Puka here with more insights I’ve learned about trading that 4 of you will probably read.
Outside of everyone going bat shit bananas over gamma squeezes our favorite thing to trade is SPY. I bet if you searched TF the most common word would be SPY closely followed by ESSC or something dirty.
Here are a few things I’ve learned from trading SPY.
- Find support and resistance.
This is blatantly obvious because JB has mentioned it many times, but I thought I’d throw it in here anyway. It’s pretty straightforward buy calls when it bounces off support buy puts when it bounces off resistance. But what happens if you buy and it breaks support or blows through resistance? On to the next point.
- Buying the options
Don’t go fucking crazy buying a shit load of options. Ease in to the position. Start with a small amount. This will come in handy if you need to average down. Also don’t go way OTM unless you’re long on it, in which case do whatever the fuck you want this is from an intraday perspective. Buy options in the money or close to it. Sure spy can have a random $8 swing but the odds are against you. Don’t try to get rich quick thinking spy is going to have a massive run. Small gains add up.
- Averaging down
Let’s say you bought calls at support and the floor gets pulled and you’re in free fall getting fucked. There’s no need to panic yet. You need to find the support prior to the one that just opened the gates of hell on you. If the discrepancy isn’t something ridiculous, start averaging down. Don’t start immediately wait until you see some stabilization. Then average down your cb. Hopefully you’ll find a good spot because as we’ve seen SPY can yoyo between red and green like it’s fucking nothing. Apply this inversely for puts. Just remember to average down smartly. Know your supports and resistances, and if you’ve had to average down and you see green get the fuck out. But also know when to throw in the towel. Obviously if it’s continually breaking supports or resistances it’s just not your day.
- Prepping for the trade
I’ve found it helpful to mark supports and resistances the day before. This way you’re prepared and know where buying points are. I usually draw off the 1min, 5min, and the 30min. This is just me personally I’m sure there’s better ways to do this it’s just what I do.
- This part is risky I don’t recommend it I’ve just found if you’re fast enough you can make money
So lately I’ve been trading SPY at open. This is usually the most volatile time. If SPY starts drilling at open, from what I’ve observed, there’s usually a green pop. It doesn’t last long unless there’s a reversal to an uptrend. If you try to time the bottom and buy calls (you may have to average down) and catch a large green candle, sell immediately it’s not a guaranteed reversal. The same thing goes with puts if it’s running hard at open there’s a chance of a large red candle. Again you have to be very quick and this is not a guaranteed strategy this is just something I have observed. I do not recommend this if you’re inexperienced. It’s generally not a good idea to be honest but hey I pinged everyone at 1am with an awesome video so I like to roll the dice and make questionable decisions.
All in all trading SPY can be profitable on a daily basis if you play it correctly. Before you trade SPY religiously you need to be aware of the wash sale rule. Read thoroughly about it because if you fuck up you could be royally porked come tax season. READ UP ON THE WASH SALE RULE.
These are just my personal thoughts on day trading SPY. I’m not an expert. If I’m wrong on any of this or you disagree that’s fine feel free to call me out I don’t mind.
Have a good night and dream of Linkin Park and Jay-Z serenading you.