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We could use a place to discuss the shift to daily trading. How do you choose Strikes?
Ideas:
1. Keep target income fixed, so daily premium drops to $75-80 (SPX at 4025)
2. Keep a common risk level based on the delta.
3. Delta that floats based on some version of VIX.
4. Worst 1day loss in last 6 months
5. Other ideas?
I use #3 (and look at the others). Two 1-DTE options seem to pay much more than a single 2-DTE option.
I certainly look forward to a full post on this topic at some point.
I'll be using the 1DTE options. An easy approach would be to target a fixed daily income target. About $0.60-0.65 per trading day. $0.90-1.00 over the weekend.
That automatically gets you a decent Delta and also scales down the Delta if the vol is high.
That is what I need to do, but I need the discipline to take daily income in that range.
I've been selling too high, since it feels safe when you are 200 pts OOM on 1DTE. The efficiency of the market likely means I'm taking risk when selling Puts at $1.20.
Any thoughts on how to include monthly AM closes with 1DTE options?
I might sell Thursday AM (for Friday AM close), if the prior day sell looks safe (delta << 1.0).
Some data on 1DTE vs. 2DTE (from 1530 EST)
1DTE, 150pts OOM, $0.70, 2.4 Delta
2DTE, 220pts OOM, $1.00, 2.4 Delta
2DTE, 195pts OOM, $1.40, 3.4 Delta
Minor rounding to make items match up, and based on TDAmeritrade data. I wish I had captured the IV.
I find it interesting that you should be able to stack back-to-back 1DTE and get same premium with less risk.
Thoughts?
