an incredibly simple yet profitable options trading strat? I came up with(easy money, high iq gtfih)

[wishIwasSalludon]

high iq people please read this cause Im not sure if Im just stupid or Ive actually came up with something. Anyways predicting the stock market is hard, like really hard so what if we can make money without predicting the stock market? Its not as stupid as it sounds lemme explain. So there are publicly traded securities called etfs, etfs exist for almost any sector(energy, finance, semiconductors) or even just tech in general. ETFs also exist for indexs(S&P 500, russel, DOW jones).

But there can be multiple ETFS for a single index, essentially the price movements of two different ETFS on the same index should be approximately the same. So I thought that we could make money by opening a short position on one index etf and then a long position on another etf on the same index. But theres a problem this strategy actually wouldnt work.

Because since the price movements for the index are approximately the same it would always result in a net loss if we were to be completely neutral and the direction of the price movement of the underlying index

if you still dont understand it can essentially be modeled like this you open 100*.9*1.1 = 99 so its a net loss

But hope is not lost, here comes options. Options have a special property to them that the more OTM an option is the lower its delta is, essentially allowing us to make money off of neutral plays.

so I thought if we have two similarly priced ETFs on the same index and two options(one put and one call) and this is important of similar price and similar delta we could make a net profit by buying both of those options simultaneously.

I made a paper trade doing this and it seems to be working

so far its a net profit of a couple hundred dollars, the only way we could lose money this way is if the market wasnt very volatile since theta would eat at the price of the options but the S&P 500 is quite possibly the most actively traded index in the world so flat price action for it is very rare

tagging people who may be interested and high iq people
@coispet @GuyFromSingapore @shabby890 @gooner23 @nigkook @SidharthTheSlayer @IAMNOTANINCEL @Shkreliii @Lethbridge @Roge @distance decay @Gengar @MilkywayDesu

Edit:
how could I not mention the highest iq user here @enchanted_elixir

 

[wishIwasSalludon]

0

 

[wishIwasSalludon]

bump

 

[kranerman23123]

Bro just reinvented hedging your bets

 

[shabby890]

The only stock I've ever made money off was GME.
I have no idea how to trade options, too risky

 

[wishIwasSalludon]

Bro just reinvented hedging your bets

Ive never heard anyone else mention a strat like this, its also better than a straddle since it requires less price action to make a profit

 

[gooner23]

as long as the options have reasonal bid-ask spreads and fees are low, and you know specifically that the etf isn't dominated by one stock (SMH biggest semiconductor etf isnt dominated by nvidia) should be fine. Id rather gamble tho and take a risk with long term options based on value investing

 

[Shkreliii]

become an opportunistic trader,

Teucrium wheat etf, hodl when jewkraine war is gone

 

[gooner23]

as long as the options have reasonal bid-ask spreads and fees are low, and you know specifically that the etf isn't dominated by one stock (SMH biggest semiconductor etf isnt dominated by nvidia) should be fine. Id rather gamble tho and take a risk with long term options based on value investing

also liquidity,

 

[coispet]

I’ll read when I finish studying

 

[wishIwasSalludon]

Id rather gamble tho and take a risk with long term options based on value investing

a risk taker I see but this is pretty much guaranteed money so long as the index moves in any particular direction

 

[wishIwasSalludon]

also liquidity,

VOO and SPY are some of the most liquid ETFs on the market thankfully

 

[wishIwasSalludon]

bump

 

[nigkook]

high iq people please read this cause Im not sure if Im just stupid or Ive actually came up with something. Anyways predicting the stock market is hard, like really hard so what if we can make money without predicting the stock market? Its not as stupid as it sounds lemme explain. So there are publicly traded securities called etfs, etfs exist for almost any sector(energy, finance, semiconductors) or even just tech in general. ETFs also exist for indexs(S&P 500, russel, DOW jones).

But there can be multiple ETFS for a single index, essentially the price movements of two different ETFS on the same index should be approximately the same. So I thought that we could make money by opening a short position on one index etf and then a long position on another etf on the same index. But theres a problem this strategy actually wouldnt work.

Because since the price movements for the index are approximately the same it would always result in a net loss if we were to be completely neutral and the direction of the price movement of the underlying index

if you still dont understand it can essentially be modeled like this you open 100*.9*1.1 = 99 so its a net loss

But hope is not lost, here comes options. Options have a special property to them that the more OTM an option is the lower its delta is, essentially allowing us to make money off of neutral plays.

so I thought if we have two similarly priced ETFs on the same index and two options(one put and one call) and this is important of similar price and similar delta we could make a net profit by buying both of those options simultaneously.

I made a paper trade doing this and it seems to be working
View attachment 2652144

so far its a net profit of a couple hundred dollars, the only way we could lose money this way is if the market wasnt very volatile since theta would eat at the price of the options but the S&P 500 is quite possibly the most actively traded index in the world so flat price action for it is very rare

tagging people who may be interested and high iq people
@coispet @GuyFromSingapore @shabby890 @gooner23 @nigkook @SidharthTheSlayer @IAMNOTANINCEL @Shkreliii @Lethbridge @Roge @distance decay @Gengar @MilkywayDesu

Brocel I read it all, Just gonna say it wont help you earn alot

 

[nigkook]

Ur hedging your position

 

[nigkook]

u need a large position to profit

 

[nigkook]

 

[GreedIcon]

high iq people please read this cause Im not sure if Im just stupid or Ive actually came up with something. Anyways predicting the stock market is hard, like really hard so what if we can make money without predicting the stock market? Its not as stupid as it sounds lemme explain. So there are publicly traded securities called etfs, etfs exist for almost any sector(energy, finance, semiconductors) or even just tech in general. ETFs also exist for indexs(S&P 500, russel, DOW jones).

But there can be multiple ETFS for a single index, essentially the price movements of two different ETFS on the same index should be approximately the same. So I thought that we could make money by opening a short position on one index etf and then a long position on another etf on the same index. But theres a problem this strategy actually wouldnt work.

Because since the price movements for the index are approximately the same it would always result in a net loss if we were to be completely neutral and the direction of the price movement of the underlying index

if you still dont understand it can essentially be modeled like this you open 100*.9*1.1 = 99 so its a net loss

But hope is not lost, here comes options. Options have a special property to them that the more OTM an option is the lower its delta is, essentially allowing us to make money off of neutral plays.

so I thought if we have two similarly priced ETFs on the same index and two options(one put and one call) and this is important of similar price and similar delta we could make a net profit by buying both of those options simultaneously.

I made a paper trade doing this and it seems to be working
View attachment 2652144

so far its a net profit of a couple hundred dollars, the only way we could lose money this way is if the market wasnt very volatile since theta would eat at the price of the options but the S&P 500 is quite possibly the most actively traded index in the world so flat price action for it is very rare

tagging people who may be interested and high iq people
@coispet @GuyFromSingapore @shabby890 @gooner23 @nigkook @SidharthTheSlayer @IAMNOTANINCEL @Shkreliii @Lethbridge @Roge @distance decay @Gengar @MilkywayDesu

Edit:
how could I not mention the highest iq user here @enchanted_elixir

you cant be high iq if you consider trading as a top method to make money kid, get skills and then make a business based on that

 

[wishIwasSalludon]

u need a large position to profit

I can live off this easily if I save a couple thousand dollars which since I live with my parents will be easy. Also the profit will snowball if u reinvest the earnings

 

[wishIwasSalludon]

you cant be high iq if you consider trading as a top method to make money kid, get skills and then make a business based on that

whats the best way to make money then? Also I choose this since it has a low bar of entry.

 

[nigkook]

I can live off this easily if I save a couple thousand dollars which since I live with my parents will be easy. Also the profit will snowball if u reinvest the earnings

you do need to pay like some sort of fee to hold etf, doesn't seem viable

 

[wishIwasSalludon]

you do need to pay like some sort of fee to hold etf, doesn't seem viable

the profit you make from this is greater than the fees and ameritrade calculates fees for you when you do a paper trade and it still a net profit. Ameritrade doesnt charge a fee for buying stocks they charge a one time fee of .65 cents per contract tho which is negligible compared to the profit youd make.

 

[Wallenberg]

Don't

 

[nigkook]

the profit you make from this is greater than the fees and ameritrade calculates fees for you when you do a paper trade and it still a net profit. Ameritrade doesnt charge a fee for buying stocks they charge a one time fee of .65 cents per contract tho which is negligible compared to the profit youd make.

welp brocel hope it works out for you, advice would be to not experiment this strat
good luck

 

[GreedIcon]

whats the best way to make money then? Also I choose this since it has a low bar of entry.

Theres no method, this aint no gta, you need to find something that is profitable and you can compete, for example, if you are good at drawing or designing, you can make a company based around that, and you can make money because you have the skills or and youre gifted for it, or if you find a niche that has potential you can also profit from it, making it more accessible to the public, theres no one size fits all, and its just like a normal job, difference is you are responsible for the losses or wins of your company

 

[wishIwasSalludon]

advice would be to not experiment this strat

why you dont think the strat is good?

 

[nigkook]

why you dont think the strat is good?

you'll be better off selling call options,

 

[wishIwasSalludon]

you'll be better off selling call options,

then Id have to know which direction the stock would move

 

[nigkook]

then Id have to know which direction the stock would move

It's worth learning than your strat brocel, ur hedging ur position and even if you have a large position high risk factor cba

 

[wishIwasSalludon]

It's worth learning than your strat brocel, ur hedging ur position and even if you have a large position high risk factor cba

its infinitely less risky than trying to predict the price of the stock

 

[nigkook]

its infinitely less risky than trying to predict the price of the stock

I might be retarded I guess need to get some good rest, Good luck with your strat then bhaicel
Make a big one

 

[Harold O'brien]

Op is extremely retarded ngl

If you make 10% return on half your capital and a 10% loss on the other half then you are neutral, not at a loss. What is this retard math. (It's a slight loss when taking into account fees though)

Buying a put and a call on the same asset will just do this:

 

[Harold O'brien]

I think you are independently trying to formulate the idea of arbitrage, but you're not quite smart enough to get there. (Buy the cheaper etf and then sell it at the price of the more expensive one because they are identical) won't work because many people much smarter than you with much better technology are already doing it, driving the profitability down to a point where it is below the cost of market frictions (that is, without surpassing high barriers to entry such as starting capital, technology, physical proximity to trading servers)

 

[wishIwasSalludon]

If you make 10% return on half your capital and a 10% loss on the other half then you are neutral, not at a loss. What is this retard math. (It's a slight loss when taking into account fees though)

You didnt take into account that bid ask spread exists retard so instead of it being like 50*1.1 + 50*.9 its more like 100*.9*1.1 so its a still a loss how low iq are you?

Buying a put and a call on the same asset will just do this:

its not on the same asset did you read the post?

 

[wishIwasSalludon]

I think you are independently trying to formulate the idea of arbitrage

this isnt arbitraging at all do you even know what arbitraging is the trades arent even on the same asset

Buy the cheaper etf and then sell it at the price of the more expensive one because they are identical)

they arent identical its not the same etf

 

[synock21]

all options strategies aside from selling covered calls or cash covered puts at too risky for the average low iq guy here.
Buying a low delta thing is exactly that: low chance your options goes itm. and never ever even think about selling low delta options, you WILL be ass raped if it goes itm.

best bet would be to unironically sell calls and sell puts on stocks you wouldn’t mind wheeling

 

[synock21]

this isnt arbitraging at all do you even know what arbitraging is the trades arent even on the same asset


they arent identical its not the same etf

yeah, but they track the same index

 

[Harold O'brien]

You didnt take into account that bid ask spread exists retard so instead of it being like 50*1.1 + 50*.9 its more like 100*.9*1.1 so its a still a loss how low iq are you?


its not on the same asset did you read the post?

At high liquidity should be basically the same no?

 

[wishIwasSalludon]

yeah, but they track the same index

it doesnt matter if they track the same index, you cant buy a VOO share and sell it for the price of a SPY share simultaneously(assuming theyre at different prices) you can only sell it for the price of a VOO share on another market

 

[synock21]

it doesnt matter if they track the same index, you cant buy a VOO share and sell it for the price of a SPY share simultaneously(assuming theyre at different prices) you can only sell it for the price of a VOO share on another market

yeah thats what i was saying, the prices would be different but the percentage change would be the same

 

[synock21]

At high liquidity should be basically the same no?

no, because by design voo was made for holding while spy was made for trading.

 

[Harold O'brien]

no, because by design voo was made for holding while spy was made for trading.

I was taking OPs word for.it, I'm not familiar with VOO

 

[wishIwasSalludon]

I was taking OPs word for.it, I'm not familiar with VOO

wrong person I assume, also I just said the price action is approximately the same which is true

 

[Harold O'brien]

wrong person I assume, also I just said the price action is approximately the same which is true

Yeah

If they are tracking the same basket of assets then it doesn't matter you can create your own replicating portfolio

 

[IAMNOTANINCEL]

All cope crypto is dead just hack milionaires wallets

 

[Lethbridge]

Idk why the ping didn't notify me.

It's a shame i'm retarded and have no knowledge about options because I'm really trying to understand this but I can't. It doesn't seem like anybody else in the thread so far can either, seems like people have just been saying random tangentially related shit only.

 

[adam_ross2549]

is it possible to gamble 2 grand to 20 grand with options if i get super lucky with earnings and whatnot

 

[wishIwasSalludon]

is it possible to gamble 2 grand to 20 grand with options if i get super lucky with earnings and whatnot

yes

 

[wishIwasSalludon]

is it possible to gamble 2 grand to 20 grand with options if i get super lucky with earnings and whatnot

wouldnt recommend it tho what stock r u thinking?

 

[adam_ross2549]

yes

imm gonna do it then get surgery wish me luck