How to Trade the 112 Options Strategy (Like a Pro)

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  • Опубліковано 7 січ 2025

КОМЕНТАРІ • 74

  • @optionswithdavis
    @optionswithdavis  10 місяців тому +3

    Get Your Copy of My Strategy Blueprints For FREE:
    1) The Options Income Blueprint: optionswithdavis.com/blueprint/
    2) The Credit Spreads Blueprint: optionswithdavis.com/cs-blueprint/

  • @Thetatraderz
    @Thetatraderz 10 місяців тому +24

    Ive been doing this trade for years. Works great on futures and more than 45 dte.

    • @creandolibertadfinanciera1366
      @creandolibertadfinanciera1366 9 місяців тому +4

      So if the stock goes up … u lose the put debit spread but u keep the difference of the low delta u sold ?? Is that right?

  • @gtcstorm40
    @gtcstorm40 10 місяців тому +9

    This works great in es futures or mini es, way better leverage and premium. Lower margin requirements. Keep short puts at a 6-7 delta

  • @LaphroaigFan
    @LaphroaigFan 10 місяців тому +9

    Hi Davis. Could you explain how you would manage this trade? Are you just closing it if the far OTM puts are breached? Or before? Or do you roll them? Perhaps make a video if you haven't already?

  • @SK-du4nq
    @SK-du4nq 9 місяців тому +3

    Yes, I have trade it campaign style with futures. Probably the best trade but extremely risky. You need to look into your notional. The risk can go through the roof. You have to risk it for the biscuit :) good luck

  • @pragmatica1032
    @pragmatica1032 8 місяців тому +2

    Great content (as always). Love your channel!. To your point on the BP effect @ 11:08, I have constructed this trade with the addition of two long puts further down in price to define the risk and reduce the BP requirements. Worked well for my small account. For sure I lost some credit, but could still trade this at least!

  • @mandyll
    @mandyll 10 місяців тому +2

    Can't wait to try out this strategy! Thanks again for another great video!

  • @shaunglendinning
    @shaunglendinning 8 місяців тому +2

    I think this strategy is being used mainly on Futures. If one is not up to trading Futures, what would the best 'ETF's' be to use with this strategy. You did say that it was probably not suited for stocks due to the number and width of the strikes. Appreciate Davis.

  • @olarius650
    @olarius650 7 місяців тому

    u explained so much better than a lot of other traders. And it's also good to hear someone using a familiar accent.

  • @enricosaccheggiani3192
    @enricosaccheggiani3192 10 місяців тому +2

    Hi, Davis , bug pleasure to see you in person

  • @victorwong1435
    @victorwong1435 5 місяців тому +1

    112 is a brilliant strategy.
    Does the loss mean picking up the shares from the 2 short puts?

  • @yochanangolan9600
    @yochanangolan9600 2 місяці тому

    Great video. I wouldn't trade this strategy due to risk on the downside. Is there a defined risk version of the 112 strategy? Could you be kind enough to cover this in the very near future?

  • @YeeWai-l1y
    @YeeWai-l1y 10 місяців тому +1

    Great video. I wouldn't trade this strategy due to risk on the downside. Is there a defined risk version of the 112 strategy? Could you be kind enough to cover this in the very near future?

  • @ssparr1
    @ssparr1 10 місяців тому +2

    Thanks for this, but given the capital intensity, it doesn't work for me. Seems to be a similar risk profile (with less capital) to the put broken wing butterfly.

  • @yochanangolan9600
    @yochanangolan9600 2 місяці тому

    hi davis its greate stuff as usual. I wouldn't trade this strategy due to risk on the downside. Is there a defined risk version of the 112 strategy? Could you be kind enough to cover this in the very near future?

  • @zaklloyd4335
    @zaklloyd4335 10 місяців тому +6

    Davis great content as ever.
    I've been trading something similar but without the risk of the two short puts.
    It starts life a single lumping put and the objective is to then add the short put as the price drops. This way your one short put can more than pay for the price of the long put.
    It's not new but I found it on another channel and he calls it the Ghetto spread. Would love to hear your thoughts.
    Works brilliantly with ETH and BTC options.
    I do both sides, calls and puts on the back of a BB squeeze.

    • @simonmasters3295
      @simonmasters3295 9 місяців тому

      No reply
      ... I warm to your strategy

    • @A-iu4iu
      @A-iu4iu 7 місяців тому

      If stock tests sold PUT Strike? it has unlimited loss on the downside

    • @optionswithdavis
      @optionswithdavis  6 місяців тому

      Never heard of the strategy but if it works for you, why not. There's always more than one way to profit from the markets.

  • @Eqnotalent
    @Eqnotalent 10 місяців тому +3

    Issue is margin requirement and it doesn’t work for short dte.

  • @NotesNomads
    @NotesNomads 7 місяців тому +1

    when you talk about the chance to lose the trade, how you define "losing"? is that max lose is that some X of your profit? tx (we all now that 1 lost trade can mean portfolio wipe )

    • @eMotionAllDamAge_
      @eMotionAllDamAge_ 7 місяців тому

      Wanna know this as well, since you can always roll your naked puts if that's the case

  • @murphydogprod
    @murphydogprod 10 місяців тому +3

    Great explanation Davis. Never heard of this strategy. When do you close this trade? (With 21 DTE left?) Or hold it longer? Also, do you roll any of the legs if you see the trade is starting to go against you? Risk management? Thanks Davis !

    • @optionswithdavis
      @optionswithdavis  10 місяців тому +2

      You're welcome! I'd manage it similar to other undefined risk strategies: ua-cam.com/video/h7f3w4w1Uiw/v-deo.htmlsi=cg2cIJ72QNC_SNYr

  • @johnnguyen1960
    @johnnguyen1960 10 місяців тому +3

    Another great video

  • @oneheroinmillion
    @oneheroinmillion 10 місяців тому

    Bro.. What are your top fav straties with less risk and mgt.

  • @fishphage2762
    @fishphage2762 10 місяців тому +1

    Do you need to have more cash for the two short way otm puts?

    • @optionswithdavis
      @optionswithdavis  10 місяців тому +1

      Your buying power requirement will increase for every additional short put you have on.

  • @desmondchee9976
    @desmondchee9976 9 місяців тому

    Hi Davis, just stumbled upon this and wonders what platform are you using options on? Is

  • @joeko8253
    @joeko8253 10 місяців тому +2

    I am trying to figure out how to properly manage this trade. Option one: Would I close this trade at 21 days out or try and let it expire? Option two. if the market tanks. my debit spread would increase in value. I could sell it for a profit and then let my short puts become cash secured puts. Worst thing happening is getting stock at a huge discount. Does this sound like a feasible strategy?

    • @optionswithdavis
      @optionswithdavis  10 місяців тому +2

      If you don't mind owning the stock then you can manage the trade like you would a put ratio spread like this: ua-cam.com/video/yi97UwGVoYA/v-deo.htmlsi=JDOyXYTwxhBS8Rfc

    • @joeko8253
      @joeko8253 10 місяців тому +1

      Thank you @@optionswithdavis

  • @williethomas3843
    @williethomas3843 10 місяців тому +1

    Davis, thanks for the content. Would it be ideal to place a stop-loss on the two short puts?

    • @optionswithdavis
      @optionswithdavis  10 місяців тому +1

      You're welcome! You can place a stop loss if it works for you, but generally this is my take on stop loss on options: ua-cam.com/video/hUkBpo5P9X0/v-deo.htmlsi=Tpi3xnm7kMT-EvO7

  • @Mike_Affholder
    @Mike_Affholder Місяць тому

    I don't understand how is this a naked option if your buying the puts?

  • @COMCOFOPO
    @COMCOFOPO 2 місяці тому

    No Need to adjust ?

  • @philsummers579
    @philsummers579 10 місяців тому +2

    Hi Davis, Thanks for showing us this strategy. I won’t be using it. The potential for a massive loss is just way too high. I think that if you have a negative stock bias, why not buy a put and fund it with a call credit spread?

    • @A-iu4iu
      @A-iu4iu 7 місяців тому

      If stock reaches call credit spreads, you book loss?

  • @russellxue
    @russellxue 10 місяців тому +2

    a staple strategy in my portfolio

  • @petere5826
    @petere5826 7 місяців тому

    Mr Davis. This should be done with /ES futures options and 60 DTE. I would not trade this with stocks..too risky

  • @subhashnrana3159
    @subhashnrana3159 7 місяців тому

    Please can you suggest how to backtest on E mini S&P options (for non-us citizens) where buy and sell signals are generated from a third party software. Any guidance would be appreciable

  • @maxxmahh
    @maxxmahh 9 місяців тому +6

    95% win rate is rather meaninglessness, expectancy would be more useful. Honestly I don't know what the psychological effect of getting a rare huge loss is. Most of these strategies seem to pay peanuts and then on a black swan event you will get caught with your pants down and actually will have a decent drawdown if not a margin call in a single day...

    • @SK-du4nq
      @SK-du4nq 9 місяців тому

      So we have backtested it. It has worked great in the past 6-7 years. However, 30% drawdowns can happen rather often. I would say don’t use more than 30% of Buying Power for the account to sustain expansions

    • @nixer65
      @nixer65 4 місяці тому +1

      The only time to trade this is immediately after a high shock event and a pull back. If you have already had 10% pullback and the IV has gone way up then the 5 delta can be 25% OTM. Now you’re in a situation where there would have to be 35% pullback to be at risk (ie zero). At any other time the 5 delta is 10-15% OTM and that is way way way too exposed to a black swan.

  • @LJ9089-r8w
    @LJ9089-r8w 10 місяців тому +2

    How do most of you guys still make profit? Even with the downturn of the economy and ever increasing life standards

    • @LIFESTYLE-OFME
      @LIFESTYLE-OFME 10 місяців тому

      Well, I picked the challenge to put my finances in order. Then I invested in cryptocurrency and stocks, through the assistance of my discretionary fund manager

    • @LIFESTYLE-OFME
      @LIFESTYLE-OFME 10 місяців тому

      Mrs Mary Gail Benner

    • @LJ9089-r8w
      @LJ9089-r8w 10 місяців тому

      Interesting, please how can I get more information? I don't want to remain out of ignorance

    • @LIFESTYLE-OFME
      @LIFESTYLE-OFME 10 місяців тому

      She's mostly on Telegram, using the username.

    • @LIFESTYLE-OFME
      @LIFESTYLE-OFME 10 місяців тому

      Benner10 👈
      That's her username.

  • @fillipesouza4580
    @fillipesouza4580 8 місяців тому

    This strategy would have gone really with SMCI yesterday (April 19, 2024). ;-)

  • @paulb6161
    @paulb6161 3 місяці тому +2

    👍

  • @knowledgeseeker5499
    @knowledgeseeker5499 9 місяців тому +3

    Extremely risky trade if you don’t have huge amount to digest potential loss

    • @fillipesouza4580
      @fillipesouza4580 8 місяців тому +1

      Agreed. Recipe for disaster.

    • @tdiler12
      @tdiler12 6 місяців тому

      lol
      yeah
      a lot of “hoping”
      once the trade is. placed
      I dont like …”hope”

  • @Godai_Chen
    @Godai_Chen 10 місяців тому

    Since the correction are coming, better to show us covered call with protected put instead

  • @robjbowen
    @robjbowen 10 місяців тому

    This is a trade that works very well on the /ES futures at 120 DTE. For SPY or SPX you really need to have portfolio margin to get it to work really well.

    • @jfredett
      @jfredett 10 місяців тому +1

      @@sanbetski With higher prob, it's better to reach out to get more value.

    • @robjbowen
      @robjbowen 10 місяців тому

      @@sanbetski Annualized you can get between 20-30% --- IRA 15-25% due to the higher requirements.

    • @SK-du4nq
      @SK-du4nq 9 місяців тому +1

      Yep 120dte is perfect. More credit and less voma. Campaign style works great but again huge risk. Notional is through the roof with SPX and futures. If no one thought about it, look at your short strikes and multiply them by the number of contracts and then by 100 for SPX. (50 for ES etc.). That’s how much you will be down if underlying gets in the money not even accounting for volatility. Market breakers - sure but not overnight though. It is a great strategy just trade it with caution.

    • @eMotionAllDamAge_
      @eMotionAllDamAge_ 7 місяців тому

      @SK-du4nq but you can always roll your puts, right? 😅

    • @robjbowen
      @robjbowen 6 місяців тому +1

      @@eMotionAllDamAge_ You could, but if your in a black swan event you wouldn't want the risk. Better to have a set stop in your plan and follow it.

  • @dannytetreault
    @dannytetreault 5 місяців тому

    7:19 oh wow! That profit graph 📉 looks amazing. It reminds me of an iron condor and a broken wing butterfly.