That was an exemplary presentation of a short strangle by Lee. The statistical explanation of 1SD and selection of Delta to attain a POP of ~70% justifies putting on such a trade. Can't thank you enough for this learning opportunity.
I've watched a couple hundred videos over the last 5-6 months learning about option trading. I have not seen another video going through the trade examples as completely as you Lee. I'm going to have to watch this a few times. Really like how you explained your reasoning as the story progressed. Thank you so much for sharing your knowledge and experience. I'm hoping you'll do more in the future. I like the way you present.
Great video Lee. Can you confirm that one Standard Deviation is equivalent to the expected move for that expiration? So for example on the TOS platform where it lists the IV and then +/- $7. $7 would be 1 standard deviation ? I’ve never been able to figure this out!
I'm not 100% sure either. Truthfully, each broker uses their own proprietary formula for "expected move". It's based on the models and it is more or less one sigma, but not exactly. Mathematically, a 1 stdev should have a 15.9% chance of expiring in the money. But if you look at the ITM%, Delta, expected move, and curve, you'll see that these numbers are all a little unexpectedly off. In part, this is because they always use the same plus or minus expected move. But since there is always skew, the negative expectation and positive expectation should be different. Also, expected move is generally given for a specific expiration, but really the move is derived from the pricing model of hundreds of different options. The broker has to decide how to weigh each strike in the formula.
Thanks for the feedback Tom. I do not currently do coaching, although I am very involved with StockMarketOptionsTrading.net where we publish some educational material. Also, I'm getting ready to launch a hedge fund as a 506(c).
Hi Lee, Great video as per usual. Can i ask though what you would do if hypothetically the underlying began to go in one direction and just didnt stop, so lets say over the next 4 weeks boeing continued up to 350. Would you just keep selling new calls and puts and rolling or would there be a point you'd throw in the towel. I've noticed that everyone goes on about breakevens however they are at experation. If your strikes are being tested a few weeks from experation you are going to be significantly down on the trade. Thanks
Best strangle explanation on YT
That was an exemplary presentation of a short strangle by Lee. The statistical explanation of 1SD and selection of Delta to attain a POP of ~70% justifies putting on such a trade. Can't thank you enough for this learning opportunity.
Thanks Jey. I made another video where I managed a tough FB Strangle. That is scheduled to go live Friday.
@@LeeSpaziano I will be eagerly awaiting to learn more on "Stranglee", your proprietary strategy!
I've watched a couple hundred videos over the last 5-6 months learning about option trading. I have not seen another video going through the trade examples as completely as you Lee. I'm going to have to watch this a few times. Really like how you explained your reasoning as the story progressed. Thank you so much for sharing your knowledge and experience. I'm hoping you'll do more in the future. I like the way you present.
Thanks for the feedback!
I just closed out a FB saga today. I think I'll do a video on that one very soon.
Great video Lee
Great video Lee. Can you confirm that one Standard Deviation is equivalent to the expected move for that expiration? So for example on the TOS platform where it lists the IV and then +/- $7. $7 would be 1 standard deviation ? I’ve never been able to figure this out!
I'm not 100% sure either. Truthfully, each broker uses their own proprietary formula for "expected move". It's based on the models and it is more or less one sigma, but not exactly. Mathematically, a 1 stdev should have a 15.9% chance of expiring in the money. But if you look at the ITM%, Delta, expected move, and curve, you'll see that these numbers are all a little unexpectedly off.
In part, this is because they always use the same plus or minus expected move. But since there is always skew, the negative expectation and positive expectation should be different. Also, expected move is generally given for a specific expiration, but really the move is derived from the pricing model of hundreds of different options. The broker has to decide how to weigh each strike in the formula.
Great presentation. Very clear description of your Strangle management strategy. Do you do coaching? I am an avid premium seller too.
Thanks for the feedback Tom. I do not currently do coaching, although I am very involved with StockMarketOptionsTrading.net where we publish some educational material. Also, I'm getting ready to launch a hedge fund as a 506(c).
Hi Lee, Great video as per usual. Can i ask though what you would do if hypothetically the underlying began to go in one direction and just didnt stop, so lets say over the next 4 weeks boeing continued up to 350. Would you just keep selling new calls and puts and rolling or would there be a point you'd throw in the towel. I've noticed that everyone goes on about breakevens however they are at experation. If your strikes are being tested a few weeks from experation you are going to be significantly down on the trade.
Thanks