Swing trade daily chart using Options

I reckon there are not many active option traders around here. I think I understand options just a bit better than average so if you could elaborate the challenges you're facing, I could try to help. At this point, I don't understand what is the problem you're facing.

Thanks Abir! My question is how to adapt the styple of Stop/Limit style trading of E-mini to SPX option trading. 

For a trending market, Al mentioned placing a stop order above the signal bar, how would you do that for options? Place a conditional order (if the underlying stock price exceed this value, buy market)?

Are there brokers who permit this conditional triggering unless you can program the order type into the system? If you can program this order type into the system, then yes! That is exactly what you should be doing. However, if the conditional order triggering is embedded in the broker's system then it is highly likely that the order triggering mechanism isn't flawless. What usually happens in case of options is that your order might get filled with a little delay resulting in you getting filled much higher than you should have if you had placed a manual order.

In any case, I think since options are decaying instruments, if you enter with stop orders with just a little bit of margin(entry above bar corresponding to the underlying) - it should mostly work. However, if you want to be a bit more safe, you can make the delta computation and keep adjusting(not constantly, just at a relevant interval is fine) your entry in the option corresponding to the underlying until you get filled or the entry becomes irrelevant.

I think I remember Al mentioning that PA works just as well in options too since institutions are trading options as well, so you should be fine if you get an entry in the option as long as the underlying is not telling you something significantly different from what you're getting from the option.

Personally, I enter manually when the underlying triggers the stop entry as my position size is pretty low. If I have to enter into a spread, I enter my main position first and see how the market is reacting and then enter the spread which usually gives me just a bit more edge if I had entered into the position simultaneously since stop orders are momentum entries and the market moves at least a bit more in your direction before pulling back.

Hope that was helpful, if not - do feel free to ask more questions. I'd be happy to try and help.

Thanks Abir!

Another question I have is can I use Al's price action to trade other timeframe? Like hourly chart or daily chart?

Hi Bruce,

You use price action the same way on any timeframe or instrument. Just adjust your risk to suit.

On options trading, see the 2 videos in Bonus Videos section. Al suggests you do not use stops for options and monitor price action on the underlying stock chart.