Next experiment

Busy all morning at the office and looks like today is mostly chop so did not miss much.

So I know the key to consistent returns is selling options but would like to be better at the directional trades to get an extra kick, home run every now and then and also to improve the timing of my option selling. The problem is most trend following systems tend to get in too late and out too late, especially on short time frames. I have pretty much looked at all of them over the years. Big trends, simpler, turtle trading, connors rsi system, whiz, alphashark, kirkland, persons, and several others. The alphashark tools have been helpful and have paid for themselves many times over but are mostly based on day trading although can be tweaked for longer time frames. Because of my schedule I am more of a weekly and swing trader.

I like @fibwizard charts but don’t have time to watch tick charts. So I have been watching several systems over the last few months and think I have discovered a hybrid that may work well for weekly trades. Basically use my alphashark market profile and dynamic swing trader indicators and combine them with kirklands p3 squeeze and a CCI 30 as the trigger confirmation. Looking at 6 months of data, seems to get the meat of most of the moves because you get into the trade earlier and out earlier than any of the other systems. Also fewer whipsaws than most of the other systems. I also like some of Raghee’s tools from simpler futures but have not figured out how to integrate them and she posts them for free (rare that simpler would give anything away). The GRAB candles are helpful and she somehow tweaked the darvas box to look like a pivot point but is based on real support and resistance, not just projected.

Anyway, no system is perfect but am restarting the /ES strangles with a directional bias when there is one. On a 5 and 15 min. have a fresh sell signal on the /ES so am selling one oct EOM 2570 call but watch the 1 and 4 hour for the weekly signals. Will then leg into the put once/if we get a drop. Between the strangle may buy or short 1 /es contract if there is a sustained move in either direction. I had some huge success with this before but got burned big on 8/24/15, not because it didn’t work, had too much size to properly hedge and optionsxpress locked my account.

My thought is to collect steady theta decay, but get the home run and hedge at the same time on the bigger moves. As you short or go long the future it hedges the options and creates a synthetic covered call or short with a put. Basically sell a delta 8 option each week (45DTE or close), then hedge when needed. I suppose if the delta of the short option hits 16-30, then add the directional component.

Will post as I trade it in real time and will share my charts. If anyone else has any thoughts or ideas on how to improve it, please let me know.

Current margin requirements are about 4k for selling a single strangle but then need to have 6k for the futures contract, so about 9-10k for each contract so as to not get into too much trouble.

Probably wont start until Thurs, when I can transfer some funds, current margin a little low.

Apologize for the long post, but I know you can help me find the flaws in the system and make it better.

Cheers, Chris