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Day trading Blue Chip stocks with options


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Day trading Blue Chip stocks with options

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  #1 (permalink)
Coronel Vivida, Parana/Brazil
 
 
Posts: 46 since Oct 2020
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I'm looking to make a list of blue chip stocks that move consistently and significantly enough to day trade to put my focus on, rather than jumping around to whatever low float stock is making moves that day. My plan is to trade options- calls and puts, rather than buying shares, but my capital is limited, so stocks like Tesla with very expensive options might not be ideal for me. I would appreciate any suggestions of either stocks that you recommend, or resources where I can find what I'm looking for. Thanks!

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  #2 (permalink)
Eilat, Israel
 
 
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VinceField View Post
I'm looking to make a list of blue chip stocks that move consistently and significantly enough to day trade to put my focus on, rather than jumping around to whatever low float stock is making moves that day. My plan is to trade options- calls and puts, rather than buying shares, but my capital is limited, so stocks like Tesla with very expensive options might not be ideal for me. I would appreciate any suggestions of either stocks that you recommend, or resources where I can find what I'm looking for. Thanks!

2 replies - one directly to your question, the other more general.
To your question: my simplest suggestion would be to just do the work. It isn't that hard: look through the list of large stocks, and identify a few whose volatility is reasonable and are high-volume and relatively low-spread.
Now, choose those whose *options* are also high-volume and low-spread.
I doubt it'll be a very long list. and even if it is - just pick the first few. Now look back at their intraday charts - are they well-behaved enought and do they tend to offer enough clear setups according to your method? if not, move on to the next, until you have a list you're comfortable with, both in terms of size and tradability.

However a few things come to mind reading your post:
1. Be aware you're DRAMATICALLY changing your trading methodology. From "scan for something specific among many candidates" to "wait patiently on just a few" - entirely different psychology, and can for some people result in taking questionable trades just because they get tired of waiting in front of the screen. Also moving from low-float shares to blue-chip options - entirely different market behavior. I'm not saying it's not a good idea (it very well may be a smart move for you) but just be aware and pay attention to the differences.
2. I find it hard to believe you are undercapitalized to buy shares, but capitalized enought to trade options - you may be over-leveraging for your appropriate risk management!!! How much can you risk per trade? Just focus on volatile stocks, and buy less shares! Trading options for leverage alone is not necessarily benefitial and may add some complications (less volume, and other factors) that may hinder your success. Growing your account patiently may be an alternative approach worth pursuing.

I wish you success in your trading

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  #3 (permalink)
Essen, Germany
 
Experience: Intermediate
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Trading: Futures Spreads and Options on Futures
 
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I would recommend you first learn some more about how options work and how they may be utilized. As Zvi noted, if you are anticipating that options are a shortcut around being under capitalized then you are potentially in for a rude awakening. Right now there is unprecedented interest in option buying (https://finance.yahoo.com/news/speculative-frenzy-sweeping-wall-street-210000335.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAHF9O21zkC2uCk8Slfwx_MhyO_pdkGAR0bIifVfzq0-2oPiPKWXx9As-zHd7EoGlDjlTkcbDdhQRHJaZ9qCS0ycP3ubRN5xX-2LTVETPZN2v4BZnvSqWRlnZmcwaMPiJu3jwCjV1kOvCZAWgNPxhXSv8dTXLlCRKDCpK-h4RNjHe) from retail speculators. This is a house of cards that, at some point, will collapse. Any number of individuals will find themselves losing a lot of money in gambling with options.

Used correctly and with sufficient education, options are a very useful instrument type that allow for a more nuanced approach than simply being long or short a stock. However, they require some investment of time and effort to understand and apply sensibly. It isn't as simple as just finding a list of liquid stocks. There are a host of other factors that come into play, as expressed through the option greeks.

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  #4 (permalink)
Rovigo (ITALY)
 
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VinceField View Post
I'm looking to make a list of blue chip stocks that move consistently and significantly enough to day trade to put my focus on, rather than jumping around to whatever low float stock is making moves that day. My plan is to trade options- calls and puts, rather than buying shares, but my capital is limited, so stocks like Tesla with very expensive options might not be ideal for me. I would appreciate any suggestions of either stocks that you recommend, or resources where I can find what I'm looking for. Thanks!

Hi,
I am not an expert in trading options but it sounds a little weird to me to "day trade" options. Basically you want to buy/sell the option within the same day? usually the options traders make some strategy that depends a lot on the time decay. Options strategies are usually based on selling options that decay over time.
Options traders are never 100% long an option, they will tell you that this makes no sense (I don't agree on that, but I just tell you the perspective of an option trader). They will buy an option and sell one against it, the core of the strategy is that time decay favors of the options trader.
If you need the stock to be volatile because you want to make directional bet, then the options are not the right instrument.

However if you want to do that, you can trade the options on SPY or NQQ that are options on the ETF of the big indexes.
But in that case why don't you just trade the ETF?

Sorry if I miss something of your question I am not an expert option traders, I trade futures. However if you are a beginner just let us know what you would like to do in details and we will share our point of view. Give more details about your plan and there will be people in the forum that can give you advice.
regards

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