Review of "A Very Effective Options Strategy Using the RSI Indicator"

Link:  https://www.youtube.com/watch?v=RbWA61gJSa4

The video describes the use of RSI as an indicator and uses trading DIA as an example.

The general idea is that prices will drop when RSI hits 70 and will rise when RSI hits 30 (generally) within 2 weeks.

The trade setup is

  • Credit spread
    • Direction depends on whether RSI is bearish or bullish
  • 2 week DTE
  • Strike of short position at a 17% delta (one standard deviation out)
  • Strike of long position at the next price
ROI:  100% of capital in a year, 100% win rate

Commentary
  • The video indicates that there were 10 time where the RSI indicated overbought or oversold.  Is this typical?
  • The video suggests that the distance to ATM in gives the indicator "room" to be incorrect.
  • Question:  does delta take into account RSI?

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