Are 52 week highs or lows good to trade puts or calls?

Question

What other criteria do you use? Parabolic moves up....? What volumes do you like to trade options? What is your normal time frame to make sure you don't get slaughtered?

Answer 1

For my self minimum volume is 1 million. I only buy 10% or less  of open interest. If I am planning to take profit in 3 days minimum time frame is 21 days. I would not recommend option that have time frame less then 7 days.

Answer 2

<<<Are 52 week highs or lows good to trade puts or calls?>>>

They are no better nor any worse than any other price.

<<<What other criteria do you use?>>>

Implied volatility (always).

News (frequently)

<<<Parabolic moves up....?>>>

That is one criterion I have never used.

<<<What volumes do you like to trade options?>>>

The most contracts I have had in one leg of a spread is 150. Usually it is closer to 10 or 20 contracts.

<<<What is your normal time frame to make sure you don't get slaughtered?>>>

The time frame I choose normally depends upon the type of spread, the implied volatility, any volatility skew that exists and scheduled events. I try to pick a strategy based on the underlying instead of picking a strategy and trying to force the underlying into the strategy.

Answer 3

A 52-week high or low doesn't predict future stock movements. You need to look at each company individually and assess all the available information.

When buying calls, buy ITM calls 6-9 months out.

Otherwise, it's hard to generalize about the time frame.