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what's your favorite strategy?
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I use a bunch of different strategies depending on the conditions. Generally only indexes or ETFs, rarely stocks. Additionally I am almost always short the options (premium selling) however I still will long if I need to reduce my capital requirements (ie putting wings on a strangle to make it an iron condor). Since I'm not a millionaire yet I need to be aware of how much capital is tied into each trade. I try to be as mechanical as possible so I'm not relying on my instinct. My instinct sucks. I'm creating high probability trades and giving up my unlimited upside. The law of large numbers says if I do a thing enough times the probabilities work out in my favor.
Heres an example of a series of Iron condors I play every month.
At 45 days to expiration I sell an iron condors in SPY,IWM,GLD,QQQ,TLT. I set the short strikes to roughly the 30 delta (~70%OTM) on either side and I buy wings 4 strikes further OTM. Upside is capped to the premium received. Downside risk is capped by the long strikes. No single trade risks more than 2% of my total capital. I want to go to 1% but I need to grow my account first.
So this trade gives me about a 70% probability of making money.
I close the trade as a loser with about 4 days left because I don't want assignment. I close a winner once I have collected 50% of the original premium. This early closure allows me to increase my probability of profit to 80%. So about 80% of these iron condors make me money and 20% cost me money. Its a probabilities and numbers game. In clase it wasn't obvious I'm making money as the short options decay (theta is my friend)
So that's one of my strategies. I also do verticals, iron butterflies, strangles, straddles and a few more. I can describe more if you want. I'd probably start a new thread to not hijack this one any more.