What I’ve learned, what has worked, what hasn’t worked, and what may help you after $845,203.28 worth of trades in 4 years.
How to Pick an Option Contract in 3 Seconds
How to pick an option contract in 3 seconds:
As an options trader, build your watchlist around liquid stocks. These stocks have weekly expirations, tight ask/bid spread, and high Volume to Open Interest ratio. For an example of liquid contracts, look at AAPL’s options chain.
Assuming you are trading liquid stocks, here is your criteria:
- Pick an expiration date. For intraday trading, think less than 15-minute timeframe, you can use same week or next week expiration. For daily swing trades you’ll likely want to use 3-6 week expiration dates.
- Pick your strike price with a delta closest to 0.40. Below 0.40 is riskier than above 0.40. Delta is the change in the option's price or premium due to the change in the Underlying futures price. Delta ranges from 0.00 to 1.00 for calls and 0.00 to -1.00 for puts.
That’s it, most overcomplicate choosing contracts but the keys are:
- Liquid Contracts
- Reasonable DTE
- ~0.40 Delta.
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Stockonomy
What I’ve learned, what has worked, what hasn’t worked, and what may help you after $845,203.28 worth of trades in 4 years.
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