Our Huge Options Trading Blunders Series (Episode 1)
Вставка
- Опубліковано 20 чер 2024
- The first Options blunder we'll cover in this video is about the disastrous consequences of getting cocky and sizing up too quickly as an options income trader. Register for our free intensive trading webinar smbu.com/seth
#OptionsMistakes #OptionsTrading #OptionsIncome
SMB Disclosures www.smbtraining.com/blog/smb-...
i love this dude. believe it or not he's only 22. options be stressful.
😂
That was damn funny!
This man is a genius. Unfortunately for me, this actually happened. Exactly as he described. I learned from my mistake!! You can either take his advice or learn the very hard way and lose half of your account in a couple of days!
Amazing video. Still valid 4 years later. Thanks SMB
I can’t imagine option trading without the guidance of this channel - thank you!
@Sam Rai What's the matter with the paid courses? Just how do they suck, and why do you think so?
@Sam Rai why would you expect a refund?
@@RodJohnson86 To Tom: The manufactures warranty -- if it's objective and purpose doesn't work!
Been studying options trading for the past 6 months. These videos have really helped me to refine my strategies. Started live in full last month, and doing fairly well. Recently made $5k in 2 days trading index options. Thanks 😘
Glade we could help Stephen!
This is 100% accurate. Its amazing how much psychology plays into trading, especially at first. Even when don't think it will... it does.
I traded my account down 50% and it was the worst experience I have had in a long time. I have been studying, following instructions, expanding my understanding, but this point is exactly how it happened. I finally started reviewing all my trades, and realized I was setting my stops too tight because I didn't want to lose. I also realized I was chasing trades so I had to set bigger stops than I was comfortable with. The next problem was the biggest. When I had a big winner I would let it run, and it would always reverse, but I would convince myself it would rebound, and it would, after my option would expire. Short term OTM options in a small account, with only 3 daytrader in a 7 day period really restricts you. Once I lost a little I start going farther out of the money until I realized how insane and angry I was becoming. It is easier to learn good habits than bad ones, and more pleasant.
You described my mistakes as well. No matter how much we study and follow a strategy we still make them. The important thing is that we can figure out why we failed and make adjustments.
The only guy I have read in an options class to say this - amazing and true - shows you care about your students.
Perfect timing to see this after 3 good trades. Thank you!
I can attest to the options blunders. I built my account from $100k to $800K in 2 years using only call options. Then I made 2 mistakes/blunders I made two option trades at $150k each...yes $300k when I was only buying $20k positions at a time. Those two trades did not come through and I lost $300k in about 30 days. It took the winds out of my sails...I wish I would have seen these SMB videos before I lost my shirt. The good news is hopefully this web class will help me get back to making money NOT losing money.
Hope you can get back to where you were at Richard!
Trade smaller. Much smaller. It makes a huge difference
U trade only naked calls and no strategies.that is great.Need some simple but powerful strategy ..
You had an impressive run but buying naked call options is not the best strategy.
Recently turned 18. And Made my first trade yesterday and made $81 dollars on SPY with a put credit spread. Wouldn’t have done it without this channels information.
Your options trading journey has begun. Congrats!
dont lose it all in one stock son
buy LEAPS on the SPY
Great advice Seth! Much thanks for doing what you do.
Hi Seth, you are truly a legend by helping me out of my bubble of fantasy. Thank you once more for sharing your precious experiences.
Thank you .... This makes me think about the possible role of auto-trading. Your thoughts appreciated.
Thanks for making this video. Very timely for me. Just started on options: Cash account; Secured puts and covered calls only on ETFs.
Best time to learn this lesson--at the beginning.
Seth, great series of videos. These should be required for everyone that trades along with Top 10 Things I Wish I Knew Before I started Trading. Thanks for the tips to take notes and to journal daily. You would not believe how much that has helped to control my emotions.
I agree. I did exactly this swing trading and had trouble even putting in orders knowing how big stop was. Now I'm selling premiums and staying low and slow, and only jumping on the absolute best setups. The difference in IV, premiums, delta safety, and knowing a plan for when it hits the fan is so huge that it makes no sense to not screen out anything but the best of the best.
Did this the first time I ever traded options. Luckily, I only gave myself a little bit of rope 😂 Excited for the rest of the series, thanks for the value!
Seth, this is pure gold, thank you so very much
I think you just saved me a lot of money and heartache. I’m going to learn to do this the right way! Subscribed.
This is exceptional insight into drawl down psychology and training from a graybeard trading warrior. .
Weight training analogy BOOM 👊. I needed to hear this from a professional. Thank you 🙏
Believe me it's real.
Good encouragement is great!
Great video! makes perfect sense!😀👍
Solid. Don't underestimate the role your emotional humanity plays in option trading. I don't care how many courses you've taken and backtests you've run. When it's YOUR life savings, it'll be totally different.
I've done the exact same thing... Only now, I realize what was going wrong.... Probably, not too late to start doing it right..... Many thanks my friend 👍👍
So true. I was flyin high with options in BYND then a couple of months later I overbought bad options & lost everything I had made & then some. I am still recovering from the fear it instilled but will never give up options. Thank you for your informative video! Looking forward to the next one :)
Thanks LP. Just keeping it real :)
Thank you! this really is the nail on the head as the 1st blunder. I already have experienced this with shares of stock, I am now option trading, and have been mindful of this, but thank you again... as I have built my plan with too great of accelerated growth. need to scale back my time goal.
Just be more realistic Brett--realism always trumps fantasies.
This happened to me, I learned a very valuable lesson!
Big thumps up to you Seth loved the 1st episode on the psychology of trading options.Look forward to episode 2.
Thx Razzy!
awesome, got Episode 2 all lined up and I'm shooting it tomorrow.
Thank you for making these videos. I'm still not an effective trader, but hopefully I'm inching my way better.
Excellent video Sir! Thanks
Thanks Sathya!
Thanks for this!
i watched this video, then i learned the lesson (traded scared b/c of inappropriate scaling of position), now i'm watching the video again. probably time to start putting Seth's words of wisdom on a chart that i have to read before i open my computer!
Man words cant express how true these mans words are..
Keep this coming!
This is the best of the quality, thank you for putting this up.
SMB videos are the best, for option trading and day trading. Thank you.
Love your input Anne :)
Excellent training. Real World.
Hope you enjoy the remaining episodes also, Master.
excellent point. i learned early on {the hard way} that scaling in to your risk tolerance is just like scaling into a trade.
This advise on account size management could not be more important. I'm getting back into the stock market and trading. I made a small play on GME and got lucky and made a couple dollars. But the stress of watching the losses and gains during was sobering. I watch your videos and always do the math for a 1 lot sized trade to fit my budget and risk tolerance. The example of progressive overload in weight training is a perfect metaphor for trading.
Thanks for these videos this information is so valuable and relevant!
I wish UA-cam had double like button just for this kind of content. Thanks a lot!!!
Thank you for this. I've gone thru this.
What a perfect day to get into this video!! I got hit today with think or swim exercising me on a dividend. The option I shorted was never even in the money that day. I am so disappointed. I’m glad to stay in the game and keep learning. Thanks for the video guys!!!!! Let’s gooooo!!!!!!
Maybe it was a dividend that did it
What actually happened ? What position did you have and how did you lose?
Watch out for the upcoming episodes, Daniel.
@@sethfreudberg4750 I look forward to every episode! Always will! Thanks for the heads up Mr Seth and for always responding to the requests of the community! I'll be waiting! I appreciate each and every one of your guys' interactions dearly!
LETS GOOO!!!!!!
Nothing wrong with being Captain One Lot in this age of commission free trading.
Nothing wrong with that!
Lol Captain One lot
such a great nickname!
LETS GOOO!!!!!!
To Clarence Yee: There are still many brokers who charge commissions for options trading.
That is a very nice idea for a series. Thank you, Seth. :-)
thx! we are excited for it
We have to keep people away from terrible and costly mistakes.
Seth Freudberg yes, position sizing the account to gain seasoned experienced mindset of a trader is key 😉
Haven't run into this problem yet, probably because I'm new to options and still in the "timid" mode. Great videos!
Over time you'll build up things up and have more confidence in your trading. Keep things nimble in the meantime
PERFECT--now you can avoid this problem completely.
To Bailey Bay: It's good to learn many aspects, even though they may not be applicable nor even wise to apply all of them. Understand the rudiments and the lingo down to a tee. Focus upon the basics: simple options. Learn your trading platform from the inside and out, then, move on to other strategies. Ironically, complex and exotic options are just many or multiple legs of the same simple system.
------------------------------------------------ Akin to stock trading: To Buy a stock long is equivalent to buying calls. To sell a stock short is equivalent to *BUYING* puts (I need to stress) -- *B U Y I N G* puts, where if the price goes down, you, as the trader, will benefit.
The trader in this video illustration had taken a risky turn, where he was selling instead of buying puts.
Great advice
Thank you for this video … it sounds familiar to me!
very good advice.
A very good and very true video
I wish I had seen this a year and a half ago..... Thanks
Great advise. I can relate started to trade 3 month´s ago with 5000$ up 28% to 6400$ - My first rule was not to blow up my one count and after looking through some probability of loosing streak i came to the conclusion that i never risk more than 2% of my account in a single trade. I been doing some mistakes, mainly trading without waiting for the right opportunity. I am in the process off building the discipline to follow my one rules. Take the guessing out of the picture, be patience and not forcing the trade. How quickly should some one scale up ? let say to trade with 50K
He definitely right, it's going to take a long time to trade a 500k account with a 5k 😁
I just started last week selling cash secured puts and I'm doing good. 5 for 5 with almost $6,000 profit and my strategy doesn't swing crazy like the hypothetical situation in this video. I will not get overconfident but I totally understand how emotions play a big role in trading. But as long as you keep your emotions in check, use your indicators and don't get greedy I think it is very possible to be successful.
This is so true. I was doing really decent with a 3 to 5k account. Then I put another 10k in, up to a total of about 18k. I did one really good trade that got me up to 23k. I pulled out 8k in "profits." Let's just say I'm back down to a 3k to 5k account.
There's nothing wrong with taking profits. Its the best thing to do
Took me 2yrs to get past this issue. I made 1 wrong trade with too much size and it took 2yrs to shake that loss. However it did force me to educate myself more and become more picky in my entries. Without making that mistake I would not be where I am today knowledge wise. I am however still gun shy at times which has cost me a ton of opportunities. I did eventually come to the conclusion of trading with smaller size = less stress during the phases where I watch trades go against my position. So I execute size based on the type of setup I am getting into due to experience. I will not give a B rated setup the same size as an A+ setup. Also if I am 50/50 on a trade I tend to not take it regardless of A+ or not if I am not feeling something I've learned to trust my gut and wait for the next setup. There is too much opportunity in the market to rush into any positions.
Thank you sir 😀
Very right... happened to me!!
I rarely comment, but this one needs one: great point. Cannot agree more.
thx!
Love the video and I look forward to the rest of them. Perhaps mention that the amount at risk should be small when compared to net wealth and income. To a person like Bill Gates a -$50K loss is peanuts, and so maybe such an individual should start with $500K. But for somebody else, even a $500 loss is substantial and can't be stomached. Otherwise I like everything that you and SMB do! Thank you! :-)
Thanks Tickbird, we've got more of these lined up to shoot in the coming weeks.
I swear you are options god i learned too much from you thank you and please don’t stop providing this good and priceless educational material
To SMB, Mr. Seth Freudberg. This is a wonderful video you had produced: Much appreciated. In this illustration, the trader should have understood the parlance and language of options more precisely. If he had, he would have realized the symmetry of such: to buy calls and to *BUY* -- NOT SELL puts. If he had interpreted one word correctly, he would have been all right, safer; and this whole video ethos becomes mute.
Very good video great insight into the risks of trading
thank you!
@@smbcapital I bought a straddle ( sell call and sell put for NFLX 327.5 3 WEEKS back for 24 Jan expiry, with results on 21jan) also i bought insurance for ( 300 put mar20, 350 call mar20), is it a good idea to buy one more option on the losing side and average it out or to close the trade before results
Just keeping it real :)
Traditional stops hardly ever work in Options... Any guidance on how to effectively determine stops?? Would be extremely grateful. Thanks Seth 👍
1.5 to 2x, x=premium recieved
lmao I remember the first time I discovered options. I opened a Robinhood account for the sole purpose of practicing and deposited only like 200 dollars. I 3x'ed it and I thought to myself "Wtf have I been doing all my life??". I ended up activating options on my Ameritrade account that I've been investing into over the years and blew it all in about a week...
It happened to me and I lost 3 months of gains, which at the time was a substantial amount. Hindsight is always 20/20 and always live to trade another day!
Mr. Freudberg, I have scoured the internet to see if you may have books on options trading (basically everything you cover on this options trading playlist). But I did not see any. PLEASE WRITE A BOOK OR BOOKS. I would love to purchase them. Kind of like an options trading for dummies (which I've read) but better. Please! Thank you for your time and distribution of knowledge.
I can't agree this video more. I'm too late watching this video to avoid a huge lose last week.
I raised my capital from 17000 to 30000. And I make a huge stop lose because of the fear, which makes my capital back from 30000 to 10000. The next day, I felt very regret. But thanks to this video, I refresh myself and rebuild my trading strategy.
Really recommend everyone to watch this video before jump into the battlefield of options.
Definitely worth a watch!
100％ agree. I was constantly hitting those walls of risk being too large and scalp back, and again hitting those walls, until getting used to it. I wonder what is the best practices to build up risk tolerance in SMB Capital? I have a friend that plays sports betting and his bet 1k-10k each time (of course money isn't an issue here), but he told me once you have a large loss, you take the pain as a risk tolerance experience (i.e No pain, No gain), then you will eventually get used to the pain. I don't know if that is the right approach, but as Ray Dalio said it, pain is part of the process.
Pain of losing on a trade is necessary to gauge your risk tolerance and whether you are ready for the next level of capital.
I wish I watched this video last week Seth
This is why I hide PNL and stick to risk level regardless of size . Process and strategy is key
JB that is a truly excellent point. That is a technique that other traders use also. It's smart.
Psychological level is the key:) amen to that.
he is very professional !
Hey, this particular video, is my worst nightmare, I have not had it yet. I did set a spread take in $800 bucks one day and on the day of expiration the stop popped and slapped me for $2500.
A nice bit of reality to those who prey on people wanting to make money quickly if they will only follow the proper lead.
Thank you Byron.
I would say that the main reason you can’t trade the same with a larger account is that it’s a bit harder to get the right price for the greatly increased number of contracts. It’s much easier to hit your price on 1 contract over 100
If a trade goes against you, it's also going to be hell getting out. So, it makes sense you have to play differently, and size in/out differently.
Will Eagleton absolutely. That’s why whenever you see large volumes of puts/calls it’s typically a hedge position
Goose that is definitely a factor. We can cover that in a video actually.
Great videos ... change the green background or get a good graphics artist... I need to be pulled in further.
What do you think about day trading an Inverse Broken Wing Butterfly w/calls?
I need to know more to understand your concept, Bruce.
5 star video
This is better than college
Lol Lucky--I am a professor at the University of Hard Knocks.
I’m going to attend the seminar for the third time because I still don’t understand it
Bryon Lape What do you not understand?
I've been making $500 to $1000+ extra income per week by trading index options spreads. Want to eventually quit my job and do this full time for my own account. Thanks for the great advice, Seth.
That's awesome Michael! Over time you can bump that up
Michael that's great to hear, but you will undoubtedly experience losses. Backtest your strategy and make sure it holds up over time. What are your entry parameters for the trade you are doing weekly?
@@sethfreudberg4750 Seth-- I have been trading SPX vertical spreads, 7 days or less to expiration. I look at the Bollinger bands-- sell a vertical call spread above the upper band (~ 2 standard deviations above the SMA). Usually this would be a 10 delta or less for the call option sold. I will look at trading iron condors on the SPX too. But so far its been profitable with a simple vertical spread.
@@smbcapital yes indeed.. just want to be conservative now since I am doing this on the side from my full time job...
@@MajorLeague718 hey are you trading fulltime now?
What is the reason to trade options instead of day trading or swing trading?
Options let's you pick two sides of a contract and you can make money if the market goes up, down, or sideways. You can be the buyer with low probability of profit but large profit potential or you can be the seller with high probability of profit with smaller profit potential. Outside of trading for speculation, buying options is meant to be insurance for underlying assets. Selling options is like selling insurance. Or you can also think of buying options as gambling while selling options is done by the casino. But you have the option to be the casino. There's like a million other things, but that's the gist of it
Seth, are you from PA? I hear it in your accent.
I wish I would have seen this video a few weeks ago
The story of the man is me. In reality. Yes I want to retire quickly but I am trading my large account like a smaller account I'm too afraid To lose but always have thoughts of trading big
The one plus is you still have your big account Gregg... Dip your toes slowly. Maybe increase size one contract at a time until you feel comfortable adding another one.
This kind of panic can happen even to small accounts -- what matters is your own psychology and what your account balance means to you. In fact, I saw this panic happen to a UA-cam trader with a big mouth but a small account. He was proud of himself for avoiding a $3000 loss on a weekly covered call and only losing around $300 (IIRC), but what he did is that he got nervous, putzed around with his initial covered call by buying it back, opening a new one, etc...reacting to every normal swing of the market during that week. What I noticed is that if he had just not touched his covered call, he would've been fine since the price at the end of the week was basically the same as at the start, so he would've had his premium at the very least.
Man I wish I could find opportunities like this where I lived. I'd do anything for a prop internship.
guessing you're not in nyc?
@@smbcapital Unfortunately not. I'm in Vancouver, Canada.
@@smbcapital If you guys (SMB) ever open an office in Japan let me know.
Is India even on the list?
it starts @ 3:30
funny my account is 5k, I have been thinking about depositing money and trading with 30k. I am rethinking the idea after this video,
Trade up to 30k, then withdraw half. That gives you 3 restarts in case something goes wrong. There are brokers with $25k+ minimum account balances, so you may want to grow to that level.
You don't need to do nonsense like take-profits in case you blow up. You WON'T blow up if you're careful and thoughtful.
Bump your account up to $30k so you can have a margin account with margin settling, but keep $15000 in options buying-power available and put $5000 into conservative investments (international fixed income, REITs, non-correlated assets, etc that you may want).
You'll be able to increase your net-useage by 100% while still not freaking out and your account will grow and be easier to manage. As it grows into $35k-40k in the next year or two you can include the profits into whatever you want.
Feel the market is at a peak? Keep it in reserves (with the 15k). Feel it's undervalued after a big crash? Write some long-term naked puts out of the money for a good, but modest, return on capital. Comfortable with your size? Let yourself put on a little more positions than normal. Not ready to increase your size? Toss it in some REITs.
The point of the REIT's or other non-correlated assets is performance but easy to raise capital if needed to defend a position that went REALLY wrong. That's what I do at least and have steadily made good returns for 5+ years with options being my primarily position.
See if you can handle the losses you experienced at this level and gradually increase it, Adam.
What Seth is talking about is real
Five minutes and still waiting for him to get started
I noticed a typo. On the 2nd display of the math, it should say 4545.
I trade unusual options and made insane returns. If I yolo 5k or 50k into a trade one of these days I'm hitting 500k.
lol it is so me.
I thought this would be a helpful video, but it turns out I’m watching a video that is specifically directed at 20 year old psychopathic kids hopped up on energy drinks.
I fell into this trap and missed out on almost two years of returns.
Theoretically, if you start with $600.00 and double your money 15 trading days in a row, you would end up with shy of 10,000,000.00. Yes it's technically possible, but this is extremely unlikely, and reckless behavior. It would be easier to achieve this at a casino, than trading any asset. Personally I have done this at a casino once but with $50, had a winning streak of 5 in a row with black jack. Of course after winning the first time I took my $50 out to ensure I could not loose my initial capital. But then again this was pure luck. That was the first and last time I went to a casino. Sum of the story is that it was just pure luck. Always remember slow and steady wins the race.