I am a day trader of options. I mainly trade weekly options.
What I enjoy doing is using the overnight high
and lows and the previous day high, low and close levels. Using these five levels and the relationships between them will provide a lot of insight on what should happen.
For example, lets look at $PCLN from this past Friday.
On the chart,
- the pink is the overnight high and low
- the green is the prior day high
- the red is the prior day low
- the white is the prior day high. however, the green is covering
the white line since these levels are the same.
I actually day traded this Friday and observe that the overnight high provided resistance
. Once $PCLN broke the overnight low
I knew it was over. And, when it broke the prior day low it was really over. So, at 8:40 AM I started to scale
into a position of doing this with the weekly calls that expire that day
- Selling the 1190 calls and buying the 1195 calls at 8:40 by selling 3 legs
- At 9:00 I sold 10 more legs
- At 10:40 I sold 5 more legs
- At 14:00 started a new position of selling the 1180 calls and buying the 1185 calls (3 legs)
- At 14:15 sold 5 more legs of 1180 calls and buying the 1185 calls
I let everything expire worthless meaning I didn't buy any of the legs back. If you are using thinkOrSwim
, if you buy back a leg at .05 you will not get charge a ticket fee. Well, actually you will get charge a ticket fee but then you will automatically receive a credit
Here is the chart... crap, I only have 2 posts and need 5 posts so here is a link to the chart i.imgur.com/oA8a8l6.png
Some things to take away...
- At times, the overnight high and low will mark the high and/or low of the day
- If we open below the prior day close and break the over night low
, it is pretty much over ( more downside )
Since I day trade options I don't look at the greeks
. I just look at the intraday action and the price action
. I keep things simple. ;-)