I love buying calls on the dip of a bull run (30 day exp) and selling once it reaches the previous high, problem is there is two weeks usually left and even though intrinsic value is 100% gains the bid/ask sometimes is 80% and it kinda sucks to sell undervalued due to my trading rule, appreciate your insights in the video.
This guy failed to mention that the spy trade had a max profit of 450. But a max loss of 9,550. This is because he bought a 10 wide to try to get the 45 cents. Either way, he failed to mention ur risk and only mentioned ur reward. I hate when people do that on purpose.
Hi Travis, I always mention risk and trade management, but risk of buying the stock is substantially greater. Although that's the textbook max loss, we would NEVER take that risk with a stop loss and no overnight gap risk. Every chart example explained where we would stop out if the trade failed. Thanks.
Hi Travis, I always mention risk and trade management, but risk of buying the stock is substantially greater. Although that's the textbook max loss, we would NEVER take that risk with a stop loss and no overnight gap risk. Every chart example explained where we would stop out if the trade failed. Thanks.
Hi Travis, I always mention risk and trade management, but risk of buying the stock is substantially greater. Although that's the textbook max loss, we would NEVER take that risk with a stop loss and no overnight gap risk. Every chart example explained where we would stop out if the trade failed. Thanks.
yes, if Trump decide to send out a twitter in the middle of the day ( spy actually expired on that day so they probably had some trades on) and declare another round of Tariff these guys who one minute ago thought they were safe, next min they are in a blood bath
This strategy will work for you if you know howto read charts,if you enter this trade and dont know howto read charts you are just gambling,he is explaining that in the video,make sure you know howto read charts before risking your money,lucky traders always give back profit.
Always close out your position. Even at .01, because it's still worth something and therefore it can still be put to you to buy that stock at that strike. By buying you take all the risk away from being assigned the stock.
Joe, totally agree, that's what we teach too. The option holder has right right to make an exercise notice to the broker until 5 ET, so always post-market risk.
Master Trader but in the long run commission paid to your broker by closing out 0.01 worth of option is gonna be a lot more than the risk of letting it expire.
@@howo357 Check with your broker regarding closing out your credit spread commission for a small price. I have seen in futures, where they have "cabinet" bids, options prices under the smallest tick, that are zero commission. The cost incurred for notifying and exercising an option is higher than what you will pay in commissions. They want you to close your position to save them money. It is a win- win. So, ask your broker if they charge to close out almost worthless options.
Hello I have a very important question about stop loss You sell put vertical spread under support level and place stop loss under support when do you cut the lossing trade ? When the price touch the stop loss level or by dollar value? Thank you
The losing trade is cut when the stop level you set is hit. You use a Contingent Order, which tells your broker software, When if XYZ trades at X, close credit spread. What the credit spread price will be at isn't know exactly since that can depend on how fast prices moved to hit the stop and how much time there is to expiration.
I wish he added info on how much collateral you will need for these credit spread trades, it would put things in perspective for those who can afford credit spreads or debit spread
Hi Isawent, I just sent this answer to someone asking about his account balance to sell a 10-lot. I said "that's hard to say since position size is a function of your experience, volatility of stock trading, and account size. You should never risk more than 1/2 of 1% of your account on any trade. Spreads don't take a lot of buying power, but you don't want to arbitrarily sell 10 lots. But if you sold 10-lot of a $5-wide spread for $.50/share, for example, the net buying power is $4,500." There is no "margin" for trading options. So on buying options or spreads, you are required to put up 100% of the net option cost. Thanks.
Cheers for this, I been tryin to find out about "options adjustments strategies" for a while now, and I think this has helped. Have you heard people talk about - Winoorfa Option Olegroson - (Have a quick look on google cant remember the place now ) ? Ive heard some decent things about it and my buddy got amazing success with it.
I've managed to stay afloat by just buying simple puts and calls for about 3 years. But yes, it's a rollercoaster. Sometimes I couldn't believe I've actually avoided bankruptcy. Expiry date approaching, significant amounts of captial just becoming completely worthless, $80k loss imminent and then some call that was a total longshot is going to the moon with +1,000% or more. Phew, one more day survived. Now I can't live without the thrill anymore. It's definitely an addiction. My recommendation: Always keep enough money on the side for a guillotine. ;P
With the cooked market internals, we used this strategy for 100% Profitable Short Credit Spreads in Two Days in Tanking Markets. Master Trader delivered its subscribers 21 of 21 winning short credit spreads in the past two days while the markets bounced from last week's crash! Subscribe here to get these trades: mastertrader.com/weekly-options-trading-2/
I use to play poker as much as I could down here in Texas and yes I am addicted to the thrill but we can go about our thrill addiction in a out of the box method. I use to play online poker before they used legislation to protect the casinos by outlawing the transfers from those poker companies. When they should have passed legislation requiring a gaming license from online poker companies in the U.S. so we could play and pay taxes on our winnings. I recently started trading stocks. Wow, this is very different because I almost feel like I can't lose and I am playing poker with my short term portfolio. I do have a long term portfolio as well. My short term is my bankroll to use weekly in the market. In poker, I would sit in my chair as if the money I put on the table or in my account is already gone or lost! I also, remind myself that money is just how we keep count of this game and that I am here to beat the players and dictate the game at the correct time and withdraw at the correct time. I become unpredictable to increase my $$ or chips. In the stock market the stocks are my cards, share value is what my cards are worth, I am playing other players- the stock traders, the dealer-the market, and I am looking for patterns and timing - the market during the day, week, and month besides considering the volume when I am making a move by selling a stock at a value higher than fair share value or buying a stock much lower than the fair share value; and if the timing is correct I am winning by increasing my profit before my exit. I have gone up over 35% in less than 2 days and I have gone down over 42% in a week. I am learning but this week I got even and recovered my 42% lost plus a tip close to about 5% up. I am testing the waters to see If I can make money and do this for a living. I am also working and studying to pass a couple certification tests so this is part time hobby but this week I had time off so I did a lot of research on different oil companies. I am learning about options but I have a hard time wrapping my head that I am buying and selling contracts and not buying and selling a stock. If I lose on a stock it means I traded it for a loss or they went out of business. CPE is the stock I am betting on currently for Monday but they have been around since 1950s or something like that. They announce earnings on Monday @ 10. I live in Houston, so I can go down there and see what I bought besides all the research I did on the company and knowing they are in financial danger. Short term I am trading in oil at this moment until I increase my bankroll to put up some real money. Oil is trading cheap compared to other stocks and they are a little over priced at this moment in time because of what is happening. Buying and holding, Buying and selling stocks, and crypto-currency has been my overall strategy so far. I park my extra cash on hand in the short portfolio on crypto currency bit coin when the markets are closed but I must remember that even that cash there is lost as well. Sigh I just do not like the concept of unlimited risk in contracts because in a stock I feel like I have no risk because I already consider the money I paid to get the stock gone and lost. What I have left is a tool to make money when timing is correct or a tool that becomes worthless.
A lot of traders are known to over leverage themselves and that is the cause of anxiety. One trade should not make or break you. It’s a marathon not a dash. Best advise Ive got in my trading career
I wish he added info on how much collateral you will need for these credit spread trades, it would put things in perspective for those who can afford credit spreads or debit spread
Max loss is the cost of the spread, so if you're selling credit spread 350/360 for premium of $50, $10 spread x 100 = $1,000-$50 = $950 that you'll need to sell that spread
You can make the same amount of money selling SPY with 2-4 week expiration without having to worry too much about volatility. I prefer selling QQQ as you collect more premium. The strategy he’s talking about sounds more like day trading which we all know has 95% failure rate.
I agree on QQQ Been selling for past four months covered I think it time to cash my QQQ and worjy with spreads Carrying the underlining securities runs the risk of massive sell offs as seen start of the years Only due to the Feds money supply market revive ed and some Good luck mate !
Hi Billy, we obviously do that too, selling options that expire 30 days or less. This is just a focused video on selling 0 DTE ones which we love since there is no gap risk. Thanks.
Is your site down? I've been trying to look at your options education options (no pun intended) and I keep getting a 503 error. I also tried navigating to other areas of your site and received a message that the origin server is not responding.
Hi Dr. See, no the site is fine, perhaps try another browser if not working? For education on selling credit spreads, please see: mastertrader.com/trading-credit-spreads-for-income/ Thanks.
this is a powerful strategy . the times i lost was because i got too greedy and it went into my strike when i could have closed for 50%a hour before closing. the loser wasnt that big cause i use a stop loss
Well, it is NOT FREE MONEY. Option sellers take on risk, but our management with the charts and short time to expiry puts the odds overwhelmingly in our favor.
I can say selling 0DTE spreads and Iron Condors on the SPX has been my most consistent and profitable trades. I've quit doing it on stocks though. TDA risk management is trigger happy and more than once they closed out the short strikes 10 minutes before market close even though my short strikes were OTM by at least 2 strikes. A couple of times I ended up losing on the trades when they did this. I also lost any value that was in the long positions because they didn't close those out when they closed the shorts. Because SPX is cash settled, they don't do this to me. I will say that I use the ES charts to time my entries into the SPX. I guess a bottom or top based on the movement in the morning and place the spread on one side. Then I wait until the last hour to place the spread on the other side and most of the time and end up with an IC with double the credit as a single side with basically no increase in risk. Sometimes I can only get one side in because of the chart action. I can say I have taken a full loss only one time and I have closed early 2 different times for a partial loss. I probably need to start learning rolling to prevent these partial losses. But yea, I like selling 0DTE on the SPX. It is my favorite strategy.
@@rahsta106 Somewhere around 20 delta give or take. Don't remember exactly. I immediately on open set the put side and waited for the consolidation and set the call side to make them iron condors. I placed a couple more put spreads closer to the price throughout the day and added the same to the existing call side. Then I did something I highly recommend against. 8 minutes before close I sold 4 put spreads ATM for $0.25 credit ea. There was $3 and some change between my shorts and the price when I did that. But the chart told me it was OK... I want to stress that the mathematical risk/reward profile on my trades were very poor. I tied up 8k in margin for 9.5% reward
@@optionwhisperer-tradingtip3122 ok, my account is very small. I usually just one contract at 85% otm. A let it ride. On Monday i did a 3 dte. I close it today around 3pm. I got about 90 percent of the premium.
Dr. Elder is wrong, while you edited his words correctly, by saying “ otm buyers “ almost always lose long term. As a very ditm call buyer of the market, and always being in the market, ( mimicking s&p500 spy long term holders), i am obviously profitable as an Options buyer however you look at it. And obviously beyond the market returns due to dodging major falls. Your strategy is great as well even though i don’t use it for certain reasons. People will have to keep in mind that they have enough capital to handle few losses in a row though. The use of the technicals does definitely improve the edge of probability of profit. But again, despite the stop loss, people must know ( as you warned ), of the risk of loss and how much or how many times they can handle it in a row. If they can, many times, then long term they are in good shape. But if they will go bankrupt if they lose 5 times in a row, then its a problem they must be aware of. And yes it can happen. It’s really nice that you are sharing that knowledge with people freely. Great work!
Thanks, yes we love buying call and put options as DIRECTIONAL trades when confirmed with our chart bias, see: mastertrader.com/directional-option-strategies-for-swing-and-day-trading/
At 21:45 you said it wrong. For Put credit spreads you buy an OTM put for protection and sell an ATM or slightly OTM put for the credit. And yes these can work but there has to be dummies to buy them from you in these circumstances. I cant for the life of me think of circumstances when someone would want to buy these but apparently they do!
Hi Scott, thanks, will check it out. Don't think of all retail public taking the other side of ANY trade. Remember there are market makers who provide markets like this and will simply hedge it off.
Always make sure you close out the trade rather than letting it expire worthless even for a .05. Options can trade past the 4pm est market normal closing time and catch you.
Hi John, only options on certain ETFs trade until 4:15 ET; however, we also recommend closing to avoid assignment risk which could occur from the option holder making a timely exercise notice based on post-market news. Thanks.
Nowhere in your video, you have talked about margin requirement. @ 10 strike for 1 contract, you need $1000. for 10 contracts, $10,000. So, you are INVESTING 10,000 to make 450 on one day. If you trade three, you need 30,000. Though you are trading credit spread, you are indirectly taking a direction that the stock doesn't reverse. Isn't more profitable to spend a fraction of this amount and buy DITM call or put and make much more and make weekly income.
Orkayen, yes we do talk about buying power consumption when calculating ROC; however, selling options/spreads by definition require much less $$ than trading stocks. And yes we buy options for directional trades all the time. In fact, I just published an article on that exact topic, email me at dan@MasterTrader.com if you would like a copy.
orkayen, buying power reduction (margin) on selling 10 ODTE OTM SPY vertical put spreads (today) one srike wide would be around $800 (with TastyWorks broker). The margin is only on the difference in strike price less the credit received.
Technical analysis (charts) is the best way to predict the… past. I’ve never seen a chartist who was unable to look backwards and explain why he was right. I’ve seen many who were wrong about the future. I would say their success rate is exactly the same as flipping a coin. I’ve been studying technical analysis for over 10 years and that’s my current opinion. Oh, and I share that opinion with certain others like Warren Buffett.
Like I explained, their are many ways to "skin the cat" but why would any reasonable person ignore such valuable information which would turbocharge their results?
@@andrew_zed3162 some people invest in far otm options because they are dirt cheap and if there is a sudden move in the market, they can get multifold returns. If the move doesn't appear, they lose very little amount as the premiums were quite meagre to begin with.
@@loathedhated when I tried this method with paper trading 100,000$ account - selling puts OTM - at first it completely rejected my fill saying I didn't have enough capital to support the trade. Then I tried a smaller amount(around 100$ or so) and it put me at something like negative 80k immediately. There must be something I am not understanding about this method.
@@andrew_zed3162 selling the put would mean you're willing to buy the stock at whatever strike you chose if the price goes below your strike, and to do so the broker immediately earmarked the $80k when you sold the option to make sure you had enough to fulfill your obligation. Once the expiration passes and expires worthless orrrrr you buy back the option to close it out early, you should get that money back that was earmarked. may take a day or so to "settle" though.
Slim, first, on short credit spreads, it's the spread width less premium received. Not much at all. Second, we don't take assignment; rather, we manage with the charts to profit or stop. The return on capital (ROC) is incredible! Thanks.
Exactly I love how he says we don't take assignment. Well, u say you're using the premium as cushion that means your stop is through at least on leg of the vertical so ur gonna take assignment when the CBOE says so
Hello For the weekly experetion To take weekly paychek by Friday If I open trade on Monday and whant to let option expire and take all premium what DTE option contract should I to choose Of 5 days or 7? Thank you
Don't worry about Monday or Friday. The strategy is to sell short-term expiring options (10 days or less) with the charts -- both for entering and managing. The charts will dictate how long you are in the trade, but we generally close around 80% of Max Profit if we get it fairly quickly. Thanks. You can get these trades here, mastertrader.com/weekly-options-trading-2/
Pramod, on short credit spreads, it's the spread width less premium received. Not much at all. On naked options, it's roughly 20% of the short strike, much less than trading stocks. The return on capital (ROC) is incredible! Thanks.
I just sold a put spread on the $QQQ 11 sept 20 265 put - 10 11 sept 20 250 put +10 As long as my spread stays out of $265 I will make a profit My reason on why I put the trade? The QQQ( Nasdaq ETF) is currently trading at $279 which is $14 out of my strike price. Than what is the like hood the Qs drop $15 in 2 days? Well that s very low an chance specially after the 2 huge down days we had. This has an estimated of 96%.61 chance to expire out of the money. Now lets talk about the trend 1 up trend 2 above 50 ema 3 huge support at 270 ( volume profile shows it) look at the daily chart and you will see that we are in a pull back zone. Now my risk is huge but I wont let it go to far from be because I will be monitoring my trade .
It’s not. The gamma risk and portfolio volatility isn’t worth. It sounds good on paper but eventually when ppl like this get caught in a big move there’s no way to adjust, or roll out because the DTE is too short.
Taylor, the only 100% way to not get assigned is to close a short option prior to 4:00 ET (or 4:15 ET for Index ETFs since many options still trade, but will be less liquid). We recommend closing to prevent margin calls or surprises (unless don’t mind be assigned per your Trading Plan). In reality, it depends what post-market moves happen in the underlying prior to the Exercise Request deadline (5:00 ET or sooner?). Additionally, the option Holder must be watching to make an Exercise Request decision in anticipation of booking the unrealized gain the following trading day. If the Holder Exercises, both will be taking the gap risk until trading resumes. NOTE: SPX Options are cash settled based on 4 ET Settlement Price, so not apply.
Most videos are better at 1.5 or above. The brain processes fast speaking better than slow speaking, which seems backwards but it's really true. I watch all videos on speed 2 lol
"People can't predict the market, daytraders always lose" "I can predict the market, we're going to do it in 1 day and make money" But he has something to sell you, so it's all good.....make sure you pay him for his courses, they'll be real valuable /s
@@sabriath This is how I make money every single day. I quit 6 digit salary job as a cyber security engineer and I'm doing this for couple of months, It needs discipline and knowledge but it's possible. simple but not easy.
@@sabriath I understand how you feel, it's the feeling I had few months ago, but believe me it looks dumb and stupid but it works 100%, when you learn the game-play. I feel I wasted all of my life.
Hi, absolutely not! After this simple 5-Module seminar, you are ready to start with small position size, mastertrader.com/advanced-credit-spread-course/
I hit a like button i am new at this but interesting so do u use naked put or call for this strategy or use only credit spread just curious. Mahalo. All the way from Hawaii
Bronson, welcome from Hawaii ! Spreads are better to limit maintenance requirement, just go far enough out on the long option so that you are only paying pennies for it (and, as always, make sure they are liquid with tight spreads). But many of us, including me, sell naked on 0 DTE day. Thanks.
@@MasterTrader thank u for ur professional reply i am very new at this but i am interested in learning about options this is really brain training for this old Asian man i am a grandpa lol i do enjoy new videos and ur old ones i watched ur expiration date trade many many times i make sure to hit a like button for each warm aloha from Hawaii please stay safe and healthy with u and ur family. Mahalo
Interesting strategy!! The one downside might be if the underlying goes deep ITM for any reason there won’t be any time to make adjustments. But will be watching more of their videos to understand their strategy better.
Is it a good idea to have a sound understanding of a companies fundamentals or just charting? I noticed below you mention getting a loss yet still winning by placing options on SHOP and LRCX. Both of those companies were being pumped extremely hard by the Fool! Also do you take notice of Short % like Tesla where 46% of All their stock was shorted so once the price began to move positive it was a massive short squeeze all the way above $900 or are you taking that massive win?
Dan: the TSLA chart at 29:21 shows exactly where I would sell a bear call spread at R (or buy a PUT) on any DTE within 10 days. But from experience I've seen you sell these spreads at S looking for more downside. I prefer to take in more $$ then have the chart bring me to those areas of possible reversal / sideways or more downside. Is this TSLA discussion just relative to a pattern on 0 DTE . ? Thanks
If you sell 10 lots of SPY 100 points above the current market, couldn't you simultaneously BUY a ton of OTM Nadex binary options (also expiring at 4:15pm) below your options strike? This would be a win/win situation. If it goes up too far, the Nadex OTM binaries would be worth more than your loss on the options. If the options expire worthless at expiration, you make more on those than the loss on the Nadex OTMs. Am I missing something???
While I agree that positive theta is advantageous. The 80plus percent options expiring pitch is untrue and is far more dynamic than that simple statement.. The cme says the following... According to The Chicago Board Options Exchange (CBOE): Approximately 10% of options are exercised (The trader takes advantage of their right to buy or sell the stock). Around 55%-60% of option positions are closed prior to expiration. Approximately 30%-35% of options expire worthless. The CBOE goes on to point out that having an option expire worthless says nothing about the profitability of the strategy that it may have been part of: Multi-legged strategies can often require that one leg or more expire worthless although the strategy as a whole is profitable. Option positions closed prior to expiration may be profitable or unprofitable. Options that expire worthless may not be unprofitable if they were part of a strategy that involved other securities such as covered call writing.
question about shorting puts and exercising early to buy stock example underlying currently selling at 49.50$ I'd like to sell the 36$ put there is current;ly volume for the 36$strike with a premium of 0.50$ which should lower my cost basis to 35.50after I exercise the option seems like a good trade to buy shares below market the price
Brad, yes, selling puts on stocks you don't mind owning is a "no-brainer" method of either making $$ (premium received) or buying stocks at less than market value.
The example at 23mins, he sells 10 naked puts at the strike of $279.5 to make $210 dollars in less than 4hs, fair enough, just be aware that the margin for this trade was $279,000 thousand dollars, way beyond what most small accounts could handle. Anyway valuable information that provides other way to profit. Thank you for the video.
Hi, yes I always say if margin is not an issue, but 99% of the time we sell credit spreads even on expiration day, just go far enough out on the long option that only paying 1-2 cents for it. Thanks.
We don't mind constructive criticism. Feel free to describe exactly what you think is bs. This is is one of our favorite, most profitable strategies. Tune into MT Live on 4/29/20 to learn!
Thank you for information. I did weekly option today expired. i did today. I have question about option assignment. I sold naked put option GME stock at $300 and stocks close $328. but the after hour GME stock it drop to $294 and bounce back to $325. That means I may get assigned. Please advise I scare GME option. I thought after hour drop I wont's get assigned
Raj, Option Holder has the right to make an exercise notice to the Broker by the deadline (even if the option expired OTM at 4:00 ET). So there is a chance depending on what Holder does based on post-market gaps.
Information on the prices of the courses in the video is not the same on the website. The "Silver" course is the same $97, but the other two are not, $597 and $697, for Gold and Platinum, respectively. This video was posted in 2018 so the prices have increased with inflation or because of high demand????
I like selling OTM options but I haven't done much of these spreads. I prefer to go further out of the $ to minimize risk, but I'm curious if I did the spreads if I could maximize my return on collateral. That trade would make sense if less collateral was needed.
People beware of his intentional omission of the risk dollar value. In one trade he was risking $10 to make $1 this is crazy. Don't focus on the return on capital numbers as they are always high for options. The R:R is nuts
This cat is another novice who does not understand our approach. We are NOT RISKING MAX LOSS in a 0 DTE trade! We take stops based on charts. You obviously are just following the mis-information novices out there and are ignoring the information in the video. We rarely lose more than 1:1, so a 85% batting average is a beautiful upward earnings curve. Thanks.
@@MasterTrader Wow! now I know that you are intentionally misunderstanding my comments. One more time, what is the theoretical R:R when you open the trade not the average R:R based on several trades. When you open a trade you don't know where its going and the full option spread or worse the exercise value (if naked) may indeed be your loss based on your approach. It's nice that you can manage it to be 1:1 (which I still don't believe) but what is it when things go wrong from the get go. And one more time, you didn't state the R:R in the video or your at risk amount ($) It's a profit side only analysis, and you and I know what kind of traders present this way ;-)
How does this course/training work and how do I get started etc? Is the training done via videos or interactively? How would I ask question during the training if I have any? I already have some Options training but everyone has their own strategies and rules so I would really like to know how you are able to sell options on the day of expiration because I have never heard of that one before. Is there like a Forum like Discord where we can ask questions etc?
Hi Ray, Courses are recorded that are available 24-7 to watch as many time as you want. Learning this way is superior than listening to a live presentation, which is how we used to do it. It's great in the moment, but no one can absorb it all in a short time. We follow up the with live monthly coaching session to review course material. So, the education and support doesn't end after the course. We are also available via emails. And if you're in the Green Room, we review trades and Q&A every day. We do 0 DTE credit spreads every M-W-F on SPX and weekly 0 DTE on stocks Fridays. Email support@mastertrader.com with other questions.
Most people their brokerage firm wouldn't allow 10 lots, because if your Spy was put to you you would have to have $350.000 in your account to cover if it were put to you
Hi Vinny, we trade both directional (buying options) and selling options/spreads around compelling patterns for income. We sell options with 45 DTE or less, but prefer 10 DTE or less because of the rapid time decay. This video just shows you the tremendous benefits of selling options that expire the same day (0 DTE) for getting paid for just calling a short-term bottom/top for the day! Welcome!
I would just buy a call or put the same day expiration....better than trading futures bc options won't stop you out. You risk more with credit spread then buying a call or put little out of money both cases you have to get the direction correct for that short period of time.
We buy options also for directional trades, including on expiration day; however, to buy 0 DTE options, we typically buy deep ITM so not to pay time value, unless we expect a huge move.
IDK let's see but I clicked on this because I had a thought about what if we did this on expiration date. Is that even possible? But I'm assuming this video will shed some light on the matter
Duck, you are right. Talk is cheap in this industry, with many crooks out there. Feel free to take a trial to our Green Room and watch us trade live each market day.
If both puts are out of the money at expiration, you keep the entire credit. If the put you sold is IN the money and the other one OUT, you will be assigned the shares (so make sure you have enough money in your account; OR close the whole spread before market close at whatever price is available). If BOTH puts are in the money, you will be assigned the shares and have them sold and you will pay the difference between the strike prices. Most brokers will do it automatically for you. So your maximum loss would be the difference between the two put strike prices minus your initial credit. Hope that helps!
You're putting 20 times of your potential profit at risk, risk:reward of 20:1, one single time you're wrong will crush your gains. Sure you could adjust your position, but you'd have to watch the charts like a hawk.
Desprima, you are incorrect on risk:reward because of the way we manage with the charts. We NEVER take Max Loss on a 0 DTE trade, impossible. Here's one we did last Friday , booking 87% of Max Profit in a few hours: 8/7: AMZN - Shorted Aug (8/7) 3250/3270 call spread for $1.60/share. 8/7: Covered half $.40/share, move stop $3204, bid 2 cents to close
@@MasterTrader I understand you actively managed the trade, but the risk:reward profile of the trade (for the amzn trade you mentioned) the very second you took it was 12.5 to 1 - that's a fact - there's nothing to disagree about. You risked $2000 to pull in $160 credit - everything you did after that was just managing the trade to lower your risk. A stop loss at 3204 also only works in the case of normal price movement activity, in case of extreme price movement activity, your potential max loss is the real stop loss. My comment before wasn't to down play your strategy, many people use your strategy or a similar version and have used it for some time, but the risks are still evident and could crush a portfolio in the unlikely event of major swings in the market all happening in a short period of time. A well known trader who used a variation of your strategy was Karen the Supertrader - who might have very well been profitable for years, only to lose somewhere in the ballpark of $50 million when the unthinkable happened. However she was selling naked options, you're using vertical spreads with defined risk, as long as your "win" occurrences are MORE than the average risk:reward profile of the trades you're placing, you'll come out positive in the end - I'll give you that, but positive by how much? No one can truly know.
I see that some American brokers no longer charge for closing an option position. British brokers still charge for closing (as far as I am aware), which increases the overall cost of option trading.
yes i agree that your strategy has benefits but you cannot deny the fact that sometimes buying naked options can outperform selling them. Here is an example, the moment before FOMC fed announcement a week and a half ago, SPY puts that were a couple dollars out of the money were trading at around $0.37 each with expiration on the same day. later in that day towards the close, I recall they were trading for about $1.87 each. if you bought a put that was a month from expiration it would have increased from 4.00 to about 6.57 which is no where near the rate of return. My point is that sometimes this strategy will not work if the market is expecting a massive move in one direction. If you have reason to expect an explosive move and IV is relatively low, its not always a bad idea to buy options. i myself only trade naked options on rare occasions however and have had success with the bear call and bull put spreads as well
Ellas, absolutely you can make more money buying options for directional trades -- we do it every time a pattern sets up on Multiple Time Frames if the options are liquid. But selling options are easy to find, trade, and manage since don't need the same precision in just calling a short-term top or bottom. Thanks.
If you really think that the equity reached a top or a bottom at expiration day, for whatever ta you are using, it isn't much better to buy a put instead of selling call spreads or buying a call instead of selling a put spreads? At least this way by buying you can never lose more than your premium and by selling spreads you can simply get murdered by a black swamn event.
Ivo, excellent question, thanks. We do teach directional option trading with buying options and debit spreads; however, we need a bull/bear bias on Multiple Time Frames to do that. And we rarely would buy short-term expiring options because of the time decay, so would go out in time. We call selling options Income Strategies since we are merely wanting to keep the premium for calling a short term top or bottom for a short time. And we never take max losses with our stop/trail management approach. Thanks again.
Click bait...... You better have at least 1k ready to buy 1 contract of any of these stocks he's talking about I do the same as him but I just ride waves buy 10 down from current price whether call or put buy 5 of each on spy which now costs me maybe 75-100 and I use the momentum in and out within 30 minutes..... You have to look for a high volume (one with alot of action 50mil plus) stock WILL NOT WORK on many stocks FEW will allow this type SPY always..... Please be very very careful with this information though it is very informative it is also very misleading.... If you have a couple hundred use spy and go OTM and be in and out with in a max of 2 hours MAX do not hold all day that will be your biggest mistake watch your candles once the quick up or down is over SELL SELL SELL do not get greedy
I've grown 100 into 900 in 1 week using what he says buy cheap ask/bid and buy large volume of them wait for a 4-10 cent move ( on ask/bid) do not get greedy !!!!! Sell the moment it changes (validation) use 1 minute candles if you have money left over you can choose to get back in and go again
Hi Joel, Everyone needs education for trading any market instrument. Credit spreads can be one of the highest probability strategies However, without knowledge of chart analysis and proper position and money management, credit spreads can be one of the worst rewards to risk strategies. So, yes, someone with minimal experience should not trade any strategy that they don't fully understand. Robinhood has had a few problems recently, so I personally would trade there. And so realize that free is not free. Your order flow is sold, which may not provide you the best execution. IF the platform technology at Robinhood cannot create and execute credit spread trades at a mid-point, You don't have the right tools trade with. The platform also must have the ability to setup Contingent Orders. All the best, Greg Capra
Kareem, absolutely, it is one of the easiest strategies we teach, but you do need basic understanding, of course, of chart patterns and option strategies.
Who actually buys options on expiration day unless it's massively past the strike?! You can get holding an option you can't sell. Seems like silly advice and very over generalized.
@@MasterTrader assuming someone buys it. Then you're stuck exercising the option for profit. That's a lot of capital to have to put in for expiration day options?!
fundamentals are like the resume of a stock you cant ignore that, it will give you an idea of the future outlook of the of the company an stock price future. if a company continues to lose money every quarter then what do you think will happen to the share price eventually?.
This is just superb, been searching for "stock option trader" for a while now, and I think this has helped. Ever heard of - Winoorfa Option Olegroson - (search on google ) ? Ive heard some extraordinary things about it and my m8 got cool results with it.
Bl Ah yeah I do let them expire, sometimes I sell them like at 80% profit to lessen the risk, like if I sell the Iron condor on wednesday and sometimes by Thursday I already have 70-80% i just buy it to close
Jaemis, excellent question. We sell them around compelling chart patterns in all volatility environments, but prefer in high volatility (after sell offs to support, or after earnings/news) since we get paid more for selling them. If volatility rises, we indirectly manage the volatility risk (vega) with the charts.
The only way for that to be reasonably profitable after considering the bid ask spread and commissions is if you were selling spreads with a round trip net premium of, for example, a few percent of your margin requirements, but those spreads are only going to be 5 percent out if the money even a week out. The closer you get to expiry, the closer those spreads would have to be. The idea of coming in and scalping premium it is just ratcheting up risk time get more return. The likelihood of the options going into the money becomes very high, given the same daily return.
You need a bare minimum of $25,000.00 in your account to sell option contracts. When you place an order “sell to open”, it will say max loss: $35,000.00, max gain $400. Be careful
I love buying calls on the dip of a bull run (30 day exp) and selling once it reaches the previous high, problem is there is two weeks usually left and even though intrinsic value is 100% gains the bid/ask sometimes is 80% and it kinda sucks to sell undervalued due to my trading rule, appreciate your insights in the video.
Three years later - and this strategy works JUST as well! Thank you gentleman @ Master Trader
Very welcome!
This guy failed to mention that the spy trade had a max profit of 450. But a max loss of 9,550. This is because he bought a 10 wide to try to get the 45 cents. Either way, he failed to mention ur risk and only mentioned ur reward. I hate when people do that on purpose.
Hi Travis, I always mention risk and trade management, but risk of buying the stock is substantially greater. Although that's the textbook max loss, we would NEVER take that risk with a stop loss and no overnight gap risk. Every chart example explained where we would stop out if the trade failed. Thanks.
Hi Travis, I always mention risk and trade management, but risk of buying the stock is substantially greater. Although that's the textbook max loss, we would NEVER take that risk with a stop loss and no overnight gap risk. Every chart example explained where we would stop out if the trade failed. Thanks.
Hi Travis, I always mention risk and trade management, but risk of buying the stock is substantially greater. Although that's the textbook max loss, we would NEVER take that risk with a stop loss and no overnight gap risk. Every chart example explained where we would stop out if the trade failed. Thanks.
It’s almost never likely to get that max loss or even get close to it
yes, if Trump decide to send out a twitter in the middle of the day ( spy actually expired on that day so they probably had some trades on) and declare another round of Tariff
these guys who one minute ago thought they were safe, next min they are in a blood bath
This strategy will work for you if you know howto read charts,if you enter this trade and dont know howto read charts you are just gambling,he is explaining that in the video,make sure you know howto read charts before risking your money,lucky traders always give back profit.
Some people do it "by the math," but we don't place any trade without a bias with the charts.
Always close out your position. Even at .01, because it's still worth something and therefore it can still be put to you to buy that stock at that strike. By buying you take all the risk away from being assigned the stock.
Joe, totally agree, that's what we teach too. The option holder has right right to make an exercise notice to the broker until 5 ET, so always post-market risk.
Master Trader but in the long run commission paid to your broker by closing out 0.01 worth of option is gonna be a lot more than the risk of letting it expire.
@@MasterTrader But in a spread you also have the right to exercise your long position to cover the assignment right?
@@howo357 Check with your broker regarding closing out your credit spread commission for a small price. I have seen in futures, where they have "cabinet" bids, options prices under the smallest tick, that are zero commission. The cost incurred for notifying and exercising an option is higher than what you will pay in commissions. They want you to close your position to save them money. It is a win- win. So, ask your broker if they charge to close out almost worthless options.
@@MasterTrader what happens if the stock is halted a few hours to Friday close?
Hello
I have a very important question about stop loss
You sell put vertical spread under support level and place stop loss under support when do you cut the lossing trade ? When the price touch the stop loss level or by dollar value?
Thank you
The losing trade is cut when the stop level you set is hit. You use a Contingent Order, which tells your broker software, When if XYZ trades at X, close credit spread. What the credit spread price will be at isn't know exactly since that can depend on how fast prices moved to hit the stop and how much time there is to expiration.
I wish he added info on how much collateral you will need for these credit spread trades, it would put things in perspective for those who can afford credit spreads or debit spread
Hi Isawent, I just sent this answer to someone asking about his account balance to sell a 10-lot. I said "that's hard to say since position size is a function of your experience, volatility of stock trading, and account size. You should never risk more than 1/2 of 1% of your account on any trade. Spreads don't take a lot of buying power, but you don't want to arbitrarily sell 10 lots. But if you sold 10-lot of a $5-wide spread for $.50/share, for example, the net buying power is $4,500." There is no "margin" for trading options. So on buying options or spreads, you are required to put up 100% of the net option cost. Thanks.
@@MasterTrader Thanks for responding
yep,it sounds good but you gotta have some good money put up
Cheers for this, I been tryin to find out about "options adjustments strategies" for a while now, and I think this has helped. Have you heard people talk about - Winoorfa Option Olegroson - (Have a quick look on google cant remember the place now ) ? Ive heard some decent things about it and my buddy got amazing success with it.
Spreads are much less collateral, try it on thinkorswim demo
hello
If i understood correctly you sell puts on support price level?
where will be your stop loss price level?
Hello, correct, sell puts or put spreads under support, with a stop under support.
I've managed to stay afloat by just buying simple puts and calls for about 3 years. But yes, it's a rollercoaster. Sometimes I couldn't believe I've actually avoided bankruptcy. Expiry date approaching, significant amounts of captial just becoming completely worthless, $80k loss imminent and then some call that was a total longshot is going to the moon with +1,000% or more. Phew, one more day survived. Now I can't live without the thrill anymore. It's definitely an addiction.
My recommendation: Always keep enough money on the side for a guillotine. ;P
With the cooked market internals, we used this strategy for 100% Profitable Short Credit Spreads in Two Days in Tanking Markets. Master Trader delivered its subscribers 21 of 21 winning short credit spreads in the past two days while the markets bounced from last week's crash! Subscribe here to get these trades: mastertrader.com/weekly-options-trading-2/
I use to play poker as much as I could down here in Texas and yes I am addicted to the thrill but we can go about our thrill addiction in a out of the box method. I use to play online poker before they used legislation to protect the casinos by outlawing the transfers from those poker companies. When they should have passed legislation requiring a gaming license from online poker companies in the U.S. so we could play and pay taxes on our winnings.
I recently started trading stocks. Wow, this is very different because I almost feel like I can't lose and I am playing poker with my short term portfolio. I do have a long term portfolio as well. My short term is my bankroll to use weekly in the market. In poker, I would sit in my chair as if the money I put on the table or in my account is already gone or lost! I also, remind myself that money is just how we keep count of this game and that I am here to beat the players and dictate the game at the correct time and withdraw at the correct time. I become unpredictable to increase my $$ or chips.
In the stock market the stocks are my cards, share value is what my cards are worth, I am playing other players- the stock traders, the dealer-the market, and I am looking for patterns and timing - the market during the day, week, and month besides considering the volume when I am making a move by selling a stock at a value higher than fair share value or buying a stock much lower than the fair share value; and if the timing is correct I am winning by increasing my profit before my exit. I have gone up over 35% in less than 2 days and I have gone down over 42% in a week. I am learning but this week I got even and recovered my 42% lost plus a tip close to about 5% up. I am testing the waters to see If I can make money and do this for a living. I am also working and studying to pass a couple certification tests so this is part time hobby but this week I had time off so I did a lot of research on different oil companies.
I am learning about options but I have a hard time wrapping my head that I am buying and selling contracts and not buying and selling a stock. If I lose on a stock it means I traded it for a loss or they went out of business. CPE is the stock I am betting on currently for Monday but they have been around since 1950s or something like that. They announce earnings on Monday @ 10. I live in Houston, so I can go down there and see what I bought besides all the research I did on the company and knowing they are in financial danger. Short term I am trading in oil at this moment until I increase my bankroll to put up some real money. Oil is trading cheap compared to other stocks and they are a little over priced at this moment in time because of what is happening.
Buying and holding, Buying and selling stocks, and crypto-currency has been my overall strategy so far. I park my extra cash on hand in the short portfolio on crypto currency bit coin when the markets are closed but I must remember that even that cash there is lost as well. Sigh
I just do not like the concept of unlimited risk in contracts because in a stock I feel like I have no risk because I already consider the money I paid to get the stock gone and lost. What I have left is a tool to make money when timing is correct or a tool that becomes worthless.
A lot of traders are known to over leverage themselves and that is the cause of anxiety. One trade should not make or break you. It’s a marathon not a dash. Best advise Ive got in my trading career
Isn't that statistically going to wipe your act out sooner or later if your not managing risk properly?
I wish he added info on how much collateral you will need for these credit spread trades, it would put things in perspective for those who can afford credit spreads or debit spread
Max loss is the cost of the spread, so if you're selling credit spread 350/360 for premium of $50, $10 spread x 100 = $1,000-$50 = $950 that you'll need to sell that spread
Interesting strategy!✍🏾 You have a new subi in the BUILDING!! Will definitely try out
picking up dimes in front of a steamroller
That's one way to look at it, but we only do with high-odd Setups and use stops. We never suffer Max Loss.
Azul
@@malekchouaki3794 Azul malik
I am looking at the moon which has been working wonderfully
You can make the same amount of money selling SPY with 2-4 week expiration without having to worry too much about volatility. I prefer selling QQQ as you collect more premium.
The strategy he’s talking about sounds more like day trading which we all know has 95% failure rate.
I agree on QQQ
Been selling for past four months covered
I think it time to cash my QQQ and worjy with spreads
Carrying the underlining securities runs the risk of massive sell offs as seen start of the years
Only due to the Feds money supply market revive ed and some
Good luck mate !
Hi Billy, we obviously do that too, selling options that expire 30 days or less. This is just a focused video on selling 0 DTE ones which we love since there is no gap risk. Thanks.
Is your site down? I've been trying to look at your options education options (no pun intended) and I keep getting a 503 error. I also tried navigating to other areas of your site and received a message that the origin server is not responding.
Hi Dr. See, no the site is fine, perhaps try another browser if not working? For education on selling credit spreads, please see: mastertrader.com/trading-credit-spreads-for-income/
Thanks.
this is a powerful strategy . the times i lost was because i got too greedy and it went into my strike when i could have closed for 50%a hour before closing. the loser wasnt that big cause i use a stop loss
Time decay on selling a an OTM put on the day expiry is so great, that even if the stock goes up, the decay puts money in your pocket regardless.
Well, it is NOT FREE MONEY. Option sellers take on risk, but our management with the charts and short time to expiry puts the odds overwhelmingly in our favor.
Classic - "a little knowledge is dangerous"
Isn’t a price increase on a short put the direction you want? I don’t understand your point
I can say selling 0DTE spreads and Iron Condors on the SPX has been my most consistent and profitable trades. I've quit doing it on stocks though. TDA risk management is trigger happy and more than once they closed out the short strikes 10 minutes before market close even though my short strikes were OTM by at least 2 strikes. A couple of times I ended up losing on the trades when they did this. I also lost any value that was in the long positions because they didn't close those out when they closed the shorts. Because SPX is cash settled, they don't do this to me. I will say that I use the ES charts to time my entries into the SPX. I guess a bottom or top based on the movement in the morning and place the spread on one side. Then I wait until the last hour to place the spread on the other side and most of the time and end up with an IC with double the credit as a single side with basically no increase in risk. Sometimes I can only get one side in because of the chart action. I can say I have taken a full loss only one time and I have closed early 2 different times for a partial loss. I probably need to start learning rolling to prevent these partial losses. But yea, I like selling 0DTE on the SPX. It is my favorite strategy.
@@optionwhisperer-tradingtip3122 What was your delta? Or percentage otm?
@@rahsta106 Somewhere around 20 delta give or take. Don't remember exactly. I immediately on open set the put side and waited for the consolidation and set the call side to make them iron condors. I placed a couple more put spreads closer to the price throughout the day and added the same to the existing call side. Then I did something I highly recommend against. 8 minutes before close I sold 4 put spreads ATM for $0.25 credit ea. There was $3 and some change between my shorts and the price when I did that. But the chart told me it was OK... I want to stress that the mathematical risk/reward profile on my trades were very poor. I tied up 8k in margin for 9.5% reward
@@optionwhisperer-tradingtip3122 ok, my account is very small. I usually just one contract at 85% otm. A let it ride. On Monday i did a 3 dte. I close it today around 3pm. I got about 90 percent of the premium.
Dr. Elder is wrong, while you edited his words correctly, by saying “ otm buyers “ almost always lose long term. As a very ditm call buyer of the market, and always being in the market, ( mimicking s&p500 spy long term holders), i am obviously profitable as an Options buyer however you look at it. And obviously beyond the market returns due to dodging major falls. Your strategy is great as well even though i don’t use it for certain reasons. People will have to keep in mind that they have enough capital to handle few losses in a row though. The use of the technicals does definitely improve the edge of probability of profit. But again, despite the stop loss, people must know ( as you warned ), of the risk of loss and how much or how many times they can handle it in a row. If they can, many times, then long term they are in good shape. But if they will go bankrupt if they lose 5 times in a row, then its a problem they must be aware of. And yes it can happen.
It’s really nice that you are sharing that knowledge with people freely. Great work!
Thanks, yes we love buying call and put options as DIRECTIONAL trades when confirmed with our chart bias, see: mastertrader.com/directional-option-strategies-for-swing-and-day-trading/
I am not at the level to sell options yet with my broker. Can this be done buying calls or buying puts?
Hi Shannon, yes we buy options for directional trades when the pattern is compelling with multiple time frame alignment. Thanks.
Try a spread
Honesty is your beauty.
Exciting stuff!!!
I do iron butterfly strategy on daily basis !!! It’s like printing money 😬😬😬😬
Nice, we love 0 DTE days!
At 21:45 you said it wrong. For Put credit spreads you buy an OTM put for protection and sell an ATM or slightly OTM put for the credit. And yes these can work but there has to be dummies to buy them from you in these circumstances. I cant for the life of me think of circumstances when someone would want to buy these but apparently they do!
Hi Scott, thanks, will check it out. Don't think of all retail public taking the other side of ANY trade. Remember there are market makers who provide markets like this and will simply hedge it off.
Excellent presentation. L hope to view more of your videos. Thanks
Always make sure you close out the trade rather than letting it expire worthless even for a .05. Options can trade past the 4pm est market normal closing time and catch you.
Hi John, only options on certain ETFs trade until 4:15 ET; however, we also recommend closing to avoid assignment risk which could occur from the option holder making a timely exercise notice based on post-market news. Thanks.
Nowhere in your video, you have talked about margin requirement. @ 10 strike for 1 contract, you need $1000. for 10 contracts, $10,000. So, you are INVESTING 10,000 to make 450 on one day. If you trade three, you need 30,000. Though you are trading credit spread, you are indirectly taking a direction that the stock doesn't reverse. Isn't more profitable to spend a fraction of this amount and buy DITM call or put and make much more and make weekly income.
Orkayen, yes we do talk about buying power consumption when calculating ROC; however, selling options/spreads by definition require much less $$ than trading stocks. And yes we buy options for directional trades all the time. In fact, I just published an article on that exact topic, email me at dan@MasterTrader.com if you would like a copy.
orkayen, buying power reduction (margin) on selling 10 ODTE OTM SPY vertical put spreads (today) one srike wide would be around $800 (with TastyWorks broker). The margin is only on the difference in strike price less the credit received.
Interesting how Tasty Trade do not look at charts yet are considered the authority on options trading. Great video.
Technical analysis (charts) is the best way to predict the… past. I’ve never seen a chartist who was unable to look backwards and explain why he was right. I’ve seen many who were wrong about the future. I would say their success rate is exactly the same as flipping a coin. I’ve been studying technical analysis for over 10 years and that’s my current opinion. Oh, and I share that opinion with certain others like Warren Buffett.
Like I explained, their are many ways to "skin the cat" but why would any reasonable person ignore such valuable information which would turbocharge their results?
15:01 "Swinging for the fences like an idiot" love this moment and so on point. :-)
Are you talking about spreads
I short Amazon options before expiration day with 300 $ spread for weekly incomes
Man I've got alot to learn.
Who buys puts that far out of the money for you to sell to at that price? Or is that not necessary?
@@andrew_zed3162 some people invest in far otm options because they are dirt cheap and if there is a sudden move in the market, they can get multifold returns. If the move doesn't appear, they lose very little amount as the premiums were quite meagre to begin with.
@@loathedhated when I tried this method with paper trading 100,000$ account - selling puts OTM - at first it completely rejected my fill saying I didn't have enough capital to support the trade. Then I tried a smaller amount(around 100$ or so) and it put me at something like negative 80k immediately. There must be something I am not understanding about this method.
@@andrew_zed3162 selling the put would mean you're willing to buy the stock at whatever strike you chose if the price goes below your strike, and to do so the broker immediately earmarked the $80k when you sold the option to make sure you had enough to fulfill your obligation. Once the expiration passes and expires worthless orrrrr you buy back the option to close it out early, you should get that money back that was earmarked. may take a day or so to "settle" though.
This is a ridiculous strategy look at the risk reward though (20:1)
The probability of success is extremely highly though.
10 contracts at 200+ strike price! Yikes if you are assigned shares. 200 x 100 = 20,000 x 10 = 200,000.... would need a lot of money to pull these off
Slim, first, on short credit spreads, it's the spread width less premium received. Not much at all. Second, we don't take assignment; rather, we manage with the charts to profit or stop. The return on capital (ROC) is incredible! Thanks.
Also, look what a subscriber told us in the Green Trading Room today: I ended today up $1,890.00 thanks 2 dan's amazing spread picks. Ladon
@@MasterTrader ah so you sell only OTM and would stop out before hitting strike price
Exactly I love how he says we don't take assignment. Well, u say you're using the premium as cushion that means your stop is through at least on leg of the vertical so ur gonna take assignment when the CBOE says so
Hello
For the weekly experetion
To take weekly paychek by Friday
If I open trade on Monday and whant to let option expire and take all premium what DTE option contract should I to choose
Of 5 days or 7?
Thank you
Don't worry about Monday or Friday. The strategy is to sell short-term expiring options (10 days or less) with the charts -- both for entering and managing. The charts will dictate how long you are in the trade, but we generally close around 80% of Max Profit if we get it fairly quickly. Thanks. You can get these trades here, mastertrader.com/weekly-options-trading-2/
@@MasterTrader thank you very mach I really appreciate
Doesnt make any sense,cuz u need to consider the commissions cost,its impossible to to this in small account, defenely not worth it
Of course, that depends how small that account is.
Hindsight it's so easy to say you took the trade and paste screenshots. Why don't you share broker statements or videos with live entries and exits?
Hi Hana, we have three Advisory Letters and post all open and closed trades in spreadsheets for our subscribers. Thanks.
Thank you for clarifying gamma risk. Most UA-cam videos scared me about it.
For selling options we need lot of money
Pramod, on short credit spreads, it's the spread width less premium received. Not much at all. On naked options, it's roughly 20% of the short strike, much less than trading stocks. The return on capital (ROC) is incredible! Thanks.
I just sold a put spread on the $QQQ
11 sept 20 265 put - 10
11 sept 20 250 put +10
As long as my spread stays out of $265 I will make a profit
My reason on why I put the trade?
The QQQ( Nasdaq ETF) is currently trading at $279 which is $14 out of my strike price. Than what is the like hood the Qs drop $15 in 2 days? Well that s very low an chance specially after the 2 huge down days we had. This has an estimated of 96%.61 chance to expire out of the money. Now lets talk about the trend
1 up trend
2 above 50 ema
3 huge support at 270 ( volume profile shows it)
look at the daily chart and you will see that we are in a pull back zone.
Now my risk is huge but I wont let it go to far from be because I will be monitoring my trade .
This is a game changer , thank you so much.
Hey bud this strategy work with small accounts under 5k?
It’s not. The gamma risk and portfolio volatility isn’t worth. It sounds good on paper but eventually when ppl like this get caught in a big move there’s no way to adjust, or roll out because the DTE is too short.
Hello
How can I place stop loss order by asset price to close sell vertical spread?
Thank you
Yes, and that is our preferred method as technical-based traders. You use a Contingent Order based on stock price.
Good info on learning
👍👍👍👍👍👍 I’ll try ... hoping it will works also for me
Come visit us in the Green Room to watch us find and trade them! mastertrader.com/best-day-trading-chat-room-green-room/
Good job .Thanks
do you have to do anything with the contracts before the close to take profit or will they expire at the end of the day on their own?
They expire on their own.
Taylor, the only 100% way to not get assigned is to close a short option prior to 4:00 ET (or 4:15 ET for Index ETFs since many options still trade, but will be less liquid). We recommend closing to prevent margin calls or surprises (unless don’t mind be assigned per your Trading Plan).
In reality, it depends what post-market moves happen in the underlying prior to the Exercise Request deadline (5:00 ET or sooner?).
Additionally, the option Holder must be watching to make an Exercise Request decision in anticipation of booking the unrealized gain the following trading day.
If the Holder Exercises, both will be taking the gap risk until trading resumes.
NOTE: SPX Options are cash settled based on 4 ET Settlement Price, so not apply.
Amazing content thanks. Better at 1.25 speed FYI :)
Cool, thanks
Most videos are better at 1.5 or above. The brain processes fast speaking better than slow speaking, which seems backwards but it's really true. I watch all videos on speed 2 lol
@@thetruthaboutweightloss I'm retired so I'm leaving the speed alone. I might not be able to keep up .. LOL!
@@MrSharkster59 Haha. Yeah sometimes 2 can be way too fast. Everyone starts sounding like squirrels.
@@thetruthaboutweightloss You can install a chrome extension to watch even faster. I watched this on 4x speed.
"People can't predict the market, daytraders always lose"
"I can predict the market, we're going to do it in 1 day and make money"
But he has something to sell you, so it's all good.....make sure you pay him for his courses, they'll be real valuable /s
we are not predicting the market, we flow with market. no matter up or down we make money at any time. Predicting is for investors not traders.
@@SHKSPR-TRADING that's a dumb statement.
@@sabriath This is how I make money every single day. I quit 6 digit salary job as a cyber security engineer and I'm doing this for couple of months, It needs discipline and knowledge but it's possible. simple but not easy.
@@sabriath I understand how you feel, it's the feeling I had few months ago, but believe me it looks dumb and stupid but it works 100%, when you learn the game-play. I feel I wasted all of my life.
@@SHKSPR-TRADING you still at this? And successfully?
Only pro option trader can understand your topic "
Hi, absolutely not! After this simple 5-Module seminar, you are ready to start with small position size, mastertrader.com/advanced-credit-spread-course/
You rascal you.
I hit a like button i am new at this but interesting so do u use naked put or call for this strategy or use only credit spread just curious. Mahalo. All the way from Hawaii
Bronson, welcome from Hawaii ! Spreads are better to limit maintenance requirement, just go far enough out on the long option so that you are only paying pennies for it (and, as always, make sure they are liquid with tight spreads). But many of us, including me, sell naked on 0 DTE day. Thanks.
@@MasterTrader thank u for ur professional reply i am very new at this but i am interested in learning about options this is really brain training for this old Asian man i am a grandpa lol i do enjoy new videos and ur old ones i watched ur expiration date trade many many times i make sure to hit a like button for each warm aloha from Hawaii please stay safe and healthy with u and ur family. Mahalo
Very cool!!!
Interesting strategy!! The one downside might be if the underlying goes deep ITM for any reason there won’t be any time to make adjustments. But will be watching more of their videos to understand their strategy better.
Agree but we don't let it get ITM with our position management with charts.
I do intraday option but never see or follow the charts. :)
Hi, to see our Alerts in real-time, sign up for a month for our Weekly Options Trader, mastertrader.com/weekly-options-trading-2/
That is a significant disadvantge.
Is it a good idea to have a sound understanding of a companies fundamentals or just charting? I noticed below you mention getting a loss yet still winning by placing options on SHOP and LRCX. Both of those companies were being pumped extremely hard by the Fool! Also do you take notice of Short % like Tesla where 46% of All their stock was shorted so once the price began to move positive it was a massive short squeeze all the way above $900 or are you taking that massive win?
Dan: the TSLA chart at 29:21 shows exactly where I would sell a bear call spread at R (or buy a PUT) on any DTE within 10 days. But from experience I've seen you sell these spreads at S looking for more downside. I prefer to take in more $$ then have the chart bring me to those areas of possible reversal / sideways or more downside. Is this TSLA discussion just relative to a pattern on 0 DTE . ? Thanks
Hello, understand and yes, just for 0 DTE, longer-term trades have different analysis, thanks.
If you sell 10 lots of SPY 100 points above the current market, couldn't you simultaneously BUY a ton of OTM Nadex binary options (also expiring at 4:15pm) below your options strike? This would be a win/win situation. If it goes up too far, the Nadex OTM binaries would be worth more than your loss on the options. If the options expire worthless at expiration, you make more on those than the loss on the Nadex OTMs. Am I missing something???
Trust me, there are no obvious arbitrage opportunities for most retail traders.
While I agree that positive theta is advantageous. The 80plus percent options expiring pitch is untrue and is far more dynamic than that simple statement.. The cme says the following...
According to The Chicago Board Options Exchange (CBOE):
Approximately 10% of options are exercised (The trader takes advantage of their right to buy or sell the stock).
Around 55%-60% of option positions are closed prior to expiration.
Approximately 30%-35% of options expire worthless.
The CBOE goes on to point out that having an option expire worthless says nothing about the profitability of the strategy that it may have been part of:
Multi-legged strategies can often require that one leg or more expire worthless although the strategy as a whole is profitable.
Option positions closed prior to expiration may be profitable or unprofitable.
Options that expire worthless may not be unprofitable if they were part of a strategy that involved other securities such as covered call writing.
Hi Rex, thanks for sharing, but those comments have nothing to do with selling 0 DTE options using our method. Thanks.
Awesome video, great content.
question about shorting puts and exercising early to buy stock example underlying currently selling at 49.50$ I'd like to sell the 36$ put there is current;ly volume for the 36$strike with a premium of 0.50$ which should lower my cost basis to 35.50after I exercise the option seems like a good trade to buy shares below market the price
Brad, yes, selling puts on stocks you don't mind owning is a "no-brainer" method of either making $$ (premium received) or buying stocks at less than market value.
The example at 23mins, he sells 10 naked puts at the strike of $279.5 to make $210 dollars in less than 4hs, fair enough, just be aware that the margin for this trade was $279,000 thousand dollars, way beyond what most small accounts could handle. Anyway valuable information that provides other way to profit. Thank you for the video.
Hi, yes I always say if margin is not an issue, but 99% of the time we sell credit spreads even on expiration day, just go far enough out on the long option that only paying 1-2 cents for it. Thanks.
can some1 put a time stamp where he talks about the strategy ? im watching this for 10 minutes and only hear bs.
We don't mind constructive criticism. Feel free to describe exactly what you think is bs. This is is one of our favorite, most profitable strategies. Tune into MT Live on 4/29/20 to learn!
@@MasterTrader didn't watch the whole video (watched 10 minutes as stated above) you take to long to get to the point.
v s he is selling his system. This is an advertisement.
31:20 There are, Index Options on the Dutch AEX index expire daily (5 days a week). Ticker EOE.
@@CheckYourHealthUS Then try FTI and AEX, see here: live.euronext.com/en/product/index-futures/FTI-DAMS/contract-specification
Thank you for information. I did weekly option today expired. i did today. I have question about option assignment. I sold naked put option GME stock at $300 and stocks close $328. but the after hour GME stock it drop to $294 and bounce back to $325. That means I may get assigned. Please advise I scare GME option. I thought after hour drop I wont's get assigned
Raj, Option Holder has the right to make an exercise notice to the Broker by the deadline (even if the option expired OTM at 4:00 ET). So there is a chance depending on what Holder does based on post-market gaps.
Lmao until you get assigned those contracts.
Impossible to get assigned since we close before market close.
Information on the prices of the courses in the video is not the same on the website. The "Silver" course is the same $97, but the other two are not, $597 and $697, for Gold and Platinum, respectively. This video was posted in 2018 so the prices have increased with inflation or because of high demand????
Hi, yes here are the current prices: mastertrader.com/trading-credit-spreads-for-income/
I like selling OTM options but I haven't done much of these spreads. I prefer to go further out of the $ to minimize risk, but I'm curious if I did the spreads if I could maximize my return on collateral. That trade would make sense if less collateral was needed.
Dan, using spreads does not use much buying power.
People beware of his intentional omission of the risk dollar value. In one trade he was risking $10 to make $1 this is crazy. Don't focus on the return on capital numbers as they are always high for options. The R:R is nuts
This cat is another novice who does not understand our approach. We are NOT RISKING MAX LOSS in a 0 DTE trade! We take stops based on charts. You obviously are just following the mis-information novices out there and are ignoring the information in the video. We rarely lose more than 1:1, so a 85% batting average is a beautiful upward earnings curve. Thanks.
@@MasterTrader Wow! now I know that you are intentionally misunderstanding my comments. One more time, what is the theoretical R:R when you open the trade not the average R:R based on several trades. When you open a trade you don't know where its going and the full option spread or worse the exercise value (if naked) may indeed be your loss based on your approach. It's nice that you can manage it to be 1:1 (which I still don't believe) but what is it when things go wrong from the get go. And one more time, you didn't state the R:R in the video or your at risk amount ($) It's a profit side only analysis, and you and I know what kind of traders present this way ;-)
Exciting stuff!!!
How does this course/training work and how do I get started etc? Is the training done via videos or interactively? How would I ask question during the training if I have any? I already have some Options training but everyone has their own strategies and rules so I would really like to know how you are able to sell options on the day of expiration because I have never heard of that one before. Is there like a Forum like Discord where we can ask questions etc?
Hi Ray, Courses are recorded that are available 24-7 to watch as many time as you want. Learning this way is superior than listening to a live presentation, which is how we used to do it. It's great in the moment, but no one can absorb it all in a short time. We follow up the with live monthly coaching session to review course material. So, the education and support doesn't end after the course. We are also available via emails.
And if you're in the Green Room, we review trades and Q&A every day. We do 0 DTE credit spreads every M-W-F on SPX and weekly 0 DTE on stocks Fridays. Email support@mastertrader.com with other questions.
Be aware
Buyers of options have until 5:30 PM to except code their options
Correct, so there is post-gap risk which is why we recommend closing short options for $.01/share just for peace of mind.
Most people their brokerage firm wouldn't allow 10 lots, because if your Spy was put to you you would have to have $350.000 in your account to cover if it were put to you
Selling a 10-lot would require $10,000; however, contract size should be a function of your Trading Plan and experience.
I apologize for my ignorance, I know nothing about options. So your strategy here is to buy (short) options on exp day? That’s it?
Thank you sir.
Hi Vinny, we trade both directional (buying options) and selling options/spreads around compelling patterns for income. We sell options with 45 DTE or less, but prefer 10 DTE or less because of the rapid time decay. This video just shows you the tremendous benefits of selling options that expire the same day (0 DTE) for getting paid for just calling a short-term bottom/top for the day! Welcome!
Thank you sir. Does MT offer one on one options tutoring?
does this method require either ITM or OTM options specifically or no? Thx
Blue is definitely your colour!
I would just buy a call or put the same day expiration....better than trading futures bc options won't stop you out. You risk more with credit spread then buying a call or put little out of money both cases you have to get the direction correct for that short period of time.
We buy options also for directional trades, including on expiration day; however, to buy 0 DTE options, we typically buy deep ITM so not to pay time value, unless we expect a huge move.
IDK let's see but I clicked on this because I had a thought about what if we did this on expiration date. Is that even possible? But I'm assuming this video will shed some light on the matter
Andrew, you really don't believe that comment of yours, do you !?
Can anybody who has taken silver or gold membership classes, recommend it to beginners?
Yes Ruben, both courses are for everyone, thanks.
Is this scalping?
Hi, no, it's day trading though -- selling 0 DTE options/spreads since no overnight risk.
Maybe if some of you Guru's would post verfiable returns people would believe you. Talk is cheap
Duck, you are right. Talk is cheap in this industry, with many crooks out there. Feel free to take a trial to our Green Room and watch us trade live each market day.
Hi so what happens when it expires? do you still get all the money or you have to close your short option or you dont do anything?
If both puts are out of the money at expiration, you keep the entire credit. If the put you sold is IN the money and the other one OUT, you will be assigned the shares (so make sure you have enough money in your account; OR close the whole spread before market close at whatever price is available). If BOTH puts are in the money, you will be assigned the shares and have them sold and you will pay the difference between the strike prices. Most brokers will do it automatically for you. So your maximum loss would be the difference between the two put strike prices minus your initial credit. Hope that helps!
You're putting 20 times of your potential profit at risk, risk:reward of 20:1, one single time you're wrong will crush your gains. Sure you could adjust your position, but you'd have to watch the charts like a hawk.
Desprima, you are incorrect on risk:reward because of the way we manage with the charts. We NEVER take Max Loss on a 0 DTE trade, impossible. Here's one we did last Friday , booking 87% of Max Profit in a few hours: 8/7: AMZN - Shorted Aug (8/7) 3250/3270 call spread for $1.60/share. 8/7: Covered half $.40/share, move stop $3204, bid 2 cents to close
@@MasterTrader I understand you actively managed the trade, but the risk:reward profile of the trade (for the amzn trade you mentioned) the very second you took it was 12.5 to 1 - that's a fact - there's nothing to disagree about. You risked $2000 to pull in $160 credit - everything you did after that was just managing the trade to lower your risk. A stop loss at 3204 also only works in the case of normal price movement activity, in case of extreme price movement activity, your potential max loss is the real stop loss. My comment before wasn't to down play your strategy, many people use your strategy or a similar version and have used it for some time, but the risks are still evident and could crush a portfolio in the unlikely event of major swings in the market all happening in a short period of time. A well known trader who used a variation of your strategy was Karen the Supertrader - who might have very well been profitable for years, only to lose somewhere in the ballpark of $50 million when the unthinkable happened. However she was selling naked options, you're using vertical spreads with defined risk, as long as your "win" occurrences are MORE than the average risk:reward profile of the trades you're placing, you'll come out positive in the end - I'll give you that, but positive by how much? No one can truly know.
I see that some American brokers no longer charge for closing an option position. British brokers still charge for closing (as far as I am aware), which increases the overall cost of option trading.
All kinds of gimmicks to remain competitive; just look at your total costs.
Spy is not a great underlying to sell 0 dte credit spreads on. Premium is just way too small
We only do it with sufficient credit, but the strategy applies to any 0 DTE Setup meeting our criteria.
yes i agree that your strategy has benefits but you cannot deny the fact that sometimes buying naked options can outperform selling them. Here is an example, the moment before FOMC fed announcement a week and a half ago, SPY puts that were a couple dollars out of the money were trading at around $0.37 each with expiration on the same day. later in that day towards the close, I recall they were trading for about $1.87 each. if you bought a put that was a month from expiration it would have increased from 4.00 to about 6.57 which is no where near the rate of return. My point is that sometimes this strategy will not work if the market is expecting a massive move in one direction. If you have reason to expect an explosive move and IV is relatively low, its not always a bad idea to buy options. i myself only trade naked options on rare occasions however and have had success with the bear call and bull put spreads as well
Ellas, absolutely you can make more money buying options for directional trades -- we do it every time a pattern sets up on Multiple Time Frames if the options are liquid. But selling options are easy to find, trade, and manage since don't need the same precision in just calling a short-term top or bottom. Thanks.
what is a online broker I can use to do this - Robinhood doesn't let you buy of sell day of expiration
Some like IB, Trade Station, or ETrade.
TES THIS IS THE SNIPER TRADER FIGHTIN ON THE WARFRONT DO NOT FORGET THERE ARE 52 WEESKS A YEAR: JOSE
FRANCIS , COCHIN, INDIA
Buy?
Hello Heather, buy what?
If you really think that the equity reached a top or a bottom at expiration day, for whatever ta you are using, it isn't much better to buy a put instead of selling call spreads or buying a call instead of selling a put spreads? At least this way by buying you can never lose more than your premium and by selling spreads you can simply get murdered by a black swamn event.
Ivo, excellent question, thanks. We do teach directional option trading with buying options and debit spreads; however, we need a bull/bear bias on Multiple Time Frames to do that. And we rarely would buy short-term expiring options because of the time decay, so would go out in time. We call selling options Income Strategies since we are merely wanting to keep the premium for calling a short term top or bottom for a short time. And we never take max losses with our stop/trail management approach. Thanks again.
@@MasterTrader OK I see, thank you for your time and for replying my message. Those were great inputs.
Click bait...... You better have at least 1k ready to buy 1 contract of any of these stocks he's talking about I do the same as him but I just ride waves buy 10 down from current price whether call or put buy 5 of each on spy which now costs me maybe 75-100 and I use the momentum in and out within 30 minutes..... You have to look for a high volume (one with alot of action 50mil plus) stock WILL NOT WORK on many stocks FEW will allow this type SPY always..... Please be very very careful with this information though it is very informative it is also very misleading.... If you have a couple hundred use spy and go OTM and be in and out with in a max of 2 hours MAX do not hold all day that will be your biggest mistake watch your candles once the quick up or down is over SELL SELL SELL do not get greedy
I've grown 100 into 900 in 1 week using what he says buy cheap ask/bid and buy large volume of them wait for a 4-10 cent move ( on ask/bid) do not get greedy !!!!! Sell the moment it changes (validation) use 1 minute candles if you have money left over you can choose to get back in and go again
@@weplayfamily9449 sound far too complicated.. this is high octane and for thrill seekers
@@1stormriders yeah well that's what I use especially on these big runs it works AMD made me 900 today off of 175 in contracts
@@weplayfamily9449 glad it works for you man !
Is this course beneficial to new investors with only minimal experience buying calls and puts via Robinhood?
Hi Joel, Everyone needs education for trading any market instrument. Credit spreads can be one of the highest probability strategies
However, without knowledge of chart analysis and proper position and money management, credit spreads can be one of the worst rewards to risk strategies. So, yes, someone with minimal experience should not trade any strategy that they don't fully understand.
Robinhood has had a few problems recently, so I personally would trade there. And so realize that free is not free. Your order flow is sold, which may not provide you the best execution. IF the platform technology at Robinhood cannot create and execute credit spread trades at a mid-point, You don't have the right tools trade with. The platform also must have the ability to setup Contingent Orders.
All the best,
Greg Capra
can people who only have a basic knowlege of options use this?a beginner?
Kareem, absolutely, it is one of the easiest strategies we teach, but you do need basic understanding, of course, of chart patterns and option strategies.
Who actually buys options on expiration day unless it's massively past the strike?! You can get holding an option you can't sell. Seems like silly advice and very over generalized.
There is always a market made by market makers. And that's the beauty of the strategy -- there IS premium on expiration day to profit from selling!
@@MasterTrader assuming someone buys it. Then you're stuck exercising the option for profit. That's a lot of capital to have to put in for expiration day options?!
fundamentals are like the resume of a stock you cant ignore that, it will give you an idea of the future outlook of the of the company an stock price future. if a company continues to lose money every quarter then what do you think will happen to the share price eventually?.
Correct, but technicals lead.
@@MasterTrader when trading.
Thank you
This is just superb, been searching for "stock option trader" for a while now, and I think this has helped. Ever heard of - Winoorfa Option Olegroson - (search on google ) ? Ive heard some extraordinary things about it and my m8 got cool results with it.
I do Iron Condors on Wednesday to sell on Friday also do them a day before expires, have been 99% successful with them
They can work well with the right price pattern and it sounds like you know what they are. 2 days to expire, Great! Regards, Greg Capra
Why not just let them expire?
about to start doing this very agressively. Also debit spreads right before expiration in low IV
Bl Ah yeah I do let them expire, sometimes I sell them like at 80% profit to lessen the risk, like if I sell the Iron condor on wednesday and sometimes by Thursday I already have 70-80% i just buy it to close
What are you selling IC's on? SPY? Individual stocks? ETF's? And do you do it mechanically every week, or do you wait for the right set-up? Cheers
Has anyone had more success with put or sell?
Lance, typically most success trading with the trend of the broader markets (thus, past few months, the put side), thanks.
That’s a $10,000 risk at the 10 contracts you use.
Scott, not with our stop loss.
Is it safe to sell premium at the time of low volatility , like we have this time in August 3 2019 ?
that's the best time to sell. no movement means less of a change the stock hitting the strike price and the contract being exercised
Jaemis, excellent question. We sell them around compelling chart patterns in all volatility environments, but prefer in high volatility (after sell offs to support, or after earnings/news) since we get paid more for selling them. If volatility rises, we indirectly manage the volatility risk (vega) with the charts.
The only way for that to be reasonably profitable after considering the bid ask spread and commissions is if you were selling spreads with a round trip net premium of, for example, a few percent of your margin requirements, but those spreads are only going to be 5 percent out if the money even a week out. The closer you get to expiry, the closer those spreads would have to be. The idea of coming in and scalping premium it is just ratcheting up risk time get more return. The likelihood of the options going into the money becomes very high, given the same daily return.
Hi, everything starts with a compelling chart pattern, whether trading stocks or options. Then we simply manage in between with the charts also.
Master Trader that is a ridiculous explanation.
Agreed Weinhold! Professional traders don’t sell short options on the last day.
You need a bare minimum of $25,000.00 in your account to sell option contracts. When you place an order “sell to open”, it will say max loss: $35,000.00, max gain $400. Be careful
So instead just sell a bear call spread or bear put spread.
Bernard, that's an incorrect statement. We have subscribes doing it with $2,000, but have to be careful about the Pattern Day Trading Rule.
Master Trader really? I’d like to know how to get around that
I don’t think my broker will allow you to sell put credit spreads on expiration day.
Why? I would find another broker then.