/biz/ - Business & Finance

>>30131989
mean reversion.
use RSI or disparity index to see when something is oversold or overbought.
play the reverse.
start small, buying and selling just 1 2dte SPY option at a time til you get the feel for it and learn more.
took me about 6 months of trading on 4 figures til my instincts could be trusted enough to move up to 5.
pic related in a slight taste of what i'm talking about. basically i watch disparity index and when it hits a line that it's reversed off of historically i buy. if it keeps dumping i buy more at the next line and so on. then i ride the bounce back to breakeven or profits, but usually profits.
there are some black swan days where there is no bounce or selloff, where it just goes in one direction. but those days you should be able to see coming (super oversold/bought on the disparity index 4h and daily interval) and either avoid or figure a way to ride the trend.
but yeah, the one constant is mean reversion.
the market NEVER goes just up and NEVER goes just down. so the question is, when does it reverse, and how do you leverage that reversal through options such that using just 10% of your account playing a .3% change on SPY yields a 4-7% return against your whole account.

pic related is a very very very basic gist. there's a lot of finesse which comes with practice.

>>30072991
mean reversion is the only constant.
use indicators to see when something has reversed historically and play that reversal, averaging down if it keeps going against you such that you can exit on the first bounce if you're nervous.
there's a lot more to it and it takes a bunch of practice and experience but that's the gist.