Trying to perfect my SPY day trading options strategy and wanted to share it with you. My strategy strictly utilizes long calls and puts. My plan is always take profits at 10-20% gains unless I've got a clear runner past my 20% then ill let it ride till about 30-40% max. I strictly use monthly calls if i will hold over night. I only use intraday 2 week out calls and puts and i never hold it over night. If i caught a bad break on a move i will sell around 10-20% loss if there is no way for sure its going to recover. I do not let fear or greed get me.
I heavily chart the TA more specifically the night before i look for channels, and various support and resistance lines before market opens. Once market opens i follow the candles and let it show me if it can or can not hold support. I also rely on the EMAs heavily. I use the 5, 10, 15 and 20 on the 30 minutes chart. I believe the 30 minute chart gives a better over all sentiment and limits fake outs. In general the 5 EMA is heavily used to reveal support or resistance. Once it breaks either way i will play the 10 EMA or 15 EMA as the next point i look to break or be rejected at.
So for example- Say SPYs 5 EMA (30 min) is below the 10 EMA and has been acting as resistance. If the 5 EMA is 461.4 and it breaks the 5 EMA i know the 10 EMA is the next resistance at 461.7. When i see the move i will pick up a 2 week out 462C. If i am at my 10-20% gain and i dont forsee it breaking to the 15 EMA i lock profit. If it breaks 15 EMA i will let it ride and set stop loss for 10 ema profit. I do vice versa for puts.
Immediately after the call if i see a rejection at the 15 EMA of 462.3 i will buy a 2 week out 462P and repeat process. Either lock profit at 10 EMA or hold till 5 EMA. I pretty much repeat this process whenever i see the the 5 EMA support or resistance broken. I would rather make ten 10-15% gain trades than one or two 50% gains. Cause that 50% gain just as easily turns into -50%.
