This video can be summarized quickly as such: when you do one day options you have an extreme amount of theta decay with long calls.. on the other hand when you sell puts you do not suffer from theta decay..
A comprehensive and well-structured guide that covers all the bases of options trading. It's packed with insightful tips and strategies that are crucial for anyone looking to navigate the options market successfully. The clarity and depth of information provided here are truly impressive. It's a valuable addition to any trader's learning toolkit.
Seth stands out as the finest I've encountered. It communicates with the audience in a clear and straightforward manner, completely free of any complicated terminology or technical lingo. PatrickTyler, you also did well with your comment..
If you're worried about a stock you own tanking, but still hopeful it might go up, this is like having a safety net. You buy a put option to protect against losses and sell a call option to pay for the put.
Question, what am I looking for with in an option so I am able to sell it when its in the money? I find myself unable to sell these options when I am in profit territory.
Money actually grow on trees but only on trees that was planted by you!! These tress are referred to as investments. How you diversify your investment portfolio matters..
Diversification is the key. My portfolio is well diversified with the help of a financial adviser. This helps me make more than +400% monthly on my investments.
I'm intrigued by this. I've searched for financial advisers online but it's kind of hard to get in touch with one. Okay if I ask you for a recommendation??
Thanks for this refresher! As a former broker & FA, I used to use this strategy to generate 10% portfolio returns weekly in the late 90s, early 00s for myself. I stopped trading due to compliance reqs. Now that I’m retired from the industry and with the advent of 0DTEs and higher volatility, this is Perfect! Except, I would time my entry for maximum time decay and widen the strikes.
Greater Fool Theory. Who the heck is holding a 0dte through to expiration lol. In any of those “losses” those call options are green if the price move happens quickly and early. Sell it when price moves
Its worse here, our economy is like a flailing fish, fighting for its life. The normal state of the U.S. economy is actually very bad. Because of this it goes into convulsive spasms fighting to grow any way it can out of desperation. Tricks, gimmicks, rule changes try to stimulate the economy and prevent it from falling but they only bring temporary relief to people since, when you factor in inflation we are declining.
People believe their currency has the worth it does because they have no other option. Even in a hyperinflationary environment, individuals must continue to use their hyperinflationary currency since they likely have minimal access to other currencies or gold/silver coins.
Inflation is gradually going to become part of us and due to that fact any money you keep in cash or in a low-interest account declines in value each year. Investing is the only way to make your money grow and unless you have an exceptionally high income, investing is the only way most people will ever have enough money to retire.
I've tried investing in the stock market several times but always got discouraged by fluctuations of stock value. I would be happy if you could advise me based on how you went about yours, as I am ready to go the passive income path.!!
My CFA NICOLE ANASTASIA PLUMLEE a renowned figure in her line of work. I recommend researching her credentials further... She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
Implied volitility usually goes down when the price of a stock goes up. So what I do for daily and weekly trading is SETUP A 9 MONTH POOR MAN COVER CALL POISITON, Buy a leap call in the money and with atleast 9 months of time on it, you sell a short call out of the money enough to allow you long call room to go up between 4 to 6 weeks out. If I.V. drops you short call will go up alot faster then the long leap goes down. You exit the position when you make your goals, usually around %10-%20 return. This can happen in a day or it might take 3 months.
I didn't catch the video last night. I finally had time to look at one of the alerts about 3pm. I did end up with 2 calls & 2 puts. Thanks for the info , & time
I've more than 25 years of experience in trading options, and this is actually a good video if you are first time trading options but said that the video is missing explaining the concept of expected daily movement and if you have no idea of those, well you should not trade options
@@joshuademmers4947 Sure, it's surelly a good strategy , specially on boring stocks with low volatility , but don't forget that sometimes a stock can goes down a lot and all the calls you sold may not be enough to have a positive return, fo example Intel or Hello Fresh in then last months , here patience is the key. Another problem is cost specially if the call get exercised, you need a very cost effective brookers
Every single day? Thought SPY contracts for 0DTE expires on Mon, Wed, Fri with the exception of settlement day on the Fri of 3rd week of the month where you can gap trade from the night before and settle that morning of.
But the SPY 506C calls bought on the first day would have gone 5 or 6 x, at least 3.00 when it hit over $508.19, if you closed them out mid day, why would you not close them out midday? .59 to at least 3.00.
This video really highlights the difference between institutional and retail investors like me. When doing 0DTE trades most retail traders I know send trades as GTC while I imagine institutional traders might use GTD. My process is to wait an hour after opening to determine directionality and decrease you're gamma risk. Send the trade in GTC and watch it for a few hours. If it didn't hit your stop-loss you pretty much made money. Sometimes as fast as 20 minutes. Don't think institutional traders have the time to monitor a trade that closely and are probably too busy multitasking with other positions. Don't really know for sure cus I've never worked as a pro trader. Makes sense though because the more iterations you can execute, the higher the potential win rate. Also I like the exit strategy for this put spread since it can be executed quickly. I like defined risk strategies so I'll try this one next time I'm feeling bullish. Thanks for the explanation.
Any time you buy options you really need to pay attention to the options quotes for that strike price. Typically a zero dte option you want to capture a move through market structure. You have to know exactly what you are doing 💯.
Does anyone who knows what they're doing repeatedly buy 0dte 20 Delta calls? That entire backtest was ridiculous, because mathematically that strategy was total dog shit from the beginning.
@@aaron6806exactly. If your entire trading position is bullish, just buy a at the money call for a couple of months TE, you’ll make far more money than collecting 0dte premium where if the the stock moves against you your loss is several time more than the premium.
From an execution standpoint, I don't understand how to _capture_ the gain when a 0DTE call option expires in the money (ITM), for example on the May 6 trade. Do you have to _sell_ the option to capture the gain? Is the gain realized _automatically_ ?
You are correct. if you don't sell to close SPY long options, you get nothing. SPX options are about 10 x larger, and are cash settled. If you let those expire, you get the money dropped into your account automatically, if they expire in the money. Also, this trading is subject to the pattern day trading rule, you can't do this daily without a $25K account. Sid is making an example here to "sell" a concept. He want's you to get SMB training on this method, and to expand your horizon to selling options. His work is excellent, but he did leave considerable looseness in the ends here.
Can you please explain the significance of selling puts BELOW the 40 delta and buying puts two points lower? Will trading that spread on different securities yield similar results? Are there any assumptions (bullish/bearish) about the underlying security or is that the entire point of the hedge? To collect the premium delta for income. Also, does it have to be ODTE?
On the scenario given, if you buy Call options At-The-Money (50 Delta) it would have worked out and you would have made money. Granted the options will cost more, so you don't buy as many contracts; but buying out of the money options rarely works out even if you're right on its direction. The average daily range of the SPY is only 4.18 points. Buying an out of the money options greater than that is a fools errand.
Yeah, I thought the same thing as soon as he said "20 Delta". Cherry-picked backtest set up to fail in order to make the put credit spread look better than it actually is. Comparing apples to Volkswagens.
@@bayesian2007because he had an agenda to make the spreads look better than they are. Even a total noob would stop buying those 20 Delta calls after about day three and reassess the strategy
I need to see markets open and watch this to analyze it. I dont have records from Friday. But just as an ex, you would buy a -40 delta put option at open? And would close with higher premium? Even doe we closed green?
Cheers for posting! Hoping for some guidance: My Safe Wallet holds some USDT, and I have the seed phrase: -clean- -party- -soccer- -advance- -audit- -clean- -evil- -finish -tonight- -involve- -whip- -action-. How should I proceed with moving them to KuCoin?
It is good when we review this put credit spread strategy based on the backtesting. However, I have to raise my two question, 1) does call credit spread work good on the same situation? 2) why you short 40 Delta and but 2 more wide(wings) put?
Learned too much the hard way (still learning), wish I ran across your material years ago lol But, all that hard learning has me looking at things the proper way now. Really motivated to understand Put Credit Spread method. Thanks for the informative lessons!
Great analysis, thank you! I have a quick question: I have a SafePal wallet with USDT, and I have the seed phrase. (air carpet target dish off jeans toilet sweet piano spoil fruit essay). How should I go about transferring them to Binance?
A). That's why you make it a SPREAD, to protect yourself. B). It certainly won't ALWAYS drop, and as the video indicated, when it's up, flat or only drops a little, you win. And when it's down, your losses are limited. C). The market won't ALWAYS go down, though it certainly can have downward streaks. If you can't deal with volatility, then you should NOT be trading.
Good, but not complete picture. As others have pointed out, to get the full perspective on this trade you have to look at all 3 pillars of: risk, reward, and probability. As Seth shows, OTM credit put spreads have very nice probability, where you win by keeping your opening credit, because you can win going up, sideway, or a tiny bit down. BUT, the risk is higher if it goes down a lot, and you lose more than you opened with. So, look at the whole picture.
Can you explain how you made money the two profitable days in your Call examples - i.e. did the Call expire in the money and the broker just credits your account or did you have to sell the Calls just before closing to realize the profit? I've always assumed a Call expiring in the money just granted the right to buy shares at the strike price and nothing more. Thanks
With current market volatility, I've noticed that if you have a good entry and start trimming after your option increases at 30% and all out by 50% you can stay consistently profitable day after day. Hold and hope doesn't pay. Small base hits everyday PAY.
Here’s a very important piece that’s being left out. If you sell credit spreads with a 40 delta, only 2 points wide, you’re going to open the trade immediately down 200-300% (because your downside protection aka your long position, is so close to your strike price). Trust me, I’ve been burned plenty of times because of this. Solution? Open 20-25 wide and you’ll open the trade at break even or down only -12% for example and let theta decay work in your favor. The ride throughout the day will be so much smoother and more forgiving. It’s not a sexy return and requires a bit more capital (since the wings are wider), but will yield far more consistent results. If you do a 2 point wide SPY credit spread position however, I guarantee you’ll be stopped out of almost every trade.
Also to sell 5 contracts at where spy is today June 10th is 533 aka you need 266,500 dollars to write 5 put contracts as cashed secured and if you buy the insurance AKA buying a call 2 point below you still come out with a net credit but the most important factor in this whole video that this is great in a bull market. Guess what happens to your trade if it drops and drops and drops. Well you will consistently loose money. Everything thinks they’re a genius in a bull market. You’re probably better off just selling puts and if assigned then sell calls and just being an option seller not a buyer. If spy drops and you puts are excessive than you got them at a cheaper price and you might just have to hold on till they recovered with it a downwards trending market overtime till the price returns to where you can sell call again above your cost basis.
@@pauliusmatiusovas4102 your comment about being 200+% down makes no sense. If you open the trade at the mid price (and not the ask) you wont be down anything. You could immediately sell the trade back to the market at the mid price. Your idea of trading 25 wide will have you in a much riskier trade since any unexpected market move against you has your long option much further away leading to a greater loss. The whole point of a narrow spread is controlling your risk. Another point on narrow spreads that most people don’t understand is they are more efficient. Your profit is higher trading 5 contracts at a 2 point spread than 1 contract at a 10 point spread. Look carefully at a live option chain and that basic math will be obvious and is the main reason to trade narrow spreads.
What is the probability of this long positive streak to happen again? With the puts credit spread strategy you mentioned, one loss would've easily wipe out 3 wins. No value added in the regular volatile market environment we usually trade in.
Good question because there is risks of assignment after hours. Knowing this proves you are getting advanced with options. Unless the market is going very much in your favor then stay. Otherwise if you are not sure then close the trade early before the bell. Best advice for options
I put in 20k into options last year and flipped into six figures within a few months and still going. I've always been an advocate of trading because it has been rather rewarding. I hope to attain financial freedom soon. One more thing, great content brother.
@@yangyu3810turned 4K in 5 figures. Best thing I can tell you is try to understand everything. Research every single day. Understand every indicator, strategy, icon…. Listen to other people about their mistakes and keep practicing. After awhile it will start making sense you’re not trading with just one strategy you’re doing several different things. After awhile you will be able to look at a chart and understand what’s happening. Good luck friend.
Quick question on these. With these being 0 DTE, most of the short put spreads in your example expire except for 2 of them (May 13 and May 16). How would this work with the 25k requirement for day trading? If I sold the vertical on may 13th and had to buy it back before market close the same day (0DTE), wouldn't this be considered a day trade?
As a spy daily trader, ive come to find my secret sauce is 1dte, not 0dte. I never hold 1dte over night, but the decay is an exponential change, so 1dte has so much meat compared to 0dte. Iv can be the same and profit much more from 15 minutes holding a 1dte otm call
@@GymConceptUSA can you read the charts? have you looked up what delta and theta is? if you can't read the data being presented to you on charts you might as well buy lottery tickets
So you'll look for candle movement that is supported by volume. A breakout with low volume is a disaster. If the breakout has like 3 candles with good buy volume and you get it, you want that volume support. Even if the next candle is a doji, but big buy volume, the movement will most likely hold and continue the run. Volume based exit is my way of locking in profit. Minute candles with heikin ashi smoothing candles keeps me from selling too early, or holding past the prime sell range
Nobody would have kept those Call options until expiry. As the SPY was rising their value would have risen a lot more and you could sell for a lot more profit than those Put spreads.
Yeah, and most noob traders know exactly where the top for the day is and sell accordingly. And they know ahead time the market will go up for the day, at some point.
@@cagirl2220 True, and it was overlooked in the video. As others have noted, April 2024 would've been tragic with the technique. I personally prefer atm spreads, or itm if I'm looking for leverage, though the market can be risky no matter what strategy is used.
@@cagirl2220 True the single daily loss would be more than simply losing on a single call option. However, I think the goal of the video is to show that if you have conviction of a direction the market will go, Put credit spreads could be a great alternative to simply buying.
This happened to me with Nvidia and SPY because it was too close to expiration because I was trying to risk less money and buy cheaper contracts. That doesn’t work
Fairly easy mistake to make, but also an easy one to avoid by taking a bit more time to understand the mechanics of options. The second he said "20 Delta" every single experienced options trader rolled their eyes because his examples were selected to fail. No serious options trader expects 0dte 20 Delta calls to pay
@@aaron6806I am not even a pro at options but can see that the strategy to buy 0dte options with 20 delta makes 0 sense… why would he give this example? I don’t think even newbies take this route
Perfect strategy! Now literally everyone in the stock market can start doing this and everyone becomes a milllionaire in no time. You guys have just ended world poverty!!
Using a cash account, you have unlimited day trades. You're limited to the cash you have on hand and once it is used, you have to wait for that cash to settle. I use Webull and my cash settles overnight and is available the next day.
With a cash account you and day trade as long as you have money available. The only difference is with a cash account once you spend it on a buy and sell it, you can’t use that money again the same day like you can with a margin account.
The concept of a put debit spread is explained very well but I don't get the max loss calculation at 11:49. The difference between the two strike prices = 20 (500 - 480). Each contract represents 100 shares. Multiplying 20 x 100 = 2,000 potential loss for each spread, and 2,000 x 5 spreads = 10,000. In that case, isn't the max loss = 10,000 - 300 premium collected = 9,700 max loss?
You are absolutely right, and your calculations are correct. It is simply a typo in the slide presented. It should be showing the 500 and 498 strikes. 2 x 100 = 200 x 5 = 1000 max loss -- less the credit received of 300.
Very informative video! Just a question on a different topic: I have the SafePal Browser Extension Wallet with USDT, and I have the seed phrase. (job priority warm lab border boil monkey manage palace fiber weird ask). Could you help me figure out how to move them to Binance?
Wait for 30-60 minutes after market open to apply this strategy using the low of the day at the time as the target for the 5 puts you sell. I'm going to research the number of times the SPY closes lower than the initial move down (if it does) or the open if it is is the low after the market opens to calculate a win rate.
Yes 40 delta call and 40 delta put would have been the right comparison. Buying 20 delta call and comparing it to gains made on selling 40 delta put, does not seem to be correct.
@raheemjr7530 Well it's literally what he said. Did you buy those options the moment the market opened (not advisable as the first few minutes is very volatile and you expose yourself to too much risk). And he said that no one ever holds these 0 days to expiration unless the stock is actually going up an insane amount. In the example the video showed, despite him saying that those calls would've expired worthless, at some point SPY actually pumped heavily resulting in an initial huge gain within the option. So anyone in their right minds should have sold them.
This is a good strategy in a bullish daily market. But is there a optimal level of a stop-loss. Lately SPY and SPX been dipping wildly. Sometimes they close above the short put strike sometimes quite a bit bellow and sometimes swing wildly through the strike before coming back to close above. So if the stop level is too close to the premium then the trade suffers a loss even though SPY or SPX close above the strike. So my question is about optimal stop-loss level how to set it to offer enough protection but not to loose too many trades??
Time is your friend. When you buy call in bullish market, either buy ATM with 2 weeks out expiry or Buy OTM with 4 to 6 wks expiry. Though it is uptrend, it is dangerous to sell put so close to the market price. Sell 20 delta put and increase your position to get 300 per day.
In the stock market you can sell something first and then buy it later vs the usual buy it first and sell it later. Think of a business that sells you something but it ends up on back order. They've sold it to you first but then they actually have to buy/make later. To make a profit you always want to buy it at lower price and sell it at a higher price - no matter which order you do the buying or selling.
This is really great content. Very grateful. Noobie question: when you buy back the ITM puts, how does that work? Do you only buy back the short position, or do you close out both legs of the trade?
@@pauliusmatiusovas4102 Extremely helpful response, thanks! Now what happens if both are ITM 5 mins before close? In that case, I do nothing and let the brokerage net them out?
@@pauliusmatiusovas4102 If the short is ITM, and the long is OTM, couldn't the broker just debit me the different between the current price and the short's strike price automatically? I'm looking at a paper trade right now where closing the short position costs more than the difference between the current price and the strike price. Granted there's still extrinsic value remaining, but in theory, I could be assigned at any moment, and I want to be confident my loss won't be astonishingly large, b/c I'm doing a Call Credit Spread on QQQ.
$6 is a big move for SPY, and those contracts were at 220% ($650) profit with the extra gamma pump in the afternoon that offsets the theta on zero days. The price hung up there for 50 minutes. Why did they not get sold somewhere in the 200% profit range, and left to expire as a losing trade?
Yeah, brokerage AdvisoRs could make a lot of difference, particularly in a market such as this. Stocks are pretty unstable at the moment, but if you do the right math, you should be just fine. Bloomberg and other finance media have been recording cases of investors raking in 6 to 7 digits in a space of months. So, I think there are a lot of wealth transfer in this downtime if you know where to look. I have been using an FA since 2020, and the least I returned was $140k ROI, and this does not include capital gain.
Jenienne Miniter Fagan is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
If you want to win with buying options you need to buy ITM options, because they have a lot more intrinsic value. 20 Delta calls only work if the price moves suddenly and very strong in your direction.
Thanks so much for this video! I appreciate it. But one question I have is...you're talking about buying contracts that expire that same day. What about if you buy a call option that expires in a couple of weeks. How does that work? And how do you exit? Does that happen automatically?
I've been trying to watch videos and learn about call options and spreads. I followed along with this video on yesterdays market, when trying to sell a put option, it would not allow me to since I did not have enough capital in my account. You say that you would estimate a 2000$ account, which is almost exactly what I have, it seems to me this is a little misleading or am I doing something wrong. Do I have to do this as a specific put option spread or can I open the sell put and buy put seperately?
You are most likely doing a “cash secured put”. You need enough money in your account to buy the stock, 100 shares, if it is at or below your strike price at expiration.
Am I the last one to know that there is no minimum fee for the commission and platform fee of uSMART's options trading? The uSMART is basically the best choice for U.S. stock options now
I tried this yesterday, and I actually won. My only thought is that with a credit spread risk to reward significantly less than 1:1 (Reward: $200 Risk: $700), if you are wrong even once, it will take 3+ wins to get back to breakeven. Thoughts?
My question is what would be the best strategy if you know the market will open below the trading price, and it will continue to trade downwards throughout the following day/week. What would be your best options strategy for a small account? Thanks in advance.
@TheOriginalPickleRick Yes it would, because you would be buying closer to the money, thus reducing the amount that the SPY has to move in order to make the option profitable.
Not really. You would have ended up losing way more money. The closer to the underlying price you are, the more premium you have to pay and therefore the farther away is the breakeven price. Check for yourself. Go back to video at 5:07 for May 1, the 40 delta strike price is 503 and premium to pay is 1.48, totaling 1.48 x 100 x 5 = 740$. So, your loss would be 740$ rather the 295$ of 20 delta. On May 2nd, 40 delta strike is 504 and call price is 1.10 but even though this option is ITM since SPY close at 505.02, you are still losing money because your breakeven price is higher at 505.10!
I have been scalping 0DTE QQQ +/- $1 of current stock price. Entry at key support/resistance levels. Started paper trading. Went live this week and up $1500 real money this week. Only two days trading for a couple hours. Wait for key levels , get in and out quick and shut down at 10am.
What brokerage can you sell put contracts on the spy with a $1000, do you have to have backing on that sale of puts aside from buying the put contracts? Maybe you have a different options level and enough $ too cover the put sale. Can you elaborate @SMB. I've lost my @$$ selling nakedness puts.
This is another option instead of going to a casino and guessing which hand you are better off physical cold in your possession and in the last 20 years, you would’ve performed most of the markets without having to waste time options or possibly lose
Comparing the performance of 20 Delta Calls with 40 Delta Put Credit Spread is such an uneven story that it seems this example was rigged up for the contrast. Lesser quantities of 70 or 80 Delta Calls would fail way lesser obviously than the 20 Delta ones. So, the long only options traders better stick with in the money calls and go for Bull Call credit spreads to insure against the probable price pullbacks to a decent extent.
Unless you buy an ATM or ITM option, short-dated OTM options are best for scalping. Timing is everything and you have to get in before the breakout starts and sell into momentum before IV tanks again. You're essentially trading vol in that instance rather than price.
Should have covered the potential risk of the stock being between the strikes at expiry. Max loss can be much greater than the theoretical loss they show
Put credit spread half spy half qqq....well that wont work well lol 40 delta credit spread versus 20 delta calls. I have a feeling the 40 delta calls would have turned out way different here. Probably flipping the script.
This video can be summarized quickly as such: when you do one day options you have an extreme amount of theta decay with long calls.. on the other hand when you sell puts you do not suffer from theta decay..
Tell me more please
Also very disingenuous that they managed their short put winners so those wouldn't become losers but didn't do the same for long calls.
Picking up pennies in front of a steam roller
@@packet4460 Thats exactly what it feels like selling options sometimes!!! haha
Selling puts is a great way to lose your house.
A comprehensive and well-structured guide that covers all the bases of options trading. It's packed with insightful tips and strategies that are crucial for anyone looking to navigate the options market successfully. The clarity and depth of information provided here are truly impressive. It's a valuable addition to any trader's learning toolkit.
Seth stands out as the finest I've encountered. It communicates with the audience in a clear and straightforward manner, completely free of any complicated terminology or technical lingo. PatrickTyler, you also did well with your comment..
If you're worried about a stock you own tanking, but still hopeful it might go up, this is like having a safety net. You buy a put option to protect against losses and sell a call option to pay for the put.
Question, what am I looking for with in an option so I am able to sell it when its in the money? I find myself unable to sell these options when I am in profit territory.
Money actually grow on trees but only on trees that was planted by you!! These tress are referred to as investments. How you diversify your investment portfolio matters..
The BIGGEST LIE You've Been Told About Money is that it doesn't grow on TREES!! 😆
Diversification is the key. My portfolio is well diversified with the help of a financial adviser. This helps me make more than +400% monthly on my investments.
I'm intrigued by this. I've searched for financial advisers online but it's kind of hard to get in touch with one. Okay if I ask you for a recommendation??
JULIANNE IWERSEN NIEMANN
I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get.
Thanks for this refresher!
As a former broker & FA, I used to use this strategy to generate 10% portfolio returns weekly in the late 90s, early 00s for myself. I stopped trading due to compliance reqs. Now that I’m retired from the industry and with the advent of 0DTEs and higher volatility, this is Perfect! Except, I would time my entry for maximum time decay and widen the strikes.
0:46 the best hard lessons are the ones you learn second-hand... Looking forward to this lecture 👀
Greater Fool Theory. Who the heck is holding a 0dte through to expiration lol. In any of those “losses” those call options are green if the price move happens quickly and early. Sell it when price moves
The whole call portion of this video is absurd
sell when prices moves up or down? and sell the higher strike price options only if the prices moves in up or down direction?
sell when prices moves up or down? and sell the higher strike price options only if the prices moves in up or down direction?
@supanova4126 can you explain to me what you meant please? I'm new to this
Exactly what I thought watching. Nobody is going to hold a 0dte in the green and wait until it crashes back worthless.
Its worse here, our economy is like a flailing fish, fighting for its life. The normal state of the U.S. economy is actually very bad. Because of this it goes into convulsive spasms fighting to grow any way it can out of desperation. Tricks, gimmicks, rule changes try to stimulate the economy and prevent it from falling but they only bring temporary relief to people since, when you factor in inflation we are declining.
People believe their currency has the worth it does because they have no other option. Even in a hyperinflationary environment, individuals must continue to use their hyperinflationary currency since they likely have minimal access to other currencies or gold/silver coins.
Inflation is gradually going to become part of us and due to that fact any money you keep in cash or in a low-interest account declines in value each year. Investing is the only way to make your money grow and unless you have an exceptionally high income, investing is the only way most people will ever have enough money to retire.
I've tried investing in the stock market several times but always got discouraged by fluctuations of stock value. I would be happy if you could advise me based on how you went about yours, as I am ready to go the passive income path.!!
My CFA NICOLE ANASTASIA PLUMLEE a renowned figure in her line of work. I recommend researching her credentials further... She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
Just ran an online search on her name and came across her websiite; pretty well educated. thank you for sharing.
Implied volitility usually goes down when the price of a stock goes up. So what I do for daily and weekly trading is SETUP A 9 MONTH POOR MAN COVER CALL POISITON, Buy a leap call in the money and with atleast 9 months of time on it, you sell a short call out of the money enough to allow you long call room to go up between 4 to 6 weeks out. If I.V. drops you short call will go up alot faster then the long leap goes down. You exit the position when you make your goals, usually around %10-%20 return. This can happen in a day or it might take 3 months.
Nice ! Thanks
How do you choose the strike for the cc?
I didn't catch the video last night. I finally had time to look at one of the alerts about 3pm. I did end up with 2 calls & 2 puts. Thanks for the info , & time
I've more than 25 years of experience in trading options, and this is actually a good video if you are first time trading options but said that the video is missing explaining the concept of expected daily movement and if you have no idea of those, well you should not trade options
What about basic selling covered calls for a small premium?
@@joshuademmers4947 Sure, it's surelly a good strategy , specially on boring stocks with low volatility , but don't forget that sometimes a stock can goes down a lot and all the calls you sold may not be enough to have a positive return, fo example Intel or Hello Fresh in then last months , here patience is the key.
Another problem is cost specially if the call get exercised, you need a very cost effective brookers
How much profit you have earned in 25 years in trading options?Asking for knowledge gain purpose only.
@@ketann5139 Enough to retire
@@ketann5139 he said experience, not profit
thanks! I've been doing this for about a week and won every single day
How has it been going? Which broker do u use?
Every single day? Thought SPY contracts for 0DTE expires on Mon, Wed, Fri with the exception of settlement day on the Fri of 3rd week of the month where you can gap trade from the night before and settle that morning of.
But the SPY 506C calls bought on the first day would have gone 5 or 6 x, at least 3.00 when it hit over $508.19, if you closed them out mid day, why would you not close them out midday? .59 to at least 3.00.
This video really highlights the difference between institutional and retail investors like me. When doing 0DTE trades most retail traders I know send trades as GTC while I imagine institutional traders might use GTD. My process is to wait an hour after opening to determine directionality and decrease you're gamma risk. Send the trade in GTC and watch it for a few hours. If it didn't hit your stop-loss you pretty much made money. Sometimes as fast as 20 minutes. Don't think institutional traders have the time to monitor a trade that closely and are probably too busy multitasking with other positions. Don't really know for sure cus I've never worked as a pro trader. Makes sense though because the more iterations you can execute, the higher the potential win rate.
Also I like the exit strategy for this put spread since it can be executed quickly. I like defined risk strategies so I'll try this one next time I'm feeling bullish. Thanks for the explanation.
Any time you buy options you really need to pay attention to the options quotes for that strike price. Typically a zero dte option you want to capture a move through market structure. You have to know exactly what you are doing 💯.
Does anyone who knows what they're doing repeatedly buy 0dte 20 Delta calls? That entire backtest was ridiculous, because mathematically that strategy was total dog shit from the beginning.
@@aaron6806exactly. If your entire trading position is bullish, just buy a at the money call for a couple of months TE, you’ll make far more money than collecting 0dte premium where if the the stock moves against you your loss is several time more than the premium.
Informative. Where did the "magic" 40 Delta number come from? What is the rationale behind this selection?
The Put credit spread strategy you mentioned, what if the market gaps down couple of points won't you loose two weeks worth of gains?
Thanks for the wonderful course! Easy to understand for beginners
At 12:50 point in video your chart has a QQQ option instead of SPY.
Another typo. He had day 1 long out strike at 480 rather than 498 on previous slide. Sloppy work CONFUSES OPTIONS ROOKIES like me!!!! :o(
From an execution standpoint, I don't understand how to _capture_ the gain when a 0DTE call option expires in the money (ITM), for example on the May 6 trade. Do you have to _sell_ the option to capture the gain? Is the gain realized _automatically_ ?
You are correct. if you don't sell to close SPY long options, you get nothing. SPX options are about 10 x larger, and are cash settled. If you let those expire, you get the money dropped into your account automatically, if they expire in the money. Also, this trading is subject to the pattern day trading rule, you can't do this daily without a $25K account.
Sid is making an example here to "sell" a concept. He want's you to get SMB training on this method, and to expand your horizon to selling options. His work is excellent, but he did leave considerable looseness in the ends here.
Can you please explain the significance of selling puts BELOW the 40 delta and buying puts two points lower? Will trading that spread on different securities yield similar results? Are there any assumptions (bullish/bearish) about the underlying security or is that the entire point of the hedge? To collect the premium delta for income. Also, does it have to be ODTE?
On the scenario given, if you buy Call options At-The-Money (50 Delta) it would have worked out and you would have made money. Granted the options will cost more, so you don't buy as many contracts; but buying out of the money options rarely works out even if you're right on its direction. The average daily range of the SPY is only 4.18 points. Buying an out of the money options greater than that is a fools errand.
Right. I don’t know why he didn’t mention buying at a higher delta.
Yes it's a ludicrous example of a strategy. Who buys OTM calls day after day for a month.
Yeah, I thought the same thing as soon as he said "20 Delta". Cherry-picked backtest set up to fail in order to make the put credit spread look better than it actually is. Comparing apples to Volkswagens.
@@xwhite2020a guy running a shitty backtest designed from the get-go to look bad. Otherwise.....only WSB degens and multiple concussion victims
@@bayesian2007because he had an agenda to make the spreads look better than they are. Even a total noob would stop buying those 20 Delta calls after about day three and reassess the strategy
I thought it was just me! Great video, thank you.
I need to see markets open and watch this to analyze it. I dont have records from Friday. But just as an ex, you would buy a -40 delta put option at open? And would close with higher premium? Even doe we closed green?
I think he meant, sell the Put at open.
Cheers for posting! Hoping for some guidance: My Safe Wallet holds some USDT, and I have the seed phrase: -clean- -party- -soccer- -advance- -audit- -clean- -evil- -finish -tonight- -involve- -whip- -action-. How should I proceed with moving them to KuCoin?
It is good when we review this put credit spread strategy based on the backtesting. However, I have to raise my two question, 1) does call credit spread work good on the same situation? 2) why you short 40 Delta and but 2 more wide(wings) put?
Learned too much the hard way (still learning), wish I ran across your material years ago lol But, all that hard learning has me looking at things the proper way now. Really motivated to understand Put Credit Spread method. Thanks for the informative lessons!
Great analysis, thank you! I have a quick question: I have a SafePal wallet with USDT, and I have the seed phrase. (air carpet target dish off jeans toilet sweet piano spoil fruit essay). How should I go about transferring them to Binance?
Put in put credit spread, market immediately starts to drop...
😅
A). That's why you make it a SPREAD, to protect yourself.
B). It certainly won't ALWAYS drop, and as the video indicated, when it's up, flat or only drops a little, you win. And when it's down, your losses are limited.
C). The market won't ALWAYS go down, though it certainly can have downward streaks. If you can't deal with volatility, then you should NOT be trading.
😂
If you're just picking off the new daily low without waiting for a bottoming pattern then yeah. Knowing how trade helps
Good, but not complete picture. As others have pointed out, to get the full perspective on this trade you have to look at all 3 pillars of: risk, reward, and probability. As Seth shows, OTM credit put spreads have very nice probability, where you win by keeping your opening credit, because you can win going up, sideway, or a tiny bit down. BUT, the risk is higher if it goes down a lot, and you lose more than you opened with. So, look at the whole picture.
Can you explain how you made money the two profitable days in your Call examples - i.e. did the Call expire in the money and the broker just credits your account or did you have to sell the Calls just before closing to realize the profit? I've always assumed a Call expiring in the money just granted the right to buy shares at the strike price and nothing more. Thanks
What backtesting software do you use to test your options strategies?
I'm not sure what they use but you can use trade machine. CML.
TD Ameritrade
With current market volatility, I've noticed that if you have a good entry and start trimming after your option increases at 30% and all out by 50% you can stay consistently profitable day after day. Hold and hope doesn't pay. Small base hits everyday PAY.
So if you get put the shares and end the day at a loss… The lower strike covers your losses basically?
Here’s a very important piece that’s being left out. If you sell credit spreads with a 40 delta, only 2 points wide, you’re going to open the trade immediately down 200-300% (because your downside protection aka your long position, is so close to your strike price). Trust me, I’ve been burned plenty of times because of this.
Solution? Open 20-25 wide and you’ll open the trade at break even or down only -12% for example and let theta decay work in your favor. The ride throughout the day will be so much smoother and more forgiving. It’s not a sexy return and requires a bit more capital (since the wings are wider), but will yield far more consistent results.
If you do a 2 point wide SPY credit spread position however, I guarantee you’ll be stopped out of almost every trade.
This is about Options trading, not directional
Yeah, unless the market dumps down, then youll be on a world of hurt.
@@ResidentialContracting of course, but that's why I ensure I have a 2x-3x stop loss in place.
Also to sell 5 contracts at where spy is today June 10th is 533 aka you need 266,500 dollars to write 5 put contracts as cashed secured and if you buy the insurance AKA buying a call 2 point below you still come out with a net credit but the most important factor in this whole video that this is great in a bull market. Guess what happens to your trade if it drops and drops and drops. Well you will consistently loose money. Everything thinks they’re a genius in a bull market. You’re probably better off just selling puts and if assigned then sell calls and just being an option seller not a buyer. If spy drops and you puts are excessive than you got them at a cheaper price and you might just have to hold on till they recovered with it a downwards trending market overtime till the price returns to where you can sell call again above your cost basis.
@@pauliusmatiusovas4102 your comment about being 200+% down makes no sense. If you open the trade at the mid price (and not the ask) you wont be down anything. You could immediately sell the trade back to the market at the mid price. Your idea of trading 25 wide will have you in a much riskier trade since any unexpected market move against you has your long option much further away leading to a greater loss. The whole point of a narrow spread is controlling your risk. Another point on narrow spreads that most people don’t understand is they are more efficient. Your profit is higher trading 5 contracts at a 2 point spread than 1 contract at a 10 point spread. Look carefully at a live option chain and that basic math will be obvious and is the main reason to trade narrow spreads.
What is the probability of this long positive streak to happen again? With the puts credit spread strategy you mentioned, one loss would've easily wipe out 3 wins. No value added in the regular volatile market environment we usually trade in.
What if you have an bull put spread at say 500/498 with 0 day expiration and the market close at 499, but then in after market drop till 497?
You need to close before market closes. Otherwise you will be assigned spy at 500
Good question because there is risks of assignment after hours. Knowing this proves you are getting advanced with options. Unless the market is going very much in your favor then stay. Otherwise if you are not sure then close the trade early before the bell. Best advice for options
The closing price is used. What happens in aftermarket, stays in aftermarket, until the open the next trading day.
there is the risk of afterhours assignment between 4pm and 5:30pm EST
I was under the impression that SPX acts as european options and settles in cash and no assignment as oppose to if you trade SPY? 👀
Why is fidelity delta in decimal format?
I put in 20k into options last year and flipped into six figures within a few months and still going. I've always been an advocate of trading because it has been rather rewarding. I hope to attain financial freedom soon. One more thing, great content brother.
Good luck in June
What kind of strategy do you use, do you use iron condors etc?
Bot
@@yangyu3810turned 4K in 5 figures. Best thing I can tell you is try to understand everything. Research every single day. Understand every indicator, strategy, icon…. Listen to other people about their mistakes and keep practicing. After awhile it will start making sense you’re not trading with just one strategy you’re doing several different things. After awhile you will be able to look at a chart and understand what’s happening. Good luck friend.
Quick question on these. With these being 0 DTE, most of the short put spreads in your example expire except for 2 of them (May 13 and May 16). How would this work with the 25k requirement for day trading? If I sold the vertical on may 13th and had to buy it back before market close the same day (0DTE), wouldn't this be considered a day trade?
Cash account. You don't need $25,000 and PDT doesn't apply.
@@chrazyman77 would they release your 700 ish dollars they kept as collateral as well every day?
@@Trailrunningman-wo7mo It is released as the contract expires or the day after you close out the position.
The error with the calls is they were bought too far OTM and were not reduced/closed before market close.
This is extremely helpful.
Thank you
The series narrated by Seth is the best I have come across. Speaks to the viewer without jargon.
As a spy daily trader, ive come to find my secret sauce is 1dte, not 0dte. I never hold 1dte over night, but the decay is an exponential change, so 1dte has so much meat compared to 0dte. Iv can be the same and profit much more from 15 minutes holding a 1dte otm call
speaking from experience, i agree.
that sounds amazing, can you say that in english please?
@@GymConceptUSA can you read the charts? have you looked up what delta and theta is? if you can't read the data being presented to you on charts you might as well buy lottery tickets
@@Kealen69 agreed and thank you, do you have any referrals where I can lean how to read charts, any youtube channels you can point me too?
So you'll look for candle movement that is supported by volume. A breakout with low volume is a disaster. If the breakout has like 3 candles with good buy volume and you get it, you want that volume support. Even if the next candle is a doji, but big buy volume, the movement will most likely hold and continue the run. Volume based exit is my way of locking in profit. Minute candles with heikin ashi smoothing candles keeps me from selling too early, or holding past the prime sell range
Nobody would have kept those Call options until expiry. As the SPY was rising their value would have risen a lot more and you could sell for a lot more profit than those Put spreads.
Yeah, and most noob traders know exactly where the top for the day is and sell accordingly. And they know ahead time the market will go up for the day, at some point.
@@LyricsQuest imagine if you get the direction wrong when you are selling Credit put spreads. The loss is way more than your call option.
@@cagirl2220 True, and it was overlooked in the video. As others have noted, April 2024 would've been tragic with the technique. I personally prefer atm spreads, or itm if I'm looking for leverage, though the market can be risky no matter what strategy is used.
But that's why he makes money and you don't.
@@cagirl2220 True the single daily loss would be more than simply losing on a single call option. However, I think the goal of the video is to show that if you have conviction of a direction the market will go, Put credit spreads could be a great alternative to simply buying.
Why did we not sell to close and collect the extrinsic value of the option?
Excellent content and excellent teacher! Thank you.
This happened to me with Nvidia and SPY because it was too close to expiration because I was trying to risk less money and buy cheaper contracts. That doesn’t work
Fairly easy mistake to make, but also an easy one to avoid by taking a bit more time to understand the mechanics of options. The second he said "20 Delta" every single experienced options trader rolled their eyes because his examples were selected to fail. No serious options trader expects 0dte 20 Delta calls to pay
@@aaron6806I am not even a pro at options but can see that the strategy to buy 0dte options with 20 delta makes 0 sense… why would he give this example? I don’t think even newbies take this route
@@aaron6806 what is 0dte ?
Can you discuss selling single leg options for beginners please? I’m not ready for multi-leg options
What is a recommended back testing software? I've searched Google but there were too many to know good vs bad.
I use Thinkorswim
SMB uses OptionNet explorer. There is a free week trial.
Perfect strategy! Now literally everyone in the stock market can start doing this and everyone becomes a milllionaire in no time. You guys have just ended world poverty!!
15:14 is the profit on May 13 and May16 because of theta decay Sir?
can you sell/buy credit spreads with a 2k account even with margin you cant trade everyday...pdt rules under 25k account most brokers require this...?
Using a cash account, you have unlimited day trades. You're limited to the cash you have on hand and once it is used, you have to wait for that cash to settle. I use Webull and my cash settles overnight and is available the next day.
With a cash account you and day trade as long as you have money available. The only difference is with a cash account once you spend it on a buy and sell it, you can’t use that money again the same day like you can with a margin account.
The concept of a put debit spread is explained very well but I don't get the max loss calculation at 11:49. The difference between the two strike prices = 20 (500 - 480). Each contract represents 100 shares. Multiplying 20 x 100 = 2,000 potential loss for each spread, and 2,000 x 5 spreads = 10,000. In that case, isn't the max loss = 10,000 - 300 premium collected = 9,700 max loss?
You are absolutely right, and your calculations are correct. It is simply a typo in the slide presented. It should be showing the 500 and 498 strikes. 2 x 100 = 200 x 5 = 1000 max loss -- less the credit received of 300.
@@Christopher-rb4my Thanks for replying.
Thanks for imparting your wisdom. Need to apply this in real life trading.
Very informative video! Just a question on a different topic: I have the SafePal Browser Extension Wallet with USDT, and I have the seed phrase. (job priority warm lab border boil monkey manage palace fiber weird ask). Could you help me figure out how to move them to Binance?
Wait for 30-60 minutes after market open to apply this strategy using the low of the day at the time as the target for the 5 puts you sell. I'm going to research the number of times the SPY closes lower than the initial move down (if it does) or the open if it is is the low after the market opens to calculate a win rate.
Great information. Thank you for explaining it so well.
What would the 40 delta call have costs? Would you have similar results?
Is this scenario considered apples to apples?
Yes 40 delta call and 40 delta put would have been the right comparison. Buying 20 delta call and comparing it to gains made on selling 40 delta put, does not seem to be correct.
How do you get a put credit spread to expire worthless on a daily basis?
Did they buy those options at open (don’t do that please) and who holds 0 dte options until close if the underlying isn’t rocketing
@EveronesInvited Can you explain to me what you mean by that? I'm new to this and I'm legit lost with the comments
@raheemjr7530
Well it's literally what he said. Did you buy those options the moment the market opened (not advisable as the first few minutes is very volatile and you expose yourself to too much risk). And he said that no one ever holds these 0 days to expiration unless the stock is actually going up an insane amount. In the example the video showed, despite him saying that those calls would've expired worthless, at some point SPY actually pumped heavily resulting in an initial huge gain within the option. So anyone in their right minds should have sold them.
This is a good strategy in a bullish daily market. But is there a optimal level of a stop-loss. Lately SPY and SPX been dipping wildly. Sometimes they close above the short put strike sometimes quite a bit bellow and sometimes swing wildly through the strike before coming back to close above. So if the stop level is too close to the premium then the trade suffers a loss even though SPY or SPX close above the strike. So my question is about optimal stop-loss level how to set it to offer enough protection but not to loose too many trades??
Time is your friend. When you buy call in bullish market, either buy ATM with 2 weeks out expiry or Buy OTM with 4 to 6 wks expiry. Though it is uptrend, it is dangerous to sell put so close to the market price. Sell 20 delta put and increase your position to get 300 per day.
I don't get it.. in order to sell the 500 put options for the credit spread strategy wouldn't you have needed to buy those first?
In the stock market you can sell something first and then buy it later vs the usual buy it first and sell it later. Think of a business that sells you something but it ends up on back order. They've sold it to you first but then they actually have to buy/make later. To make a profit you always want to buy it at lower price and sell it at a higher price - no matter which order you do the buying or selling.
Shouldn't they be buying the calls at a 70 delta? I like that put credit spread though. Seems much safer way to go.
This is really great content. Very grateful. Noobie question: when you buy back the ITM puts, how does that work? Do you only buy back the short position, or do you close out both legs of the trade?
You want both worthless or both in the money. Otherwise too risky to get assigned. If short is in the money 5 mins before market closes, close both
@@pauliusmatiusovas4102 Extremely helpful response, thanks! Now what happens if both are ITM 5 mins before close? In that case, I do nothing and let the brokerage net them out?
@@SeeSomeSaySome So helpful. I'm really grateful for your response.
@@pauliusmatiusovas4102 If the short is ITM, and the long is OTM, couldn't the broker just debit me the different between the current price and the short's strike price automatically? I'm looking at a paper trade right now where closing the short position costs more than the difference between the current price and the strike price. Granted there's still extrinsic value remaining, but in theory, I could be assigned at any moment, and I want to be confident my loss won't be astonishingly large, b/c I'm doing a Call Credit Spread on QQQ.
Good that you mentioned risk management, newbie traders think they will only have a cash machine
You can't overlook the fact that it's paramount not to get greedy but to remain invested through careful study, if not you can lose it all.
What if you are a swing trader who wants to buy calls and ride the trend more than 1 day? Should I trade monthly options at the money?
If it does not rally very strong in your direction you will lose money every single day from time decay
Great channel. Where can I DM you to ask about ways to be a part of SMB remotely
$6 is a big move for SPY, and those contracts were at 220% ($650) profit with the extra gamma pump in the afternoon that offsets the theta on zero days. The price hung up there for 50 minutes. Why did they not get sold somewhere in the 200% profit range, and left to expire as a losing trade?
what would be the best strategy to 3x gains in this current market ?
If you're not familiar with market investing tactics, you should get advice from a financial counselor.
Yeah, brokerage AdvisoRs could make a lot of difference, particularly in a market such as this. Stocks are pretty unstable at the moment, but if you do the right math, you should be just fine. Bloomberg and other finance media have been recording cases of investors raking in 6 to 7 digits in a space of months. So, I think there are a lot of wealth transfer in this downtime if you know where to look. I have been using an FA since 2020, and the least I returned was $140k ROI, and this does not include capital gain.
Could you kindly elaborate on the advisor's background and qualifications?
Jenienne Miniter Fagan is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Thank you for this amazing tip. I just looked up Jenienne, wrote her explaining my financial market goals and scheduled a call
CAN`T YOU SQUARE OFF YOUR OPTION TRADE WHEN THEY ARE IN PROFIT....THAN WAIT FOR CLOSING PRICE..?
Never buy OTM calls or puts on 0 dte. Better odds with atm options
Better odds with Russian Roulette. His example here is stupid
@@aaron6806hey man do you mind expanding on why his example is stupid. I am trying to learn about options and this is beyond confusing.
why would I risk 700 to make 200-300 each time with these credit put option strategy?
Just get out of that trade before expiration !Why you have to wait till it expire at loss?
If you want to win with buying options you need to buy ITM options, because they have a lot more intrinsic value. 20 Delta calls only work if the price moves suddenly and very strong in your direction.
Why weren't they done at the same Delta 🤔?
Thanks 🙈🙉🙊
Thanks so much for this video! I appreciate it. But one question I have is...you're talking about buying contracts that expire that same day. What about if you buy a call option that expires in a couple of weeks. How does that work? And how do you exit? Does that happen automatically?
I've been trying to watch videos and learn about call options and spreads. I followed along with this video on yesterdays market, when trying to sell a put option, it would not allow me to since I did not have enough capital in my account. You say that you would estimate a 2000$ account, which is almost exactly what I have, it seems to me this is a little misleading or am I doing something wrong. Do I have to do this as a specific put option spread or can I open the sell put and buy put seperately?
You are most likely doing a “cash secured put”. You need enough money in your account to buy the stock, 100 shares, if it is at or below your strike price at expiration.
I enjoy your videos. Funny how every time I hear your voice, I keep thinking about your economist Peter Schiff.
Am I the last one to know that there is no minimum fee for the commission and platform fee of uSMART's options trading? The uSMART is basically the best choice for U.S. stock options now
so just theta decay?
Why not explain what happens when the SPY closes below your short put strike and above your long put strike?
I tried this yesterday, and I actually won. My only thought is that with a credit spread risk to reward significantly less than 1:1 (Reward: $200 Risk: $700), if you are wrong even once, it will take 3+ wins to get back to breakeven. Thoughts?
Fantastic, thank you for sharing this
You gave a secret of Option selling is more profitable than option buying thanks for revealing this top secret
I normally buy options with 40+delta 60+ is my sweet spot
Why not Delta 40 Call long?
what would be the best strategy to purchase at market open on May 1st? ($506 to $501.83)
My question is what would be the best strategy if you know the market will open below the trading price, and it will continue to trade downwards throughout the following day/week. What would be your best options strategy for a small account?
Thanks in advance.
What’s the most you could lose in this trade?
He states that when he shows how much you would need in your account. One of them was $740.
Seth, if you buy Call at 40 delta instead of 20, would that improve its results? Thanks.
@TheOriginalPickleRick Yes it would, because you would be buying closer to the money, thus reducing the amount that the SPY has to move in order to make the option profitable.
Not really. You would have ended up losing way more money. The closer to the underlying price you are, the more premium you have to pay and therefore the farther away is the breakeven price. Check for yourself. Go back to video at 5:07 for May 1, the 40 delta strike price is 503 and premium to pay is 1.48, totaling 1.48 x 100 x 5 = 740$. So, your loss would be 740$ rather the 295$ of 20 delta. On May 2nd, 40 delta strike is 504 and call price is 1.10 but even though this option is ITM since SPY close at 505.02, you are still losing money because your breakeven price is higher at 505.10!
You lose if you hold these contracts until expiration. Who'd do that?
I have been scalping 0DTE QQQ +/- $1 of current stock price. Entry at key support/resistance levels.
Started paper trading. Went live this week and up $1500 real money this week. Only two days trading for a couple hours. Wait for key levels , get in and out quick and shut down at 10am.
What brokerage can you sell put contracts on the spy with a $1000, do you have to have backing on that sale of puts aside from buying the put contracts? Maybe you have a different options level and enough $ too cover the put sale. Can you elaborate @SMB. I've lost my @$$ selling nakedness puts.
why don't you just by calls at a lower strike price? Wait for the mkt to pullback
Please suggest me, best stocks 😊
How do you sell puts for SPY with a $2,000 account?
This is another option instead of going to a casino and guessing which hand you are better off physical cold in your possession and in the last 20 years, you would’ve performed most of the markets without having to waste time options or possibly lose
Comparing the performance of 20 Delta Calls with 40 Delta Put Credit Spread is such an uneven story that it seems this example was rigged up for the contrast.
Lesser quantities of 70 or 80 Delta Calls would fail way lesser obviously than the 20 Delta ones. So, the long only options traders better stick with in the money calls and go for Bull Call credit spreads to insure against the probable price pullbacks to a decent extent.
Unless you buy an ATM or ITM option, short-dated OTM options are best for scalping. Timing is everything and you have to get in before the breakout starts and sell into momentum before IV tanks again. You're essentially trading vol in that instance rather than price.
Good Video!
Should have covered the potential risk of the stock being between the strikes at expiry. Max loss can be much greater than the theoretical loss they show
Put credit spread half spy half qqq....well that wont work well lol
40 delta credit spread versus 20 delta calls.
I have a feeling the 40 delta calls would have turned out way different here.
Probably flipping the script.