Say an option expiring in 1-2 days, especially consider the expiration day. Specifically for index options, a move of 1-2% in the index during the day will move a sufficiently OTM option price roughly 5-15x. So, if you have a model that forecasts expected SPX/ES direction and movement on expiration day and you buy either call OR put depending on your model output for 0.5 and manage to sell it for 5, this one successful trade will provide for 10 losing trades. This means if your model can forecast at 10% success rate, you will breakeven. If your model can forecast at 20% success rate, in couple of years starting, you will be making millions on expiration days. And I am talking only about indices. probably, stocks will make it even more interesting Critique of the idea welcome.
195 views but no critiques!!! Probably the noob options crowd got excited by the title but din't have much to share whereas pros thought this is a ridiculous idea, not worth their time to comment :eek: :eek:
look at an ETF wait for wed close to fri open look for either a hollow red candle on the 10min/hourly/daily chart on the open at the bottom of a trading range/bollinger bands or for a short opportunity look for a filled blk candle at the upper end of the trading range/top of bollinger bands, look at longer term charts for potential upside and downside $ targets within your expiration timeframe. Make the play. Profit. Repeat. SLV and GLD was fantastic with this.