$SPX chart & some thoughts about intraday options trading

nice to know where we stand, always have your levels

i trade options on large & mega caps (sometimes mid caps if high reward opportunity there, like DWAC BROS, etc.)

I had some thoughts about trading options intraday & wanted to share them with anyone who's doing it or trying to

Some really basic & simple concepts changed my trading*, **my trading = options intraday trading (sometimes swinging)


FOCUS ON THE RISK!!!!: The most important, mismanaging risk leads to overtrading, revenge trading & not following your trading plan on top of losing money which just sucks. Almost everyone has this problem or a problem that stems from here, it is usually the inability to overcome this issue that leads to many blowing up, stopping trading or having them stuck in a cycle of changing strategies yet to realize its all about how they manage their risk. Simple is better, so to solve this lets think about it, if options can go to zero overnight then risk would be 100% right? It's not like you cut put your 50% stop loss and they will fill you if market closed, you can be up 300% on a strike, stock gaps down and that same strike opens up down 50%, did your trailing stop get hit? No lol, intraday you have more control, to me it depends how many positions you have on and how many trades you take, I wont have more than 3 positions open usually max 4 (1 has to be other direction, hedge or doesn't move in market direction) and take on average between 5-6 trades. If you take a lot of trades & can't manage them all at same time then you should have your stop be 40-50% of premium, if you can manage it actively then consider 20-35% stop loss of premium on contract/s. As to risk, risk what you can lose 3 times intraday before you say okay im calling it a day. Say you have a 70k account and are fine with losing 900 before calling it a day. 900/3 = 300 of risk per trade. That doesn't mean size is 300, risk is 300, so if you have a 40-50% stop loss then position size is 600-750 or with a 20-35% stop loss then position size is 860-1500. You now know what you're willing to risk, amazing, now lets find what we need to make to see if that trade is worth it, having risk defined makes us MORE selective & patient in our selection of trades & set ups. A common risk to reward ratio that is sought for options trading is 1:3, so if you're risking 900 for the day (300 three times) then 900*3 = 2,700 for the day should be the goal BUT THE MAIN GOAL IS TO FINISH GREEN AND FOLLOW OUR TRADING PLAN. So per trade our target should be 300%, to see if this possible we go to my next simple & basic concept that changed my trading.

Range: How many points does it move on average per day, week & month? How much have we moved or ranged today, this week, this month? Pick 2-4 names answer these 2 questions, open your google docs or sheets/excel and get lost finding this. It's very simple I don't think it needs much explanation but I will give simple exaple how you use this, say you know ROKU moves on average 7-10 points UP intraday after it breaks out of the first 15 min candle & takes out previous day high. Well you would take it long seeking 7-10 point reward, so if we know our risk from example above is 300, and say we manage it actively so we have a 25% stop, we take a 1,500 position & using range if we know 7-10 points and we have a 1:3 risk to reward ratio then say our target is 7, 2.3 pts would be out stop loss, 1:3 risk to reward = 2.3:7 for ROKU trade. You risk 2.3 pts to make 7pts. Simple, right? Since we risk 25% of premium on a 1:3 risk to reward ratio getting 75% return on premium would be our target BUT we're getting a 7-10 point move, it'll likely be more which is why can be a little more lazy with management of trades if we have multiple positions ( i really only like that on trend days). I trade ROKU twice last week, I got out between 80-100% for both and dont think i got the full 7% point move (check my twitter Its in my media)

Trading Plan: In most basic words, your bible. It guides you & is part of you. It may sound lame but let me know how your ability's to consistently monitor and mange your set ups & trades is going, anyone can get lucky in a bull market don't ever forget that. Luck is part of trading I admit that I am lucky it helps me stay humble and always look to improve my edge/s, sometimes the trade works because I followed my plan, sometimes the trade works because I didn't follow my plan and I got lucky or MAINLY the trade worked because I followed my plan & I was lucky. I look at trading as gambling with more potentials to give edge & a different arena to play, you don't gotta go to the casino lol, BUT unlike casion respect capital, LESS emotions (we still will have them but managinig risk HELPS ALOT). We want to be those guys who go play black jack & baccarat make the minimum possible (5-10k I think) without setting off any alarm or anything in casino because they are so calm and just plaing, then go home to come back to another casino or same casino next day. Good trading is boring, I wake up, make money or lose money, stop trading maybe after ~3hrs, go play with dog. I did a ~26% day like 4-6 weeks ago and didn't even celebrate, it should get to be normal. Trader Dante & Mark Cook on YouTube, type in their name & 'trading plan". Those 2 were the 2 most who influenced the construction & creation of my trading plan.

K.I.S.S: the post is about simple concepts that changed my trading, well keeping everything simple changed my trading. I will give an example, if cant move the range and not part of my trading plan I don't touch. If can move range but not part of trading plan I trade with half or less size to experiment IF I HAVE SET UPS, IF YOU DONT FOCUS ON THAT FIRST. If can move (has range) and part of trading plan I trade it. I don't use any indicators, on my charts all you see are candlesticks, volume bars (at the bottom) + what I draw on there which is either boxes or lines. Label the lines and boxes, know the weekly and monthly high, lows, close & opens. Market is auction use auction indications, what matter more RSI or closing price? if you say RSI it might be too late... lol jk im just joking but seriously


TLDR/Wrap Up:

Risk is number 1, know your risk to know your reward, 1:3 risk to reward ratio good for options.
The name/ticker needs to be able to move (has range) if not premium won't change, get good delta + good range = good amount of premium change aka percent return/money in your pocket
Have a trading plan, no trading plan no light guiding you, its like trading with no chart or level 2 or time & sales, better betting on red or black.
Keep trading as simple as you can the better YOU understand the better YOU do, it doesnt matter what the correlation vega and gamma have to do with each other if in your holding time trade intraday its never long enough to where it matters on your trade then WHO CARES!!!! unless it matters at a point, spend yout time & focus on things that matter to YOU & YOUR TRADING, time is money