Can anyone share their option trading strategies?

---Can anyone share their option trading strategies?

Instead of picking a strategy and trying to find a situation to fit it, I prefer to find a situation and try to find a strategy to fit it.

---How do you select a candidate for the underlying equity?

Something has to draw my attention to the underlying stock. Usually it is a news story or a research report, but it can be just about any "top ten" type of list, such as a list of the stocks with highest implied volatility.

I look at the company and its fundamentals. If I don't understand what they do, what drives their profits, if the company is too highly leveraged, or if I don't understand recent stock price changes, I look elsewhere.

I then look at the option chains to see if I can find an attractive trade based on my expectations.

---Do you trade options based on events like splits or earnings reports?

Sometimes.

---What patterns do you use to make profit?

I don't use any formal technical analysis. I do try to avoid fighting the tape.

---Do you use volatility to determine when to enter and exit?

Usually, but not always.

---What tools do you use?

The tool I have used most is www.ivolatility.com.

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Some sample trades I have made:

In Sept, 2007, the "housing crisis" was just beginning. HOV, a housing company, reacted quickly. Given the bad times I thought to stock would fall, but not too far too quickly. I opened the following put ratio spread:

Bought 50 HOV Feb $7.50 puts @ $1.45

Sold 150 HOV Feb $5.00 puts @ $0.65

Total Credit = $2,500

Max Profit Possible = $15,000

Max Loss Possible = $35,000

Break even point at expiration = stock at $3.50

Since the stock was over $7.50 at expiration all the options expired worthless, leaving me a profit of $2,500.

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Here is an example of a spread with several adjustments.

(When I tried to post the trade and the adjustments I exceeded the max message size, so I will post links instead.)

http://messages.yahoo.com/Business_%26_Finance/Inv...

http://messages.yahoo.com/Business_%26_Finance/Inv...

http://messages.yahoo.com/Business_%26_Finance/Inv...

http://messages.yahoo.com/Business_%26_Finance/Inv...

http://messages.yahoo.com/Business_%26_Finance/Inv...

http://messages.yahoo.com/Business_%26_Finance/Inv...

http://messages.yahoo.com/Business_%26_Finance/Inv...

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Here is an example of a trade based on event timing and volatility.

A stock with a symbol CLPA was trading at about $33 per share. I sold naked puts (the equivalent of covered calls) on the stock eight months out with at $35 strike for $17.50 each.

CLPA had just submitted a new "cancer cure" drug to the FDA for approval. I decided to enter the trade because it was unlikely that the FDA would rule on the drug for months, I did not believe that IV could remain that high, and I did not know of any other action likely to have a major impact on the stock price.

About six months later, the stock was around $31 and I covered the short puts for $8.75 each.

I considered the following:

1 - When I established the position, I was risking $17.50 for a possible profit of $17.50. Now that I could close the position for half that amount I was effectively risking $26.25 for a possible profit of $8.75.

2 - I established the position because I did not believe the FDA would rule on the case soon. That was no longer true.

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i have attended a lot of seminars, read counless books on forex trading and it all cost me thousands of dollars. the worst thing was i blew up my first account. after that i opened another account and the same thing happened again. i started to wonder why i couldn,t make any money in forex trading. at first i thought i knew everything about trading. finally i found that the main problem i have was i did not have the right mental in trading. as we know that psychology has great impact on our trading result. apart from psychology issue, there is another problem that we have to address. they are money management, market analysis, and entry/exit rules. to me money management is important in trading. i opened another account and start to trade profitably after i learnt from my past mistake. i don't trade emotionally anymore.

if you are serious about trading you need to address your weakness and try to fix it. no forex guru can make you Professional trader unless you want to learn from your mistake.

You are asking a complicated question that has many different answers. It's like asking, what's the best defense in football? The answer is: It depends. You have to try to figure out what works for you. Experience is a cruel teacher, but it's frequently the best teacher.

a very easy strategy is selling iron condors if the underlying stays between the goal posts ie the strikes you make money you can move the goal posts