Traders either love or hate Elliot Waves. Some traders regard this as an elite trading indicator, while some despise it and never employ the vast capabilities. I have been using Elliot waves for quite some time and with decent results and have seen some discussions on Elliott wave forums. It’s not an infrequent comment I see when some state “I like Elliott Wave but it’s like something isn’t quite right.” Some people just adhere to strict rules and dont invest time to fully understand its capabilities
Some Elliotticians swear by Robert Prechter and some find his wave counts change too much and find themselves frustrated.
Through hours of research and usage Ian Copsey has unearthed a fundamental error in the structural development of price behavior as defined by the Elliott Wave Principle. From his early findings that trending waves ended prematurely and the vagueness of the wave relationships he began to realize that trending waves do not develop in the manner which R.N. Elliott described in his findings.In Harmonic Elliott Wave he reveals the methodology, the common ratios that lin… More >>
Here is a video to watch introducing Harmonic Elliot wave.
I have been trading a delta neutral options only position on a particular stock that is quite volatile for the past several months and have pretty decent results. The problem I am running into is figuring out a consistent point at which to balance the stock.
I read that one convention is to balance the trade when the delta exceeds an absolute value of 1 (or 100 deltas). Given the volatility of this stock I have been using a value of 1. 5. A typical day returns a profit of . 4% (excluding outliers which are biased significantly upwards). However, some days I will turn a profit that is closer to 20%.
I also read that it is sometimes normal to wait for a 20% change in the underlying asset which seems somewhat liberal to me.
Just wanted to know if anyone knew of any conventions or has used a method themselves that has worked. I am not particularly unhappy with my strategy but sometimes I feel that it is too conservative; yes, it limits losses, gets small gains, and keeps me in the game for big moves, but any protracted (really anything greater than a 1 day move) occurs for me at delta neutral rather than a trend biased position.
I should note that typically I do not like to hold stocks less than 4 weeks out of expiration but given the wild swings in this stock I have not had any problems waiting until 2 weeks before expiration.
Any ideas would be greatly appreciated!!
Thanks and good trading.
I should clarify a few things:
1) When I refer to the absolute value of the total delta exceeding 1 I am referring to the difference between the two deltas
2) I typically use ITM options; however, it is not always technically a straddle b/c I have not always been using the same strike prices for various reasons (e. g. easier adjustment back to neutral).