🚨 Hey all! Thanks for supporting the channel! If you’d like to see a more in depth breakdown of our current trading systems, we put together a quick video here - skyviewtrading.co/479RWUm
So to be clear, contract assignment _never_ happens until expiration day? If a person sells a call and the stock price goes above the strike price _but then falls to below the strike price_ before the expiration date, then it doesn't get assigned and it's a profitable trade?
I have just completed watching these videos in Option trading for Beginners and all my doubts were cleared here. This was so beautifully explained and in such simple words. Thank you so much !!!!!
I was just thinking yesterday, this was the only missing piece in the excellent beginners guide you posted, and there you go uploading this gem. Thank you! I hope to learn from this and teach others as well, as a means of paying it forward.
I downloaded video 1-6 and just watch them over and over again while I drive for work lol... I've been teaching myself to master the option trading craft so I don't have to drive for work anymore.. needless to say, I've found your lessons to be priceless, thanks for the good work you do man 😎🤙
I’m so grateful and appreciative… thank you so much for these valuable courses in this channel in trading options!!! You make and explain it so easily without all the complex fluff others confuse you with.
A great analogy for selling puts and calls Is that you are basically playing the casinos part; assuming major risk per hand but with more favorable return rate overall, whereas buying puts or calls is like being the player; higher profit to be made on any given hand but with unfavorable odds.
@@skyviewtrading your very welcome. Will You be doing any more parts to the complete beginners guide ? The way you explain and illustrate on the videos is so good, I had no idea what options were until I watched your videos. And I re watch them for it all to sink into my mind. I would love more videos. Thanks 😃😃😃
Amazing clear and concise teaching I could've understood your videos in middle school. Goes to show when someone knows what they're talking about a toddler could get it.
I have watched parts 1&2 and a few other YT videos for beginners. This information was very clear and certainly a great addition to any other learning tools one has when beginning in options trading. My small investment group has one person who trades options and will have a spot on the agenda for each mtg for the others to learn how to trade options. I am very interested in learning this investment technique. Thanks for the work on your YT presentations
I barely comment on TH-cam but I really want to say I love your videos. You're the best at explaining things. Your voice is another plus as well. I have always been waiting for your new videos to come out! Thanks again
Thank you for the explanation! Options always boggled my mind and getting a full detailed walk-through with examples like this series really really made it more understandable for me
Halfway through this video to finish up this playlist. Wow, very informative and to the point. I began momentum and swing day trading about 6 years ago, started doing it full time starting 2022. I am really great at it and it's how I make most of my money and retired last year at 40 years old. Second best is swing trading. The issue I have found with my current strategies is Momentum (MOMO) -- I reach a max of entry size due to low float stocks being the most volatile and ideal for MOMO trading. Also, I trade can get away from you really quick, and meaning crazy risk with increased share size. (As with trading in general but more so with MOMO trading). Swing Trading - I am really good at it, but unless it's intraday, I have to make a few swings a week to offset the chance that a stock will "leg up/down (offset)" out of it's technical/pattern trading ranges if I am not paying attention or have SL set properly. This will be an excellent way to hedge against my swing trades and make it so I can hold positions overnight longer or intra-week as to be able to set alerts and get better sleep at night if I decide to hold longer, lol. Plus, being able to day trade options is def something I am going to start practicing with. Again, thanks a lot. Will be sending folks in my group over to channel for review, as well. Take care!
At 10:34 you made this trade. If you could get this trade again and again, your win rate would be 84% with 1:0.02 risk/reward ratio. risk=1513 reward=35. In theory, this gives an average of -50% return after 100 trades with 5% account betting for each trade, so its a losing strategy. You are not gonna get a delta high enough for the corresponding probability, otherwise we would be all rich. Please correct me if i am wrong.
Hello! It's not exactly that black and white. The risk is technically "undefined" here. That $1,513 is the buying power requirement, not the max risk of the trade. When you backtest how often a naked strategy loses the amount of the buying power requirement it is EXTREMELY small. Less than 1% of the time. So we're not going to lose $1,513 the other 16% of the time. It would be more like 1% of the time or less. Also, we could have a "loss threshold" where we cut the loss before then. Lastly, if we closed the winner before expiration it would increase the 84% probability of profit that we have on entry here. So to conclude, it's not as black and white as you made it out to be and risk management measures in place change everything even more!
Great information. What happens in your first example, if the stock goes above the strike price before the expiration date. and then falls below the strike price before the expiration date? Does this trigger any event or how should a seller of this option respond?
You guys are doing are great job with your videos. Very nice. A few questions for you: How can I, as a beginner / intermediate options trader, track my trades. I have been using a basic spreadsheet that I kludge up, but I see that there are a bunch of more capable and more detailed sheets out there. What do you recommend? What are the important key numbers to track if doing beginner type strategies (covered calls, protective puts, possibly some cash-secured puts, simple long calls, ...). Using TOS. Would like to have charts, graphs, bars, surfaces of the different key values. Risk profile? Win ratios? P/L amounts? per trade, per account, per time period,... Your advice is appreciated.
Hey, thanks for your kind words! Different traders track different things. Also, many traders track less and less as time goes on and they become more comfortable with their approach. Everything they need can be found from their Trade History at that point. Early on I personally tracked everything and anything. These days I track very little -- just a simple equity curve of my weekly P/L vs SPY (the S&P 500) benchmark. I encourage you to track everything you can early on! Over time you will find your personal preferences. I hope that helps!
Bless you sir! Thank you for supplying me with this knowledge. I’ve watched several other videos on this but your videos have definitely taken my understanding to new heights! Hats 🎩 off to you sir for having a great teaching style! 😁😁😁
Hey! You do not need to own stock to sell options on stocks. That's the beauty of options! Trading them requires less capital than owning shares of stock. Hopefully that makes sense!
I'm willing to buy a stock at $17; current price is $20. Based on your lesson, I "sell a put" for $17? If the price never gets to $17, I at least earn the premium? If the price reaches $17, I'll just buy the stock?
Thankyou for this video and the other 5 very helpful and the way you teach is amazing. What would you say is the most profitable/safest options trading method? Would it be the iron condor?
Thanks so much for the kind words! Iron Condors are a great place to start, and exactly how most of us get started! With time it seems like most advanced traders tend to transition over to naked premium strategies. The naked premium version of Iron Condors would be Strangles. We tend to trade a lot of strangles. Hopefully that makes sense!
For the short put, if you didn't buy back the put, you would be assigned 100 shares at $20, is that it? Or is there some other money lost on the put, such as the cost to sell it vs cost to buy it(even though we didn't buy it back)
Hey! If you sold the 20 strike put and didn't buy it back you'd be assigned 100 shares of stock at $20 per share, assuming the stock's price is below $20/share at expiration. No other money is lost, in fact we have a break-even price below $20/share because we collected a credit on entry. Let's say that credit was $0.80. If we sold the 20 strike put for an 80 cent credit our break-even would be $19.20. If the stock is at $18/share we would have lost $1.20 on the short put, and now own 100 shares of stock at $20/share. Hopefully that makes sense!
Great! Another quick question if you don't mind. When you bought to close on CDC before the exp date, you don't have to buy 100 shares if the company? It's possible to always do this, buy to close before exp date and not have to buy shares?
Wow thanks for the 6 videos on options trades. I’m going to be putting this into effect to get that P.O.P! I’m also going to follow your website and take the courses. Question, I’m sure you guys don’t give advice like this … but what do you think of Long Call Options at strike price $220 this coming week for Salesforce before earnings. The whispers are an earnings beat, the implied volatility is high. I think it’s very likely it gets to $220 before the end of the week.
We're glad to hear it helped! As for long calls on Salesforce -- we never really have directional opinions. We tend to keep a somewhat neutral portfolio. We're also option sellers, so we tend to shy away from buying option premium on entry. Lastly, we tend to stay away from "earnings trades." They can be a bit of a gamble. Hopefully that helps!
First off, great videos! I am confused about one thing though. @17:15 you say that since the "delta is positive we are benefiting from the stock going higher." On the following day GDX stock went down but the delta is still positive. Shouldn't it be negative since it we are now NOT benefiting from the stock going down? Oh, and not just is Delta positive but it's even greater (37.57 on day 9 and 26.61 on day 10). Thank you.
Hello! Good question. I think the confusion is that we were looking at two different tickers. The first one was GDX, where we had a positive delta. That benefits from upward movement in the price of GDX. The second one was CAT, where we had a negative delta. That benefits from downward movement in the price of CAT. Hopefully that makes sense!
hey mate, great video. quick question with GDX one thing I don't understand coz U sold the short put, couldn't the person who bought it close the short put in the money? like I don't get why they didn't ? was that just luck or am I missing something?
Hello, thanks for the kind words! There are 2 potential reasons. One, the trader who bought the put might want to hold it for more potential profits. Two, there is no guarantee that trader is up on the trade just because the strike is ITM. The break-even price of the trade is a little further away than the strike price is. Hope that makes sense!
One thing people need to realize is when sell calls. As long as your strike price is above your cost basis your, "loss" is actually "potential loss" because you are actually making profit based on selling above your cost basis... This is why the wheel strategy is a thing.
Hello! Yes, I think what you are referring to is an "unrealized loss." The loss is technically just a short term loss so long as the stock trades below the call strike. As expiration approaches that short term loss will grow smaller and eventually turn into a winner thanks to time decay. Thanks for the comment!
Hey! That $9,000 would be required to purchase 100 shares of stock. The beauty about the option market is that options represent 100 shares of stock but require a fraction of the capital required when purchasing 100 shares of stock if we just want to trade them. Hopefully that makes sense!
What about the situation when I write a Put Option (Short Put) and the share price fluctuates and reaches the in-the-money zone in the middle of its existence? The option owner will not wait and exercise the option. And I, as a listing agent, will have to buy a stocks at a disadvantageous price. Or will he rather sell option on market and nothing of it affect me? Can you say something about this situation? Thank you
Hello! You don't get assigned immediately when an option you sell goes In The Money, but the deeper ITM it becomes and/or the shorter the expiration date is the more likely it is you get assigned. Short puts are assigned long shares of stock. The long shares of stock replace the short put. There will be 100 shares assigned for each short put. Hopefully that makes sense!
If you bought the trade at .35 and it expired, how do you profit off of that? You bought for $35 and sold for $35. I'm very new so if this can get cleared up that would be great
Hey! In this video we are talking about SELLING options on entry. When we SELL an option we want it to expire worthless. The goal is to sell high and buy it lower. The difference is our profit. Hopefully that makes sense!
@@Adrift_-Sold the option for $0.35 to enter the trade. The option expired worthless $0.00. They made the $35 they sold the option for (($0.35 - $0.00)*100). Watch the video 24:24 mark.
Do we have to wait to close the sell put or sell call option until the expiration date, to take profits, or can we do it at any time? In your example, when you saw the GDX stock moving in nonfavorabke direction, you could have closed that sell put position while still in profit, isn't it?
Hey! We can close an option at any time before expiration. However, if we open an option trade and the ticker goes in a non-favorable direction it is very likely we will show some short term losses, where we will need to wait for Time Decay to turn the trade profitable. Hopefully that makes sense!
Hello! No it doesn't work like that. When we buy or sell options we're not actually interacting with another trader. We are interacting with a Market Maker. It's their job to facilitate our orders. So they take the other side of whatever buy or sell we want to make and that's considered their inventory. Then they dish it out to other traders as order flow comes in. They also hedge themselves in the process. So even if an option you sold theoretically gets bought by another trader, how that trader manages the option he bought has no affect on the option you sold. Hopefully that makes sense!
What about LEAPS? If you sell a LEAP after they hit their strike pice and before the expiration date, could your profit gains potentially be in the 200%, 400% and 1,000% returns?
We don't trade a lot of LEAPS, mostly because they are slow moving and require you to have a strong directional opinion. Of course gains could be large, but that is only if you pick the right stock that goes up a lot. The larger the percentage gain the lower the probability it is achieved. Hopefully that makes sense!
Love your videos but can you really make any money with this strategy if your max profit is your entry price on short calls? You're not really gaining capital if you only make back the money that you spent on the trade...unless I'm missing something
Hey, and thanks for the kind words! Yeah I think what you are missing is that our profit is the difference between the Trade Price we sold it for and the Mark Price we close it at. So if we sold a strangle for a $2 credit and we buy it back for $0.50, we made $1.50 on the strangle, which is $150 per contract. Hopefully that makes sense!
Hey :-) thank you so much for this! there is a way to find stocks that doesn't requires large amount of securities in the account? i'm on intractive and find it very hard to locate stocks for put\call selling with requirement of less then 10K or so securities for profit of less than 200-300$ even for 40 days and more. am i doing something wrong or intractive have hard policy?
Hello! With 1 contract most tickers in the $50-$150 range should only require about $1,000 in buying power requirements (give or take). The $10k you mentioned sounds like way too much, and I assume you either have 10 contracts in the trade or you are not approved to trade naked premium. Reach out to your broker's support team and see if there's another approval level you need to get the margin relief for those naked premium trades. Hopefully that makes sense!
Hello! Yes, technically you get "paid a premium" on entry. However, that isn't ours immediately. In order to keep that premium collected we need to buy back the options for cheaper than what we sold them for.
Hello! It all depends on what you want to accomplish exactly. We have a specific set of mechanics for our members, but the goal is to learn a little bit about how the option market works before implementing an actual trading strategy. Hope that helps!
Thanks, but I think we need video number 7 in this playlist to explain - 1. Why are seller selling CALL options with strike rates way below the trading price and has a 90% of staying IN-THE-MONEY? Is there a strategy to make money in such case? 2. Similarly is there a way to make money with buying options OUT-THE-MONEY? Like you said it has 400% profit margin in the example, but since its OTM, it will be worthless eventually, but then why are people even buying it? 3. What happens when the price goes above the max paid by the seller. Lets consider, instead of INFINITY its a million dollar in profit for the CALL buyer, who pays that?
Hey, great questions! I'll answer them a bit below.. 1. Everything has a POSSIIBLITY to make money. But, not everything makes money if you do it robotically. Selling a call that has a 90% chance of staying ITM is basically like selling -90 shares of stock. The P/L of that short call acts similar to -90 shares of stock basically. Just like buying a call that has a 90% chance of expiring ITM would act as +90 shares of long stock. Those very deep ITM options act similar to shares of stock, but buying or selling that call option requires less capital than buying or selling 90 shares of stock. 2. You can make money buying OTM options only if you get a HUGE MOVE in your direction. So, maybe you buy a call option in NVDA and NVDA stock goes up 50% in a 2 weeks. You would make a lot of money on a 2 week call option like that. However, most stocks don't go up that much that fast, and that's why most of them expire worthless. 3. You lose the difference between what you sold the call for and what it's trading at during that time. Let's make the math easier than the stock going to $1 million with the example below... Let's say you sold the 100 strike call for a $5 credit. Your break-even on this trade is 100 + $5 = $105/share. Anything above $105/share at expiration means you lose money on the option trade. Let's say the stock is trading for $175/share at expiration. Your break-even was $105/share. So $175 - $105 = $70. You would be down $70 on the option trade. Meaning, you sold the call for $5 and now it is trading for $75, give you a net loss of $70 on the option trade. A $70 loss on the option trade would be a $700 loss per option contract you sold. If you sold 2 calls for example you would be down $1,400. Hopefully that helps clarify some concepts!
I suppose this will work well when there is little movement on the market, but there is much higher risk if market starts moving in the direction you didn’t anticipate. Also, high margin requirement (which can change every day for your position!) makes this very difficult for beginners with low capital to profit with.
Hello! That's a good thought. But the beautiful thing about options and how they are priced is that the Implied Move tends to overstate the Actual Moves about 2/3 of the time. So even when times are very volatile, that volatility is priced into the options, and the Implied Move still overstates the actual move most of the time.
Hello! That is correct. For the covered call strategy specifically, it involves one short call for every 100 long shares of stock you own. If you owned 300 shares of stock, you would sell 3 calls against those 300 shares. Hopefully that makes sense!
@@skyviewtrading yah to be able to write 1 short call(sell a call) u need 100 shares. So I cant sell call without owning those 100 shares. So u need to have 100 shares of a stock to sell a call?
Hello! I'm a bit confused on your question. Could you point to a minute mark in the video where your question comes from that might help me understand where your confusion is? Thanks!
@Sky View Trading I wish I could. Lol I'm sure you are explaining it fine. I'm just confused as if I was to "buy a call". What do I do to sell that? Do I "sell a call" to sell the call I just bought? Or is "selling a call" different then selling a call I just bought? I use tos platform BTW.
selling a call option is not a loss in my view. I think of a loss as losing money. The only loss in selling a call option is caping the max profit you can make right? So if the strike price is $200 and I bought the stock at $150 and then the stock goes to $300, I make a profit from 150 to 200 and don't lose any money. I can't make the same as if I had sold at 300, but that isn't a loss from where I started. I think that is misleading. So to be clear, selling a call option does not have a scenario where you end up losing money you started with right? so long as the strike price is above what you bought the stock at?
Great teaching on options trading. Bravo! please, i need a course or mentor for options trading. would you be kind enough to do me the favour of being my course or mentor in this journey. I look forward to your reply. Thank you.
How is he selling stocks he doesn't own? Don't you have to buy them first? Also, why would you want to sell out of the money and how does that turn a profit?
Hey! We are selling options on stocks. An option is trading for a certain price. If we sell that option we are betting on the price of that option going lower. For example, selling it at $1.00 and buying it back lower at $0.50. That would be a profit for an option seller. An out of the money option is, for example, a 90 strike put with the stock's price at $100. If that put option stays out of the money (above the stock's price) it will be trading for $0 at expiration. Hopefully that makes sense!
haha there is no rush! Papertrade for a little. And even when you do start trading live it's not a bad idea to keep papertrading new ideas and strategies alongside of that live trading!
@@skyviewtradingthanks bro I really appreciate ur break down everyone else I couldn't understand but u broke it down perfect where can I papertrade bro.
I was enjoying your series till this video. You show people the worst strategy for options other than opening by selling on margin. This strategy WILL BANKRUPT YOU!!! There are literally thousands of videos showing exactly that. What is more logical: knowing exactly how much you can lose and possibly unlimited gains? or as this video shows, get $35 but potentially lose an unlimited amount? DO NOT FOLLOW THIS VIDEOS ADVICE! This video is predatory.
Hello. This is a common fear. However, you, nor most of the people creating the videos, have ever sold an option before. Most people have no experience, or very little experience with selling options, yet come to this conclusion and have your fears. So I encourage you to think deeper on this. The term "undefined-risk" really scares newer traders when they enter the world of selling naked options. What we find over time is that we can put real numbers and probabilities around how bad it could get if X were to happen in the market. With the right research and training, eventually, your thought process around undefined risk matures and that's when the magic can happen in this endeavor!
🚨 Hey all! Thanks for supporting the channel! If you’d like to see a more in depth breakdown of our current trading systems, we put together a quick video here - skyviewtrading.co/479RWUm
So to be clear, contract assignment _never_ happens until expiration day?
If a person sells a call and the stock price goes above the strike price _but then falls to below the strike price_ before the expiration date, then it doesn't get assigned and it's a profitable trade?
I have just completed watching these videos in Option trading for Beginners and all my doubts were cleared here. This was so beautifully explained and in such simple words. Thank you so much !!!!!
That's so awesome to hear, thanks for watching and for the kind words!
@@skyviewtrading Is there a Part 7 to this series??
These videos has really helped me to, thank you!
Best short but detailed course so far!
These 6 parts are great vids to cover options trading. Thanks for putting these up for the noobs.
I was always confused by other channels but you made me want to be a subscriber, you earned it, very good presentation.
Thanks so much for the kind words, that means a lot to us!
I was just thinking yesterday, this was the only missing piece in the excellent beginners guide you posted, and there you go uploading this gem. Thank you! I hope to learn from this and teach others as well, as a means of paying it forward.
Thank you so much!
Been stocks trading for years but has always been afraid of Options. Your videos are hands down are the best on You Tube. Thanks bro.
Thanks so much for the kind words and for watching! Keep up the hard work!!
Really like this guy and how he explains. Everything is so much clearer! Thank you for putting in the work SVT!
Thank you so much for the support!
I downloaded video 1-6 and just watch them over and over again while I drive for work lol... I've been teaching myself to master the option trading craft so I don't have to drive for work anymore.. needless to say, I've found your lessons to be priceless, thanks for the good work you do man
😎🤙
Thank you so much, Brett! I shared this with our team in our wins channel and we're all super pumped! Thanks for the support!
Have you been able to put it in to practice yet?
Can’t wait to watch this video! The previous ones were very good! Just put it on my watch list!
Glad you like them! Thanks for watching, and keep up the hard work!
I’m so grateful and appreciative… thank you so much for these valuable courses in this channel in trading options!!! You make and explain it so easily without all the complex fluff others confuse you with.
Thanks so much for the kind words and for watching! We appreciate it!
I will always come back to all your content, it's valuable..
Thank you for the kind words. We appreciate the support!
These presentations are gold. Great work! Thank you!
Thanks so much for watching and for the kind words!
I love your channel, the best out of the 107 channels that I use to follow.
We love to hear that! Thanks so much for the kind words and for watching!
A great analogy for selling puts and calls Is that you are basically playing the casinos part; assuming major risk per hand but with more favorable return rate overall, whereas buying puts or calls is like being the player; higher profit to be made on any given hand but with unfavorable odds.
Excellent video - one of the best educational videos i have watched. You made sense of a complex issue, many thanks!
Glad you enjoyed it! Thanks so much for watching and for the kind words!
Amazing. Best videos on TH-cam for sure. Can’t wait for the other parts. Keep up the good work 👍🏻👍🏻
Thank you so much!
@@skyviewtrading your very welcome. Will
You be doing any more parts to the complete beginners guide ?
The way you explain and illustrate on the videos is so good, I had no idea what options were until I watched your videos. And I re watch them for it all to sink into my mind. I would love more videos.
Thanks 😃😃😃
Amazing clear and concise teaching I could've understood your videos in middle school. Goes to show when someone knows what they're talking about a toddler could get it.
Thanks so much for the kind words! And keep up the hard work, you have a bright future ahead of you if you are already interested in markets!
I have watched parts 1&2 and a few other YT videos for beginners. This information was very clear and certainly a great addition to any other learning tools one has when beginning in options trading. My small investment group has one person who trades options and will have a spot on the agenda for each mtg for the others to learn how to trade options. I am very interested in learning this investment technique. Thanks for the work on your YT presentations
Glad it was helpful!
I barely comment on TH-cam but I really want to say I love your videos. You're the best at explaining things. Your voice is another plus as well. I have always been waiting for your new videos to come out! Thanks again
Thank you so much for the support! We appreciate it!
Cant imagine I completed whole series like a sincere student in weekend !! Thanks a lot !! What should be next ?
Thank you for the explanation! Options always boggled my mind and getting a full detailed walk-through with examples like this series really really made it more understandable for me
Thank you for the kind words. Glad it was helpful!
Thank you for the whole course. Very easy to follow an very clear for me.
We're so glad to hear that!
Halfway through this video to finish up this playlist. Wow, very informative and to the point. I began momentum and swing day trading about 6 years ago, started doing it full time starting 2022. I am really great at it and it's how I make most of my money and retired last year at 40 years old. Second best is swing trading.
The issue I have found with my current strategies is
Momentum (MOMO) -- I reach a max of entry size due to low float stocks being the most volatile and ideal for MOMO trading. Also, I trade can get away from you really quick, and meaning crazy risk with increased share size. (As with trading in general but more so with MOMO trading).
Swing Trading - I am really good at it, but unless it's intraday, I have to make a few swings a week to offset the chance that a stock will "leg up/down (offset)" out of it's technical/pattern trading ranges if I am not paying attention or have SL set properly.
This will be an excellent way to hedge against my swing trades and make it so I can hold positions overnight longer or intra-week as to be able to set alerts and get better sleep at night if I decide to hold longer, lol.
Plus, being able to day trade options is def something I am going to start practicing with.
Again, thanks a lot. Will be sending folks in my group over to channel for review, as well. Take care!
We're so glad to hear you enjoyed the video and are doing well. Keep up the great work!
We should network man!!!
At 10:34 you made this trade. If you could get this trade again and again, your win rate would be 84% with 1:0.02 risk/reward ratio. risk=1513 reward=35. In theory, this gives an average of -50% return after 100 trades with 5% account betting for each trade, so its a losing strategy. You are not gonna get a delta high enough for the corresponding probability, otherwise we would be all rich. Please correct me if i am wrong.
Hello! It's not exactly that black and white. The risk is technically "undefined" here. That $1,513 is the buying power requirement, not the max risk of the trade. When you backtest how often a naked strategy loses the amount of the buying power requirement it is EXTREMELY small. Less than 1% of the time. So we're not going to lose $1,513 the other 16% of the time. It would be more like 1% of the time or less. Also, we could have a "loss threshold" where we cut the loss before then. Lastly, if we closed the winner before expiration it would increase the 84% probability of profit that we have on entry here. So to conclude, it's not as black and white as you made it out to be and risk management measures in place change everything even more!
I really like this video, having that loss was a great example on how to close. thanks a lot for the info!
Glad it was helpful! Thanks for watching, and keep up the hard work!!
Thank you so much for posting this video. I am new to options, in your free videos all the concepts are very clearly explained. Amazing work!
Glad it was helpful! Thanks so much for the kind words and for watching!
Great information. What happens in your first example, if the stock goes above the strike price before the expiration date. and then falls below the strike price before the expiration date?
Does this trigger any event or how should a seller of this option respond?
You guys are doing are great job with your videos. Very nice. A few questions for you: How can I, as a beginner / intermediate options trader, track my trades. I have been using a basic spreadsheet that I kludge up, but I see that there are a bunch of more capable and more detailed sheets out there. What do you recommend? What are the important key numbers to track if doing beginner type strategies (covered calls, protective puts, possibly some cash-secured puts, simple long calls, ...). Using TOS. Would like to have charts, graphs, bars, surfaces of the different key values. Risk profile? Win ratios? P/L amounts? per trade, per account, per time period,... Your advice is appreciated.
Hey, thanks for your kind words!
Different traders track different things. Also, many traders track less and less as time goes on and they become more comfortable with their approach. Everything they need can be found from their Trade History at that point.
Early on I personally tracked everything and anything. These days I track very little -- just a simple equity curve of my weekly P/L vs SPY (the S&P 500) benchmark.
I encourage you to track everything you can early on! Over time you will find your personal preferences. I hope that helps!
Bless you sir! Thank you for supplying me with this knowledge. I’ve watched several other videos on this but your videos have definitely taken my understanding to new heights! Hats 🎩 off to you sir for having a great teaching style! 😁😁😁
Thanks so much for the kind words and for watching!
Did you need to own the stocks to sell those options?
very confusing when one needs to own stock and when there is no need for that.
Hey! You do not need to own stock to sell options on stocks. That's the beauty of options! Trading them requires less capital than owning shares of stock. Hopefully that makes sense!
25:35 So in theory i could buy 100 contracts of high probability profit options and make larger profits?
Hello! Yes, the more contracts you trade the more money you could make. But remember with more reward always comes more risk!
Great video! Explains it where a 3 year old can understand it
I'm willing to buy a stock at $17; current price is $20. Based on your lesson, I "sell a put" for $17? If the price never gets to $17, I at least earn the premium? If the price reaches $17, I'll just buy the stock?
It sounds like you understand it! Nice job, and thanks for watching!
Thankyou for this video and the other 5 very helpful and the way you teach is amazing.
What would you say is the most profitable/safest options trading method? Would it be the iron condor?
Thanks so much for the kind words! Iron Condors are a great place to start, and exactly how most of us get started! With time it seems like most advanced traders tend to transition over to naked premium strategies. The naked premium version of Iron Condors would be Strangles. We tend to trade a lot of strangles. Hopefully that makes sense!
pure gold bro
Thank s man... 🙏❤️
Thanks for watching!
For the short put, if you didn't buy back the put, you would be assigned 100 shares at $20, is that it? Or is there some other money lost on the put, such as the cost to sell it vs cost to buy it(even though we didn't buy it back)
Hey! If you sold the 20 strike put and didn't buy it back you'd be assigned 100 shares of stock at $20 per share, assuming the stock's price is below $20/share at expiration.
No other money is lost, in fact we have a break-even price below $20/share because we collected a credit on entry. Let's say that credit was $0.80.
If we sold the 20 strike put for an 80 cent credit our break-even would be $19.20.
If the stock is at $18/share we would have lost $1.20 on the short put, and now own 100 shares of stock at $20/share.
Hopefully that makes sense!
Thank you for answering so concisely and completely.
could you please go into the difference between selling covered and uncovered calls?
We will look to create a video on that soon!
Great! Another quick question if you don't mind. When you bought to close on CDC before the exp date, you don't have to buy 100 shares if the company? It's possible to always do this, buy to close before exp date and not have to buy shares?
Wow thanks for the 6 videos on options trades. I’m going to be putting this into effect to get that P.O.P! I’m also going to follow your website and take the courses.
Question, I’m sure you guys don’t give advice like this … but what do you think of Long Call Options at strike price $220 this coming week for Salesforce before earnings. The whispers are an earnings beat, the implied volatility is high. I think it’s very likely it gets to $220 before the end of the week.
We're glad to hear it helped! As for long calls on Salesforce -- we never really have directional opinions. We tend to keep a somewhat neutral portfolio. We're also option sellers, so we tend to shy away from buying option premium on entry. Lastly, we tend to stay away from "earnings trades." They can be a bit of a gamble. Hopefully that helps!
First off, great videos! I am confused about one thing though. @17:15 you say that since the "delta is positive we are benefiting from the stock going higher." On the following day GDX stock went down but the delta is still positive. Shouldn't it be negative since it we are now NOT benefiting from the stock going down? Oh, and not just is Delta positive but it's even greater (37.57 on day 9 and 26.61 on day 10). Thank you.
Hello! Good question. I think the confusion is that we were looking at two different tickers. The first one was GDX, where we had a positive delta. That benefits from upward movement in the price of GDX. The second one was CAT, where we had a negative delta. That benefits from downward movement in the price of CAT. Hopefully that makes sense!
hey mate, great video. quick question with GDX one thing I don't understand coz U sold the short put, couldn't the person who bought it close the short put in the money? like I don't get why they didn't ? was that just luck or am I missing something?
Hello, thanks for the kind words! There are 2 potential reasons. One, the trader who bought the put might want to hold it for more potential profits. Two, there is no guarantee that trader is up on the trade just because the strike is ITM. The break-even price of the trade is a little further away than the strike price is. Hope that makes sense!
@@skyviewtrading yes that makes sense mate cheers
How did you get that custom layout at 16:00 in the video showing your positions and the two graphs, I really like it.
Hello! That is in the "flexible grid" tab of the ThinkorSwim trading platform by TD Ameritade.
Do you use theoritecal pricing model ?!
Hello! We use the option chain and the probabilities generated in there to help make trading decisions!
Really great video
Glad you enjoyed it! Thanks for watching!
One thing people need to realize is when sell calls. As long as your strike price is above your cost basis your, "loss" is actually "potential loss" because you are actually making profit based on selling above your cost basis... This is why the wheel strategy is a thing.
Hello! Yes, I think what you are referring to is an "unrealized loss." The loss is technically just a short term loss so long as the stock trades below the call strike. As expiration approaches that short term loss will grow smaller and eventually turn into a winner thanks to time decay. Thanks for the comment!
I thought 1 opt contract is 100 stocks. Why is the capital so low with a 90$ stock? I thought the capital required would be 90 x 100 = 9000
Hey! That $9,000 would be required to purchase 100 shares of stock. The beauty about the option market is that options represent 100 shares of stock but require a fraction of the capital required when purchasing 100 shares of stock if we just want to trade them. Hopefully that makes sense!
What about the situation when I write a Put Option (Short Put) and the share price fluctuates and reaches the in-the-money zone in the middle of its existence?
The option owner will not wait and exercise the option. And I, as a listing agent, will have to buy a stocks at a disadvantageous price. Or will he rather sell option on market and nothing of it affect me? Can you say something about this situation? Thank you
Hello! You don't get assigned immediately when an option you sell goes In The Money, but the deeper ITM it becomes and/or the shorter the expiration date is the more likely it is you get assigned. Short puts are assigned long shares of stock. The long shares of stock replace the short put. There will be 100 shares assigned for each short put. Hopefully that makes sense!
If you bought the trade at .35 and it expired, how do you profit off of that? You bought for $35 and sold for $35. I'm very new so if this can get cleared up that would be great
Hey! In this video we are talking about SELLING options on entry. When we SELL an option we want it to expire worthless. The goal is to sell high and buy it lower. The difference is our profit. Hopefully that makes sense!
@@skyviewtrading Exactly, so if you bought it for .35, and buy it for $35, how do you profit?
@@Adrift_-Sold the option for $0.35 to enter the trade. The option expired worthless $0.00. They made the $35 they sold the option for (($0.35 - $0.00)*100). Watch the video 24:24 mark.
Do we have to wait to close the sell put or sell call option until the expiration date, to take profits, or can we do it at any time? In your example, when you saw the GDX stock moving in nonfavorabke direction, you could have closed that sell put position while still in profit, isn't it?
Hey! We can close an option at any time before expiration. However, if we open an option trade and the ticker goes in a non-favorable direction it is very likely we will show some short term losses, where we will need to wait for Time Decay to turn the trade profitable. Hopefully that makes sense!
WooHoo!
🙌
if I decided to sell call, do I need to have 100 stock as collateral to begin with?
Hello! No you do not need to own any shares of stock to sell options.
@@skyviewtrading but you need to have enough money to buy 100 share right?
Hi , Just want confirmation yout statement at time 1.00 to 1.10 is correct?
Hello, yes it's correct!
If i sell an option and the buyer sels the option ahead am i free off the trade and take the profit home or what ?
Hello! No it doesn't work like that. When we buy or sell options we're not actually interacting with another trader. We are interacting with a Market Maker. It's their job to facilitate our orders.
So they take the other side of whatever buy or sell we want to make and that's considered their inventory. Then they dish it out to other traders as order flow comes in. They also hedge themselves in the process.
So even if an option you sold theoretically gets bought by another trader, how that trader manages the option he bought has no affect on the option you sold. Hopefully that makes sense!
What about LEAPS? If you sell a LEAP after they hit their strike pice and before the expiration date, could your profit gains potentially be in the 200%, 400% and 1,000% returns?
We don't trade a lot of LEAPS, mostly because they are slow moving and require you to have a strong directional opinion. Of course gains could be large, but that is only if you pick the right stock that goes up a lot. The larger the percentage gain the lower the probability it is achieved. Hopefully that makes sense!
@@skyviewtrading Yes, super tough to hit a Leap Call, that’s where risk management and asset allocation is key.
Love your videos but can you really make any money with this strategy if your max profit is your entry price on short calls? You're not really gaining capital if you only make back the money that you spent on the trade...unless I'm missing something
Hey, and thanks for the kind words! Yeah I think what you are missing is that our profit is the difference between the Trade Price we sold it for and the Mark Price we close it at. So if we sold a strangle for a $2 credit and we buy it back for $0.50, we made $1.50 on the strangle, which is $150 per contract. Hopefully that makes sense!
Hey :-) thank you so much for this! there is a way to find stocks that doesn't requires large amount of securities in the account? i'm on intractive and find it very hard to locate stocks for put\call selling with requirement of less then 10K or so securities for profit of less than 200-300$ even for 40 days and more. am i doing something wrong or intractive have hard policy?
Hello! With 1 contract most tickers in the $50-$150 range should only require about $1,000 in buying power requirements (give or take). The $10k you mentioned sounds like way too much, and I assume you either have 10 contracts in the trade or you are not approved to trade naked premium. Reach out to your broker's support team and see if there's another approval level you need to get the margin relief for those naked premium trades. Hopefully that makes sense!
So when selling options do you get paid a premium?
Hello! Yes, technically you get "paid a premium" on entry. However, that isn't ours immediately. In order to keep that premium collected we need to buy back the options for cheaper than what we sold them for.
Very nice presentation. What tool do u use to make these slides? I like especially to see you writing, but I guess it is some software.
Hello! We can't give away all our secrets! =]
How donyou choose the strike and expiration date?
Hello! It all depends on what you want to accomplish exactly. We have a specific set of mechanics for our members, but the goal is to learn a little bit about how the option market works before implementing an actual trading strategy. Hope that helps!
What about the percent chance that it will be equal to 100？
Hello, I'm not sure exactly what you are referring to here.
Thanks, but I think we need video number 7 in this playlist to explain -
1. Why are seller selling CALL options with strike rates way below the trading price and has a 90% of staying IN-THE-MONEY? Is there a strategy to make money in such case?
2. Similarly is there a way to make money with buying options OUT-THE-MONEY? Like you said it has 400% profit margin in the example, but since its OTM, it will be worthless eventually, but then why are people even buying it?
3. What happens when the price goes above the max paid by the seller. Lets consider, instead of INFINITY its a million dollar in profit for the CALL buyer, who pays that?
Hey, great questions! I'll answer them a bit below..
1. Everything has a POSSIIBLITY to make money. But, not everything makes money if you do it robotically.
Selling a call that has a 90% chance of staying ITM is basically like selling -90 shares of stock. The P/L of that short call acts similar to -90 shares of stock basically.
Just like buying a call that has a 90% chance of expiring ITM would act as +90 shares of long stock. Those very deep ITM options act similar to shares of stock, but buying or selling that call option requires less capital than buying or selling 90 shares of stock.
2. You can make money buying OTM options only if you get a HUGE MOVE in your direction. So, maybe you buy a call option in NVDA and NVDA stock goes up 50% in a 2 weeks. You would make a lot of money on a 2 week call option like that. However, most stocks don't go up that much that fast, and that's why most of them expire worthless.
3. You lose the difference between what you sold the call for and what it's trading at during that time. Let's make the math easier than the stock going to $1 million with the example below...
Let's say you sold the 100 strike call for a $5 credit. Your break-even on this trade is 100 + $5 = $105/share. Anything above $105/share at expiration means you lose money on the option trade.
Let's say the stock is trading for $175/share at expiration. Your break-even was $105/share. So $175 - $105 = $70.
You would be down $70 on the option trade. Meaning, you sold the call for $5 and now it is trading for $75, give you a net loss of $70 on the option trade.
A $70 loss on the option trade would be a $700 loss per option contract you sold. If you sold 2 calls for example you would be down $1,400.
Hopefully that helps clarify some concepts!
@@skyviewtrading thanks for taking the time to reply.. it helped.
I suppose this will work well when there is little movement on the market, but there is much higher risk if market starts moving in the direction you didn’t anticipate. Also, high margin requirement (which can change every day for your position!) makes this very difficult for beginners with low capital to profit with.
Hello! That's a good thought. But the beautiful thing about options and how they are priced is that the Implied Move tends to overstate the Actual Moves about 2/3 of the time. So even when times are very volatile, that volatility is priced into the options, and the Implied Move still overstates the actual move most of the time.
sorry to ask but selling a call its COVERED CALLS ? ...but u need prior to that to own the underlying stock, right? ...anyone? 03:40
Hello! That is correct. For the covered call strategy specifically, it involves one short call for every 100 long shares of stock you own. If you owned 300 shares of stock, you would sell 3 calls against those 300 shares. Hopefully that makes sense!
@@skyviewtrading yah to be able to write 1 short call(sell a call) u need 100 shares. So I cant sell call without owning those 100 shares. So u need to have 100 shares of a stock to sell a call?
If you sell a call option for 1000 and it goes to 10 or 0 what happens?
@@moebadwymaktus208 u loose your shares. and keed the premium lisen at 4:01
What app are you using for options?
Hello! Our preferred broker is TastyTrade. They are great, and also cater to option traders like us.
thank youuu
You're welcome! Keep up the hard work!!
Hey, Awesome Video! really love your doodle style videos, may I know which software you use to create your doodle videos?
Hello! Thanks for the kind words! We use Camtasia a lot.
So when you buy a call to make money ypu don't sell the call? I'm so confused
Hello! I'm a bit confused on your question. Could you point to a minute mark in the video where your question comes from that might help me understand where your confusion is? Thanks!
@Sky View Trading I wish I could. Lol I'm sure you are explaining it fine. I'm just confused as if I was to "buy a call". What do I do to sell that? Do I "sell a call" to sell the call I just bought? Or is "selling a call" different then selling a call I just bought? I use tos platform BTW.
I always thought when you sell a put option your hoping the stock price will go lower and a call will go higher
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I might do fort Condor.
haha people make up names for different strategies all the time!
@@skyviewtrading There is a game called final fantasy 7 and in that game is a town called fort condor.
selling a call option is not a loss in my view. I think of a loss as losing money. The only loss in selling a call option is caping the max profit you can make right? So if the strike price is $200 and I bought the stock at $150 and then the stock goes to $300, I make a profit from 150 to 200 and don't lose any money. I can't make the same as if I had sold at 300, but that isn't a loss from where I started. I think that is misleading. So to be clear, selling a call option does not have a scenario where you end up losing money you started with right? so long as the strike price is above what you bought the stock at?
Great teaching on options trading. Bravo! please, i need a course or mentor for options trading. would you be kind enough to do me the favour of being my course or mentor in this journey. I look forward to your reply. Thank you.
Hello! Yes, check us out at www.skyviewtrading.com where we have all of our advanced education topics!
How is he selling stocks he doesn't own? Don't you have to buy them first? Also, why would you want to sell out of the money and how does that turn a profit?
I’d recommend watching the rest of the series! This is about buying and selling stock options, not stocks.
Hey! We are selling options on stocks. An option is trading for a certain price. If we sell that option we are betting on the price of that option going lower. For example, selling it at $1.00 and buying it back lower at $0.50. That would be a profit for an option seller.
An out of the money option is, for example, a 90 strike put with the stock's price at $100. If that put option stays out of the money (above the stock's price) it will be trading for $0 at expiration. Hopefully that makes sense!
@@skyviewtrading How do you sell options that you don’t own in the first place?
Thank you for reminding me why I don't trade options. Complicated, and risky.
That's also what makes them so powerful if you can work hard enough to understand them!
Wow great video in which program you edit?
Thanks for the kind words! We use Camtasia a lot.
The best way to trade options
We agree! 🙌
when i opened youtube 30 secs ago and seen this i got so happy ur voice is just so soothing and sexy at the same time
haha we appreciate the kind words! We hope you enjoy the education content just as much as the voice!
time to take out my 401k
We have many members trading with a retirement account. But of course it is important to LEARN before you earn, and start small in the beginning!
@Sky View Trading if you sell a call option for 1000 and it goes to 10 what happens and how and when to close?
And what happens if you don't close it?
I work for caterpillar lol
7:24
Yes?
I think im ready to play with the big boys now I hope I dont blow up my account lol
haha there is no rush! Papertrade for a little. And even when you do start trading live it's not a bad idea to keep papertrading new ideas and strategies alongside of that live trading!
@@skyviewtradingthanks bro I really appreciate ur break down everyone else I couldn't understand but u broke it down perfect where can I papertrade bro.
I was enjoying your series till this video. You show people the worst strategy for options other than opening by selling on margin. This strategy WILL BANKRUPT YOU!!! There are literally thousands of videos showing exactly that. What is more logical: knowing exactly how much you can lose and possibly unlimited gains? or as this video shows, get $35 but potentially lose an unlimited amount? DO NOT FOLLOW THIS VIDEOS ADVICE! This video is predatory.
Hello. This is a common fear. However, you, nor most of the people creating the videos, have ever sold an option before. Most people have no experience, or very little experience with selling options, yet come to this conclusion and have your fears. So I encourage you to think deeper on this.
The term "undefined-risk" really scares newer traders when they enter the world of selling naked options. What we find over time is that we can put real numbers and probabilities around how bad it could get if X were to happen in the market. With the right research and training, eventually, your thought process around undefined risk matures and that's when the magic can happen in this endeavor!