can use systems with weeklies Statistical studies have uncovered weekly selling strategies Weekly roll-overs produce income and grow core positions

Statistical studies have uncovered weekly selling

10 Disadvantages to Weeklies Short time-2-live and rapid time decay, limits ability to repair or adjust Lower volumes/open interest, might limit strikes, resulting in wider spreads - Apple is not so prone to this

Lower volumes/open interest, might limit strikes,

11 News, Sentiment & Volatility Review current news and events that might affect Apple Review current sentiment, volatility and direction. Discuss possible scenarios and appropriate strategies

12 Volatility and Sentiment Every morning our systems generate reports on volatility, sentiment Long Call or Put (monthly) - high, very bullish or bearish Call and Put Spreads - medium, neutral to bullish Call and Put Butterflies - low, neutral Condors - very low, neutral Straddle - n/a, don t know

bearish Call and Put Spreads - medium, neutral to bullish Call and Put

13 Strategy Summary Avoid blowouts - never sell naked Trade small, keep risk contained Use time decay of weeklies for income Use monthlies for high risk directional trades - DITM, delta >80 for LONG calls, puts Structure trades around volatility, sentiment, events and news Time, target, risk, reward - minimize price movement as factor

trades - DITM, delta >80 for LONG calls, puts Structure trades around volatility,

14 Apple Algorithmic Traders

15 AiT Weekly Trend Trader Avg Time in Trade: 2.5 Weeks Avg Trades Per Month 3 Win rate: >80% Profit factor: > 8

16 AiT Daily Swing Trader Avg Time in Trade: 5 days 7 Hrs Avg Trades Per Week 1.3 Win rate: > 65% Profit factor: > 5

18 OTW Swing Trader Avg Time in Trade: 3 days Win rate: >60% Profit factor: > 2.5

20 AiT 240 Swing Trader Avg Time in Trade: 1 day 22 Hrs Avg Trades Per Week 3 Win rate: 65% Profit factor: > 4

22 AiT 60 Day Trader Avg Time in Trade: 2 Hrs 33 Mins Avg Trades Per Day 1.2 Win rate: 56% Profit factor: > 2

24 AiT 10 Day Trader Avg Time in Trade: 2 Hrs 20 Mins Avg Trades Per Day 3 Win rate: 50% Profit factor: > 2

Underlier Filters Category Data Field Description

Underlier Filters Category Data Field Description Price//Capitalization Market Capitalization The market price of an entire company, calculated by multiplying the number of shares outstanding by the price per share. Market Capitalization is not applicable