Opinion for an option trading strategy…?
One strategy that I’ve thought about is:
1. Sell at the money.
2. "Use" the money from the sale and buy deep out the money.
It’s actually called "call back spread".
The idea is as follows:
When you sell at the money one contract and buy deep-otm say 10 contracts…then a slight move up will make big profit.
I see a few problems here though:
1. Implied volatility. It’s not secret that out the money options have higher IV. But is this really a problem here?
2. Optimum time to exercise. You should close all your positions before experition…and you will be tempted to hold them more and more.
3. Commissions. Commissions are a big problem here. I guess direct trading to cboe or trading via interactive brokers can offer better results.
Basically, if you calculate this strategy via black-scholes’s fair prices – the potential profits turn to be a shocker. Like…50% per month 
. But again…these are the problems mentioned above.
10x and happy new year.
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