Yachi - Thank you for providing that information. I took a quick look at Tilson's May 4, 2017 presentation. A whole lot of information there, and it will take me substantially longer than a glance to fully evaluate it all. But thank you for that lead.

Your system appears to be working very well for you, but I'm not sure I'd be able to implement it as well as, or with as much confidence as you.

It seems to me that most people that trade in options look at it in one of two ways: (1) they attempt to guess the actual stock's value by the expiration of the option, or (2) they aren't able to guess the stock's value by the expiration, but instead attempt to guess the direction the stock will move, and roll the options forward whenever sufficient profit is made.

If you take the first view, it works fairly well if you can have a predefined stock price at a predefined future date. At that point, you can fairly accurately calculate risk, projected return, and narrow it down to the option you think will work best. With tickers every 5 or 10 points, that's somewhat of a narrow target to hit two years out. So the way I view it, that takes some fairly serious projections to be able to hit those targets. Plus, if you're any form of a "random walk" believer, there's no way you can actually predict the price.

If you take the second view, you believe that the stock will move in a certain direction. So you can still be a "random walk" believer, if you believe the market on the whole will increase ~7+% per year. You just believe over the next two years the market will increase, without being able to predict at what price point and at what date. If that's the case, I don't see much discussion on calculations and estimations on profitability between two options. Instead, it's more of a shot in the dark, going further ITM the more risk adverse you are and more OTM the more risk seeking you are. If you're planning on rolling the options forward once you've made sufficient profit (or whenever you've taken so much of a loss), you'll never be holding the option to the expiration so calculation of "time value" within the option seems more like a misnomer. If that's true, the only value difference between a Call that is 30% ITM and 20% ITM (with equal expiration dates) has to do with the investor's psychological value they associate with it, and not much to do with the price of the underlying option itself.

Or am I totally off base here?