4 Considerations When Designing a System
Note: This is an excerpt from a recent guest post on the Options Trading IQ blog. Gavin focuses more on trading non-directional spreads than I do and has a ton of good information on his blog. Make sure to check out his Trader Interviews while you’re there.
When I first started trading options, I was afraid to trade directionally. I heard that most options expire worthless and I definitely didn’t think I could consistently be one of the lucky people holding options with value at expiration. As a result, I spent my time learning to trade non-directional spreads like Iron Condors and Butterflys because they focused on selling options that expire worthless.
Around the same time, I began experimenting with Trend Following trading systems. I really liked that I could backtest a system and prove to myself that the rules were valid. Additionally, I didn’t need to attempt to predict what the market would do and I could just follow signals. After trading Trend Following systems for a while, I realized that there might be some benefits to combining an options selling strategy with Trend Following. Because I was already used to trading Iron Condors, I focused on out of the money credit spreads.
Check out the full post, including the 4 considerations at Options Trading IQ . . .