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Old 09-21-2014, 01:59 PM   #1

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Option Trading Strategies

Hello Everyone,

For research purposes, I am looking for any option strategy, for a bullish/bearish/fluctuating market, that produces up to 100% ROI at some probability (I'll do the calculation myself) but also has limited loss potential of up to 50% of the sum invested.

Does anyone know of such a strategy?

The closest thing I've found was the long call spread strategy, but here the profit potential equals the loss potential.

I would appreciate any help

Thanks
Netgo
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Old 03-22-2015, 05:24 PM   #2

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Re: Option Trading Strategies

Netgo,

I like to buy front month, deep ITM long calls on large, liquid ETFs. If you use more than 1 ETF, the ETFs you choose are not too correlated, and you think of the group of them as a basket, it is very unlikely that you will lose 100%. I usually trade a group of 3 of them, based on momentum characteristics. My maximum profit in a month has been 60% and my maximum loss has been 60%. My average per month is 8% to 9%. On individual options, I have made as much as 120% and as little as -85%. I don't use any stops. I buy them 6 wk out and roll them or choose new ones 2 wk out. You can use just about any momentum system to do this: read David Vomund, Mebane Faber, Thomas Carr, Leslie Masonson, Ploutos on Seeking Alpha, or CXO Advisory. You need the chops to hang onto them through some wild rides, so it's best to stay small.

I'm not sure that one can design what you are seeking. If you add "insurance" to this type of trade to limit your loss, you are also limiting your gains. I have been speaking of directional trades. As for volatility trades, I'm hard pressed to come up with something that will fulfill your requirements, but maybe I'm just not thinking of it right now.
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