Is this a Bullish or a Bearish strategy?
The 1 Minute strategy is a bullish option strategy as it is focused on buying calls options.
Is this a beginner or an advanced option strategy?
The 1 Minute Strategy is an advanced option strategy as it takes into consideration the use of multiple options for additional layers of protection. Therefore, it is a complex strategy meant for experienced traders.
In what situation will I use this strategy?
This strategy is typically used when an investor is expecting a large move in the underlying security within a short timeframe. To take advantage of the expected increase in share price but also protect against losses, they would use the 1 Minute strategy. The strategy involves buying a call option and also selling two lower strike call options to offset the cost of the long option. This is sometimes known as a “short strangle”.
How is this strategy affected by the greeks?
This strategy is affected by the greeks in a few ways. Primarily Delta, Gamma and Theta. Delta measures the sensitivity of the option’s price with respect to movements in the underlying security. Gamma measures the rate of change of delta per one-point move in the underlying security. Theta indicates how the option’s time value decays over time.
In the 1 Minute Strategy, Delta and Gamma will generally be slightly positive, as the long call option will usually offset the impact of the two short puts. Theta will generally be slightlynegative as the strategy seller will have to compensate for the flip side of the option vega.
How do I know when to exit this strategy?
The 1 Minute Strategy should be exited when the price of the underlying security moves beyond the break-even point. This break-even point will be calculated based on the delta, gamma, and theta of the options. If the underlying security rises past the break-even point, then the strategy should be exited as soon as possible.
Give me an example with calculations of this strategy
For example, if an investor buys a call option with a strike price of $100 with an expiry of 2 weeks, they can offset the cost of the option by selling two put options with a strike price of $97 and $95. Assuming the delta and gamma of the options is 0.3 and 0.05 respectively, the break-even point can be determined.
The cost of the long call option is $2000 and the proceeds from selling the two short puts is $1400. This gives the investor a net debit of $600. The investor will break even when the price of the underlying security is $99.95. ($99.95 – $100 + $600 / 0.3).
MarketXLS and how it can help
MarketXLS is a great tool for traders who want to implement the 1 Minute strategy quickly and efficiently. MarketXLS provides real-time data for options across different expiries and strike prices. This allows traders to identify the best options for their 1 Minute strategy and accurately price the options. MarketXLS also provides real-time analytics of the option Greeks, helping traders more accurately assess the potential gains and losses from the strategy.
Here are some templates that you can use to create your own models
Search for all Templates here: https://marketxls.com/templates/
