How to Trade the 112 Options Strategy (Like a Pro)
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- เผยแพร่เมื่อ 8 มี.ค. 2024
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Want an Options Strategy that has a very, very high win rate...
Makes money regardless if the market goes up or down...
And can be used in all market conditions?
Then you might want to consider trading the 112 Options Strategy.
So what exactly is this 112 strategy, should you trade it, and if so how to trade it?
I reveal all in this video.
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• Iron Condor
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Ive been doing this trade for years. Works great on futures and more than 45 dte.
So if the stock goes up … u lose the put debit spread but u keep the difference of the low delta u sold ?? Is that right?
This works great in es futures or mini es, way better leverage and premium. Lower margin requirements. Keep short puts at a 6-7 delta
Hi Davis. Could you explain how you would manage this trade? Are you just closing it if the far OTM puts are breached? Or before? Or do you roll them? Perhaps make a video if you haven't already?
Can't wait to try out this strategy! Thanks again for another great video!
You're welcome :)
u explained so much better than a lot of other traders. And it's also good to hear someone using a familiar accent.
☺️
Hi Davis, just stumbled upon this and wonders what platform are you using options on? Is
Great content (as always). Love your channel!. To your point on the BP effect @ 11:08, I have constructed this trade with the addition of two long puts further down in price to define the risk and reduce the BP requirements. Worked well for my small account. For sure I lost some credit, but could still trade this at least!
Thanks for the support ☺️
Yes, I have trade it campaign style with futures. Probably the best trade but extremely risky. You need to look into your notional. The risk can go through the roof. You have to risk it for the biscuit :) good luck
I think this strategy is being used mainly on Futures. If one is not up to trading Futures, what would the best 'ETF's' be to use with this strategy. You did say that it was probably not suited for stocks due to the number and width of the strikes. Appreciate Davis.
Great video. I wouldn't trade this strategy due to risk on the downside. Is there a defined risk version of the 112 strategy? Could you be kind enough to cover this in the very near future?
Bro.. What are your top fav straties with less risk and mgt.
Please can you suggest how to backtest on E mini S&P options (for non-us citizens) where buy and sell signals are generated from a third party software. Any guidance would be appreciable
Hi, Davis , bug pleasure to see you in person
Thanks for this, but given the capital intensity, it doesn't work for me. Seems to be a similar risk profile (with less capital) to the put broken wing butterfly.
Davis great content as ever.
I've been trading something similar but without the risk of the two short puts.
It starts life a single lumping put and the objective is to then add the short put as the price drops. This way your one short put can more than pay for the price of the long put.
It's not new but I found it on another channel and he calls it the Ghetto spread. Would love to hear your thoughts.
Works brilliantly with ETH and BTC options.
I do both sides, calls and puts on the back of a BB squeeze.
No reply
... I warm to your strategy
If stock tests sold PUT Strike? it has unlimited loss on the downside
Great explanation Davis. Never heard of this strategy. When do you close this trade? (With 21 DTE left?) Or hold it longer? Also, do you roll any of the legs if you see the trade is starting to go against you? Risk management? Thanks Davis !
You're welcome! I'd manage it similar to other undefined risk strategies: th-cam.com/video/h7f3w4w1Uiw/w-d-xo.htmlsi=cg2cIJ72QNC_SNYr
Another great video
Appreciate the kind words!
Davis, thanks for the content. Would it be ideal to place a stop-loss on the two short puts?
You're welcome! You can place a stop loss if it works for you, but generally this is my take on stop loss on options: th-cam.com/video/hUkBpo5P9X0/w-d-xo.htmlsi=Tpi3xnm7kMT-EvO7
Issue is margin requirement and it doesn’t work for short dte.
Do you need to have more cash for the two short way otm puts?
Your buying power requirement will increase for every additional short put you have on.
a staple strategy in my portfolio
Mr Davis. This should be done with /ES futures options and 60 DTE. I would not trade this with stocks..too risky
I am trying to figure out how to properly manage this trade. Option one: Would I close this trade at 21 days out or try and let it expire? Option two. if the market tanks. my debit spread would increase in value. I could sell it for a profit and then let my short puts become cash secured puts. Worst thing happening is getting stock at a huge discount. Does this sound like a feasible strategy?
If you don't mind owning the stock then you can manage the trade like you would a put ratio spread like this: th-cam.com/video/yi97UwGVoYA/w-d-xo.htmlsi=JDOyXYTwxhBS8Rfc
Thank you @@optionswithdavis
This strategy would have gone really with SMCI yesterday (April 19, 2024). ;-)
Hi Davis, Thanks for showing us this strategy. I won’t be using it. The potential for a massive loss is just way too high. I think that if you have a negative stock bias, why not buy a put and fund it with a call credit spread?
If stock reaches call credit spreads, you book loss?
How do most of you guys still make profit? Even with the downturn of the economy and ever increasing life standards
Well, I picked the challenge to put my finances in order. Then I invested in cryptocurrency and stocks, through the assistance of my discretionary fund manager
Mrs Mary Gail Benner
Interesting, please how can I get more information? I don't want to remain out of ignorance
She's mostly on Telegram, using the username.
Benner10 👈
That's her username.
95% win rate is rather meaninglessness, expectancy would be more useful. Honestly I don't know what the psychological effect of getting a rare huge loss is. Most of these strategies seem to pay peanuts and then on a black swan event you will get caught with your pants down and actually will have a decent drawdown if not a margin call in a single day...
So we have backtested it. It has worked great in the past 6-7 years. However, 30% drawdowns can happen rather often. I would say don’t use more than 30% of Buying Power for the account to sustain expansions
Extremely risky trade if you don’t have huge amount to digest potential loss
Agreed. Recipe for disaster.
Since the correction are coming, better to show us covered call with protected put instead
This is a trade that works very well on the /ES futures at 120 DTE. For SPY or SPX you really need to have portfolio margin to get it to work really well.
@@sanbetski With higher prob, it's better to reach out to get more value.
@@sanbetski Annualized you can get between 20-30% --- IRA 15-25% due to the higher requirements.
Yep 120dte is perfect. More credit and less voma. Campaign style works great but again huge risk. Notional is through the roof with SPX and futures. If no one thought about it, look at your short strikes and multiply them by the number of contracts and then by 100 for SPX. (50 for ES etc.). That’s how much you will be down if underlying gets in the money not even accounting for volatility. Market breakers - sure but not overnight though. It is a great strategy just trade it with caution.
ok, i think you are missing maybe 65% of the trade in your explanation. i am actually surprised this is new to you given you are an options trading channel. I guess this is more for future options folks.
but the part you are missing is laddering (putting on trades over a few months) and how that hedges against recent trades and the 0 line draw down. when you get a ladder going (many months), the short dated long puts become a hedge against a new far out expiration trade draw down. the worse thing that can happen in any premium selling strategy is right after you enter, the market moves against you. Your 0 line is going to be nasty and harsh. This is where all your previous short dated long puts from the spreads come in to hopefully reduce that 0 line drawdown so you can weather the storm.
that is how the veterens do it and they pay specially attention to how the hedges play in respect to the 0 line. personally, i rather just short a far OTM put without the put debit spread. but guys have gotten huge gains from managing that trap.