Gone are the days of waking up in sweat and tears from the IV crush of buying FDs on earnings.
Now we can just buy $FD onchain.
No expirations, no greeks, no pain.
LONG LIVE $FD.
I know some of you out there are trading FDs profitably week to week... I'm just wondering what strategies you use to do this?
For example, if I want to trade SPY: would I want to buy an option expiring in 5 days, or do you usually go with 1-day or 0-day options? Do you buy ATM or slightly OTM? What % gain do you look to cash out some (or all) of your contracts?
I'm thinking of trading some FDs on SPY using the Kelly Criterion for bankroll management - estimating that the probability of making money is ~50% and the payoff could be at least 2-to-1 will let me manage my position size for each trade to theoretically be profitable over time.
Tell me why this will or won't work? And what strategies you use to be profitable.