Former Engineer/Lawyer Becomes Full Time Trader with 3 Simple Criteria
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- Опубліковано 29 лип 2018
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3 Simple Criteria (note to self for retention/education):
1) Identify good and bad habits to maintain or eliminate
2) discipline oneself to enter trades mechanically with a process - resist temptation to constantly tweak strategy and let strategy play out to have favorable odds over large sample size of events. Trade a few structured and confident strategies: when IV Contraction that occurs around earnings reports, theta decay, identifying overbought/oversold trades before reversals
3) Trade exits with a disciplined strategy - 50% profit exit or 21 DTE options and cut losses/gains short
Was wondering if you guy could bring Les back and see how he's faired in the recent volatile market, or if he has developed any new strategies? Excellent interview, thank you!
I can not tell you how much I enjoy watching your interviews and teachings . I take notes of everything you guys say and I have learnt so much . Thank you
They seem to be really enjoying talking to someone who knows what he's doing.
This is a good interview. Else it is Tom hijacking the talk and the guest is like hmmm....
Austin is not a dry heat, lol. It's 80%+ humidity minimum every day in the summer. They're thinking of Arizona.
I started trading options in March and eventually moved to this exact strategy trough trial and error and have found great success! Have grown my account from under 2k to 22k in 2 months :)
what strategies do you use?
Hi Antonio , well done..me too learning ..unfortunately I did not understand the first two ID crush? and "under decay" I don't understand ...would you mind explaining / correcting me ?
Tell us more, man!
@@marsery theta decay
@marsery IV crush*
I want to be like him when i grow up
This so awesome!!! I listened to your videos and really learned alot and this video help me out so much , Thank you for the Videos
05:38 is where thy actually start. The whole video is good. Tom Sosnoff needs to let the guest talk.
he never shuts up we want to hear these guys talk
Why? It's a conversation.
Tony is looking crazy as usual!!! Haha. Great video guys.
Only two types of traders watch tasty trade one who are already consistently profitable and second who are on their way to be consistently profitable 🏅🥈
It is great interview where you guys teach trading I really want to join.thanks
Great Risning Star guest. My question, who dislikes a video like this (for the 20 thumbs down)?
well said 13:50 that managing trading at 50% which i am kinda struggling with. I tried to get few extra penny and i ended up loosing more.
I close at 80% on cash secured puts. It works for me.
I looked and over 90% of my plays hit 20% but trying to get that 2x has cost me so must gains 🤦♂️ now say I buy an option for $100 i just set a sell for $120 and bam!!! I just walk away and more then not it hits the same dam day at 15% to 20% small gains not exciting but seem to work extremely well 👀
Wow Tom took a breath between words today😂
Seems people they end up I interviewing are engineers. That’s pretty cool.
Pretty interesting. But it makes sense. I’m an INTJ and INTJ’s tend to be engineers and are very analytical. It makes sense to me :)
50% returns being delta neutral...gotta love options!
this guy's great
I like the interview, excellent content. I believe when he says he likes tweaking and turning knobs, the military term for that is “ knob dicking”
testing today my first iron condor strategy before earnings...WOW. IN and OUT. Amazing. Liquidity matters!!!
Please explain in a little more detail! Also what broker do you use?
Did you do an iron condor before an earnings announcement and collect credit and close out early after the earnings because of IV crush?
@@Painfulwhale360 broker is TOS, open iron condor position on option cycle closest to expiry, 30 minutes before closing bell on day be4 earnings release, short strikes = atm strike +/- atm straddle mid price*0.85, close position 5 minutes after opening bell on the next day. entry conditions: IVR must be greater than SPX's IVR and option must have tight b/a spreads. overall premium >=1/3 of spread. hope this helps
@@ddt77ta How are you still doing with this strategy? I’m having a hard time understanding how to do it.
You’re saying place an iron condor on a stock the day before the earnings release, so 8am the next morning the earnings is released and then close the trades withen 5 minutes of the bell?
Yup
Where can I learn this strategy in detail?
Hi.... In the interview he says that he uses the same strategy as tastytrade in earnings, does anyone know where I can see examples of tasytrade trades with earnings Strangles or Iron Condor ?
we post all of our trades to the tastyworks.com platform's follow page - you can see all trades there if you have an account!
Can we get an update how this man did in March 2020? Did he blow up his account or no? I feel like everyone can make money in a bull market but how did he fare in bear market/black swan event?
Most people who stuck around April - Dec 2020 had an easy time. Stocks pretty much only went up from there
from mid 2020 throughout the end of 2020 wasnt that bearish market back then
if he lost money, he likely did not lose much if he knew how to manage that kind of risk. After March 2020 most people would've made money including him
Most of the successful options traders on here seem to be doing well over 800-1000 trades a year and focusing on two or three underlying (SPX, SPY, etc…). How are they putting 4 trades day after day (some even say 10 a day) essentially the same underlying? Apparently with the same 30-45 DTE. Wouldn’t all the DTE and strikes start to pileup creating a concentration of risk around the 21 days to expiration? I’m really confused about the idea of 4-10 trades a day of just a few index options. Please help me understand
You take advantage of the IV a spy options will move more then 20% up and down in a single day from the volatility alone i watch the spy a lot follow the one and 3 minutes rsi and macd and ema and sma
Yes right
R they intraday option seller or holding the position till expiry
How do I get hold of Les to learn more about the earnings strat he follows? thanks,
How many cups of coffee does Batista drink per day?
What kinds of trades does he do in the afternoon and close the next day? Someone out there please explain that to me. Are there shorter duration option trades I’m not aware of?
Sounds like it is for when companies release their earnings every quarter. It’s called IV crush. IV is implied volatility. He opens the trade in the afternoon before earnings are released then closes it after the open the next morning. The value of options can change dramatically with changes in volatility.
Awesome, i wish i could ask him, this: when you've been assing on naked put, immediatly you sold covered call. Itm or otm and what is your exit strategy with those shares and covered call?
To answer your question: First off, I only sell puts on stocks that I wouldn't mind owning (e.g., well-known, highly liquid stocks that pay a good dividend). I typically sell OTM puts at a specific Delta level, using the Monthly series that has about 45 DTE (days til expiration) left.
As long as the puts don't get exercised/assigned, I usually roll them at 21 DTE to the next Monthly series (which will have about 45 DTE left), but honestly sometimes I just let them expire and resume selling 45 DTE puts at the next opportunity. Often you can keep selling and rolling puts like this month after month, for many months. Depending on how the stock price (and thus Delta) have moved, I might be selecting slightly different strikes from month to month.
If I do get assigned on the stock at some point, that's OK, because it was a stock I knew I wouldn't mind owning in the first place (otherwise I wouldn't have sold the puts). Once I get assigned, I then sell calls at the same Delta level as I sold the puts at, again with about 45 DTE left.
If the stock goes up and the shares get called away, that's OK, because typically that means I'll be selling the shares at a profit (compared to the strike price they were put to me at). If the calls don't get called away, I'll typically roll them to the next Monthly series when my current calls get down to 21 DTE (at which point, the next Monthly will be around 45 DTE). When I roll those calls to the next Monthly series, I might also select different strikes, depending on how the stock price (and Delta) have moved.
So as you can see, you can actually do this in a cycle --> first, sell puts ... keep rolling the puts (and collecting premium) at 21 DTE, month after month, until you get assigned the stock (meaning you get to buy the stock at lower price than before, which is a good thing) ... sell calls against the stock (i.e., a Covered Call) ... keep rolling the calls (and continuing to collect premium) at 21 DTE, month after month, until the stock eventually gets called away (meaning you're selling the stock at a higher price than before, which is another good thing) ... and then start the cycle all over again by selling puts.
Thanks good one strategy.
Hi, I love this video. Please tell me the watchlist criteria for IV crush around earnings. Thank you in advance
On the earnings strangles how far out is he selling? The 45 day range or the current expiration? Somewhere in between?
Likely between 30-60dte if he's using the tastytrade methodology
@@tastyliveshow Where can one find the Tasty method?
If you're winning a lot and losing a lot, over and over..... That is consistency. Did he mean only consistent winning?
I understand the volatility reverts back to the mean but does the price?
It's hard to find evidence that stock prices are mean reverting, which is why we account for this with OTM options that have a high probability of expiring OTM. This gives us a wide range to be successful, while also taking advantage of a potential volatility crush. Even if a stock rallies, the vol crush can offset any delta blockers and the trade can still be profitable.
@7:15... 900 trades a year... 3/day... is that counting adjustments (rolls, close, etc), or is that strictly new trades?
That was strictly new trades (i.e., not counting adjustments, rolls and closing trades). However, since the time I was on the show, I've almost doubled that now to about 5-6 trades per day, or about 1400 trades per year.
When placing these earnings trades, should we still be seeking to capture 1/3 the width of the strikes in premium, since they're such short term trades, usually just 1 day??
We want to ensure our risk:reward is still sound, so if that means 1/3rd then yes - it's just a 1 day trade, but earnings can result in huge moves, so we don't want to be picking up pennies in front of a steamroller. Totally up to you though.
All these rising stars are highly educated not to take away from that but they're not the regular joe
Curious to know if the guy blew up his account by now. If not, big respect! 55% annualised return is quite a risk.
What if there are no option buyer? Will this scenario happen in future?
Its pretty simple. Sell the straddle/strangle/iron condor at the near closing price of the stock just before earnings release and buy back the next morning, I started this last year and it returned 90% based on a 25k account. Do naked and you will make money 80% of the time and 20% will screw you :)
What expiration do you choose for you straddle/strangle/iron condor? The 30-45 days out, the closest to expiration (could be a weekly) or further out?
@@ZeeKay80 immediate expiration, same week
1SD strangles a day before earnings is a sure way to eventually blow your account.
Can someone help me understand IV crush around earnings?
Here's a segment on this:
www.tastytrade.com/tt/shows/market-mindset/episodes/earnings-volatility-crush-tsla-04-24-2019
So at various points during the interview this gentleman says he exits in two different ways. Earlier in the interview he says he takes off trades the following morning. Later he says he exits at 50% or 21 days to expiration. Which is it? When do you know to do one or the other? It’s tempting to assume he lets those that aren’t net credits go, but he specifically says he eats or rolls losers the following day as well.
He was talking about earnings plays when he said he puts them on on the last hour and takes them off in the first 45 minutes the next morning. He was talking about strangles and condors when he talks about 50% or 21DTE. I assume that he is opening those at about 45DTE.
55%?? damn i just wanna beat the market enough lol
Can someone explain to me how you can trade everyday but put on trades that are 40-50 days to expiration? Is this type of trading only available to those with 50k+ accounts? Is the tastytrade way applicable to 5k accounts?
They're trading options, not stocks. And just because the options don't expire until 40 days out, doesn't mean you don't take profits/adjust/roll them before those days come. I would check out tastytrade.com and learn a lot from their materials!
to be honest a lot of there methods involve naked options with un defined risk it would be hard to build a portfolio with only 5k, you can play around with spreads but you will not see the full extent of there results. check out there tasty bite videos on youtube its aimed for people with accounts in the 2k-20k range
@@JohnYoga I thought he said he uses iron condor trades
@michael - Michael - he clearly lined out he has 3 phenomenon he targets and 5 strategies to capture those opportunities, for earnings he has over 250 companies which could have multiple triggers In a day, IC or strangles are based on company strike price to limit risk, IC would have small margin req
240 earnings underlying
Never heard of 109 in Austin tx lol
Yep, 109 in Austin, on July 23, 2018! (See the temperature stats for Austin here: www.wunderground.com/history/monthly/us/tx/austin/KAUS/date/2018-7 )
It is a dry heat in my oven too...doesn't mean I want to live.
If you're position is in a loss at the 21 DTE, do you still close it out regardless? Or do you roll it? And if you roll it, do you do it at the 21 DTE or wait until it gets closer to expiration.
Roll it at 21 DTE
Did he say his return was 55% per year or 55% return over three years (~18% year)?
Its just 55% per year. 55% per year is the same as 55% over three years. You dont divide by 3.
@@GrizzLeeC Why do you say 55% per year is the same as 55% over 3 years. I think unless it was explicitly stated that he made more and the averaged return came out to 55% each year, they are different.
@@_Nibi chris lee better not trade until he masters at least 3rd grade math
55 combined...18.333% year on 500k for income plays is very good. That return is after fees.
did he make 250k over 3 years or 55% average return per year
Trades responsively, 25 then shop with the rest.
I'm a 2hrs away from Austin. I'd love to take him to lunch and pick his brain.
Is that 50 % after tax, fees and commissions?
le proboscis - 50% of max profit. Taxes vary according to income and fees vary per platform.
I agree that selling options are good income asset to generate cashflow due to theta decay and blablabla. But at a point of not having any other financial asset and doing thousand trades a year?!
I''m also engineer here, but the main objective for this labor is to create money independence isn't it? Is it worth it instead of just sitting on good companies stocks. I think money management is somewhere in between.
But if it works well then why not do it over and over again? Of course you could still invest in other ways but this would bring the biggest and most short term returns.
Wanna see this guy try to trade earnings these days sheesh 😒
With all due respect, his story doesn’t add up. If he’s making close to 4 trades a day (i.e. ~ 1000 trades a year), closing every trade at max 50% profit as he stated, and has an overall return of 50% on his portfolio, it implies that he has almost no drawdown and no losing trade. An to top that, he has a perfect score of 50% returns for 3 consecutive years! By no means is this an attempt to belittle his success, however it begs the question if this sounds too good to be true.
There's a 1-2 standard deviation probability he is estimating those figures during this relaxed conversation.
55% over three years, not per year.
Guys, 50% is essentially for credit trades, closing the trade once 50% of the credit is reached. You should not be risking more than 2% of the capital in a single trade. Trade small, Trade often. I would say 50% is quite conservative, and easily achieved with mechanical trading without emotions.
He said he made 55% total the last three years total, not per year.
My God, get this man a glass of water...the sticky mouth sounds are driving me nuts
this is really interesting. but in order to sell a strangle requires you to have 100 shares of the stock in the first place (in Robinhood) which is not something you really want to do
LET THE GUY TALK. a stop interrupting him
Tony needs to stay inside
900 to 1,000 trades a year sounds excessive to me....
its kind of low to me