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" Rolling " an Options trade ..... " Roll " Out ? " Roll " up/down, Vertical Roll ??
I need some insight and help please, in Understanding which method is Best for me..... Given what I'm looking to Achieve with my Options Trades ( via Staying Long in these Positions ) WITHOUT having to close them out, take the Profits, and then buy back in, to a new trade and Start all over again , Thus giving up the Potential for even Further gains, on my first and initial Options Trade(s ) that I placed
Here's the Premise of the Trade:
I have a Bias from my Analysis that stock XYZ is going to make a HUGE move to the upside
I want to trade Outright Options on this trades ( long Calls )
So what I'm trying to understand and figure out , is if there's a way to stay in my initial trade , and just keep Buying more and more time , WITHOUT having to ever close out my position ?
Theoretically , let's say I want to stay in an options trade for 9 months ( and maybe even for 1 year ) ,
but only wish to buy 3 month out till Expiration Contracts , and then analyze and look to buy another 3 month out , etc. , etc. ,.... so long as the trade continues to look Bullish
What would this Method of Options trading be called, and how would I go about placing and adjusting it ?
I could buy a 1 year out LEAP when I first put on the trade I guess, but the Options on LEAPs ( given so much time to Expiration ) are a bit to Pricey ...... That's why I'm looking at those with 3 - 4 months out till Exp.
QUESTION:
1. Does the Delta for the Options I buy, always need to be around a certain number , for the strategy I'm looking to Employ to work?
On the Movie ( The Big Short )
it shows them Making a Killing in the Options Market ( Prior to them selling short the Housing Market ) , and although they didn't spend much time delving in to what exactly they did via Options trading to make a killing in the markets ......... It seems that they did some sort of " ROLLING " technique ?
Thank you for any and all insight and help ,
I very much appreciate it
Can you help answer these questions from other members on NexusFi?
Trading: Equities, index options and futures/futures options
Posts: 190 since Apr 2010
Thanks Given: 66
Thanks Received: 198
No offense but if you don't know enough to design a trade yourself for the conditions you expect then you're probably not ready to trade options yet. A HUGE move in a market is perfect for the leverage that options can provide but you need the knowledge to know what to do if you are correct and, even more importantly, what to do if you are wrong.
I'm am by no means not yet a master yet of all things options
I'm on a " Time " crunch, in that ,
There are ( in my option ) a few BIG move trades that may be on the Near term horizon on a few of the Futures/Commodities markets, and I want to make sure that I can use Options ( as Leverage ) to capture these Big moves VS buying the Futures Contract Outright on them
Trading: Equities, index options and futures/futures options
Posts: 190 since Apr 2010
Thanks Given: 66
Thanks Received: 198
If you know a little then I would stay with a simple strategy of buying slightly out of the money options which give a nice ratio of cash spent vs. reward. If you are correct and they go well in the money just do a spread by selling the old call and buying a new one slightly out of the money again. This will lock in profits while still allowing you to profit on any further move. If the options are too close to expiration then go to the next expiration on the new call. There are much better strategies to use but they require a pretty advanced level of knowledge AND experience.
