Electrical Engineers loves challenges and complex math. Also, here an Electrical Engineer, I started investing in stocks and I find stock so boring. Options trading is more challenging...when you taste your first loss in trading it, that's when get more challenged.
Software engineer here, I can confirm. I love the complexity of options because it is all very intuitive to me and I feel like I have an edge as a result.
Thanks for sharing, David. Your story is a shot of pure inspiration juice! You just motivated me to toss my YTD trade history on a spreadsheet in the goal of analyzing patterns, optimizing risk:reward, and most importantly -> stepping up my game towards consistency and meeting 2020 goals. Thank you.
How do you hedge? Are your CSP (core positions) assigned, and then you Buy PUTS to insure (hedge) against a crash while also selling covered calls to pay for the PUTS? or how do you pay for the PUTS you buy? Maybe sell a way out of the money PUT? please elaborate. Thanks for the interview and insight.
Once your CSP is getting assigned, the underlying has likely already crashed. Especially if you start by opening 0.05 delta puts like this guy. So buying a put at that point is largely too late.
I don't understand what he says after 19:30 in the video. Can someone please explain to me how is he hedging against market meltdown? He was talking about 4% drag, hedging etc how does he hedge if he is selling puts? spreads?
Stupid question: what’s a 5 delta put?? Is that the same as the 0.50 delta put? Been selling out of the money puts for few months now, making consistent profits of 1-3% per week on capital. I want to be more mathematical in my strategy. I kinda pick my strikes by gut feeling...
@@ScrambledDecksReviews If i may ask, what underlying are you carrying as a hedge, SPX or SPY? I'm assuming you have bought Puts and roll them as time goes on(what DTE and what Delta you have them on), also whats the ratio of the hedge to the overall net Liq etc...thanks
Drag on a portfolio is where fixed costs (such as paying for a VIX vertical pread) "drags" or weighs performance by an expected amount. This trade-off is acceptable when managing large portolios and also when being exposed to greeks such as for option sellers who exposed to vega, or sudden spikes in implied volatility.
Am I understanding the SPY 45 DTE Income strategy on your website correctly? It seems like you need a $1 Million plus account to do this with, right? How could I do something similiar with a $100K account?
Scrambled Decks superb video. Bro I have few questions on your hedge. Is there an email address I can contact you at? This was one of the best TT episodes!
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?
When your position has little to no directional risk in the short term. For example selling a put and selling a call both OTM, creates a range of profitability and is less reliant on direction.
One interesting aspect to options trading is that it allows you to treat trades in "time slices." This is relevant because downturns tend to happen very quickly, while uptrends tend to happen more gradually. So, for example, if you're constantly selling weekly puts and you manage your losers, you will have a statistical edge as long as the above is true (downtrends happen much more quickly than uptrends).
should be this concept - www.google.com/url?client=internal-element-cse&cx=015477303216471237373:u_cnlyqjhzi&q=www.tastytrade.com/tt/shows/market-measures/episodes/risk-and-rewards-managing-winners-and-21-dte-10-05-2018&sa=U&ved=2ahUKEwjMtLrn2ojmAhWIpFkKHRgdApwQFjAAegQIAhAC&usg=AOvVaw3wSEbNCH411Ig977NSnL3j
@@davez5201 naked short is legal as long as your margin can support it. But it's hard for a lot of people because of the steep risk if the market does collapse and it's not always easy for stop loss to catch it, so generally brokers put heavy margin requirement so that worst case scenario brokers have a lot of cash to burn before the fire reaches them... makes your position very small IRL even if your % is good.
Market - Order is filled immediately at any price the market offers (risky but instant) Limit - Order is filled at only the price you set or better Credit - you receive money for assuming risk Debit - you pay money Even - Order is routed for $0.00 and you don't pay or receive anything, but still have risk.
how come every youtube video says its so great to sell puts. is this some conspiracy to get newbies to think they can make money selling puts so in reality they can get wiped out?
"well stock trading commissions are zero now" It must be nice living in a capitalist society ahahaha.... In canada we still pay $10 to buy OR sell options. Canada has to be the most restrictive country to competition. Monopolies everywhere hosing everyone.
When a white belt in trading sits in and listens to black belts converse 😅 Could you tell me or direct me to a video that Explains how to role a spread? 🙏
Buying puts and calls = trying to get rich quick (10% effective). Selling (covered) puts and calls = getting rich relentlessly (90% effective).
It’s not quite that simple/easy lol
At least not for me
16:47 what is a 5 delta short put?
0.05 delta?
Nice chat. Radiologist here, been trading short options for about 7 months. It's great. I might have my kids get GEDs and do it for a living.
Med student here! Would love to hear more about you!!
How's your strategy going since the market dropped 20% ?
Electrical Engineers loves challenges and complex math. Also, here an Electrical Engineer, I started investing in stocks and I find stock so boring. Options trading is more challenging...when you taste your first loss in trading it, that's when get more challenged.
Software engineer here, I can confirm. I love the complexity of options because it is all very intuitive to me and I feel like I have an edge as a result.
@@stephelton Chemical engineer here, I like options because you can set up some really interesting interactions between them.
Network engineer here, love options so much! Can't wait to do this full time. Best WFH job ever.
i guess ima fucking electrical engineer over here trading option spreads.
Thanks for sharing, David. Your story is a shot of pure inspiration juice! You just motivated me to toss my YTD trade history on a spreadsheet in the goal of analyzing patterns, optimizing risk:reward, and most importantly -> stepping up my game towards consistency and meeting 2020 goals. Thank you.
Thanks. Great video. I have a question. He mentioned Delta 9, 10, what's that mean? Please explain. Thanks.
How do you hedge? Are your CSP (core positions) assigned, and then you Buy PUTS to insure (hedge) against a crash while also selling covered calls to pay for the PUTS? or how do you pay for the PUTS you buy? Maybe sell a way out of the money PUT? please elaborate. Thanks for the interview and insight.
Once your CSP is getting assigned, the underlying has likely already crashed. Especially if you start by opening 0.05 delta puts like this guy. So buying a put at that point is largely too late.
I don't understand what he says after 19:30 in the video. Can someone please explain to me how is he hedging against market meltdown? He was talking about 4% drag, hedging etc how does he hedge if he is selling puts? spreads?
" I don't think we're going to see a 2008 or 2009 " - this didn't age too well lol!
ahaha! 4real!
I love how we have these 20 SD "once in a lifetime moves" about every decade now it seems 😅
I think his 5% rolling hedge paid though.
@@eannane8712 5% rolling hedge, how did it perform during Feb 2020 until May 2020?
@@slowafmx2327 leptokurtosis will do that
I guess Tom didn't know the super secret handshake to talk about electrical engineering.
I'm from Chicago I'm starting to learn about trade options and calls you guys are a big help thanks for your video's 👍👍👍👍🥳🥳
What is this so called 5 delta put strategy?
Does one just spam 5 delta puts?
19:11 I wonder how this strategy worked during March of 2020
Why they didn't touch on the strategy. All we know is he goes short 5 delta
What about his stop loss and his hedge?
Curious if he is okay in 2020.. hope so
Thank you for a great interview!!!!
I have learned a lot from you. That why I have to pay back by having an account with you.
1000 point drop is nothing nowadays for a stock market correction. I think with more people trading we will see much more bigger drops!
Stupid question: what’s a 5 delta put?? Is that the same as the 0.50 delta put?
Been selling out of the money puts for few months now, making consistent profits of 1-3% per week on capital. I want to be more mathematical in my strategy. I kinda pick my strikes by gut feeling...
.5 is 50
Are those puts cash secured if you do not mind me asking a noob question, thanks.
I enjoyed this interview. But I didn't understand the reference to dragging as a defense
@@ScrambledDecksReviews If i may ask, what underlying are you carrying as a hedge, SPX or SPY? I'm assuming you have bought Puts and roll them as time goes on(what DTE and what Delta you have them on), also whats the ratio of the hedge to the overall net Liq etc...thanks
Drag on a portfolio is where fixed costs (such as paying for a VIX vertical pread) "drags" or weighs performance by an expected amount. This trade-off is acceptable when managing large portolios and also when being exposed to greeks such as for option sellers who exposed to vega, or sudden spikes in implied volatility.
What does he mean by having short delta/a hedged position?
A position that is bearish (could be bearish equities or long volatility) , that hedges some of the risk in his short puts.
"You could see a nasty pullback of 5 to 10%" .... *laughs in SPX 3 months later*
Hey David, good to see you here man. I also changed path from real estate to stocks 😉 much happier now. Good luck man
Am I understanding the SPY 45 DTE Income strategy on your website correctly? It seems like you need a $1 Million plus account to do this with, right? How could I do something similiar with a $100K account?
you can take in like 2k a month with a 50k account
Just trade the same strategy with a cheaper underlying. Like SPYG, SPLG, or go 2x leveraged with SSO or QID if you’re feeling saucy
How he hedges his position, couldn't understand?
Scrambled Decks superb video. Bro I have few questions on your hedge. Is there an email address I can contact you at? This was one of the best TT episodes!
Was it naked 5delta or spread 5 delta ?
i think naked
People from or live in northern va always say Northern VA. As if it's a separate state from VA.
Makes sense, it's like the division between north & south goes through the middle of VA
N Va is a bunch of communist gov bureaucrats
Got a link to Davids facebook group?
facebook.com/groups/1930565613719977/
New to option trading what % gain per year do people see?
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?
What is “delta neutral”?
When your position has little to no directional risk in the short term. For example selling a put and selling a call both OTM, creates a range of profitability and is less reliant on direction.
I'm also a trader, engineer, and rock climber!
😂😂 smh I think it’s a cult. I’m an engineer and trying to get my other engineer friends on board
does train engineer count
Engineer here. Tickles my math organs
Good interview guys.
"I design trigger mechanisms for bombs."
"The government said I shouldn't say this."
"No comment on the job, thank you."
curious how well he's done these past few months selling puts
You can follow him on facebook! He posts his profits/losses every week.
@@ricomajestic wheres the page?
One interesting aspect to options trading is that it allows you to treat trades in "time slices." This is relevant because downturns tend to happen very quickly, while uptrends tend to happen more gradually. So, for example, if you're constantly selling weekly puts and you manage your losers, you will have a statistical edge as long as the above is true (downtrends happen much more quickly than uptrends).
Do you know which episode of the show he's talking about around 6:00 mark?
should be this concept - www.google.com/url?client=internal-element-cse&cx=015477303216471237373:u_cnlyqjhzi&q=www.tastytrade.com/tt/shows/market-measures/episodes/risk-and-rewards-managing-winners-and-21-dte-10-05-2018&sa=U&ved=2ahUKEwjMtLrn2ojmAhWIpFkKHRgdApwQFjAAegQIAhAC&usg=AOvVaw3wSEbNCH411Ig977NSnL3j
Masters Engineering degree from Princeton----thought he would have trouble reading a chart. lol
Method for hedging a short put?
short shares of the stock
Just when I think I'm getting decent at trading, I listen to a conversation like this and realize what an absolute novice I am.
22% is about the market rate of growth for 2019 till november...
Without the market risk though. In other worlds he wasn’t swimming naked when the tide went down. 😊
I think my broker requires equity of over 20k in order to be approved for naked puts. what are some of the easier brokers to get approved for?
check out tastyworks.com!
It's not a naked put. It's covered by cash. Pretty sure trading naked positions is illegal anyway.
@@davez5201 naked short is legal as long as your margin can support it. But it's hard for a lot of people because of the steep risk if the market does collapse and it's not always easy for stop loss to catch it, so generally brokers put heavy margin requirement so that worst case scenario brokers have a lot of cash to burn before the fire reaches them... makes your position very small IRL even if your % is good.
14:50 🔥
Wonder how he is doing in the last 2 weeks.
@@ScrambledDecksReviews can you talk about or explain how your hedging strategy is? thank you so much and i love the interview!
Short put roll over - how does it work ?
I figured it out. Thanks
Everything is groovy until Feb, 2020...Not the best time to sell puts
roll down and out.
Awesome!
what is his hedge position? if it's only 5% how will that protect him during a crash?
@@ScrambledDecksReviews ty
inspiring interview
My broker has these options for rolling, what does it mean???:
Market
Limit
Credit
Debit
Even
Market - Order is filled immediately at any price the market offers (risky but instant)
Limit - Order is filled at only the price you set or better
Credit - you receive money for assuming risk
Debit - you pay money
Even - Order is routed for $0.00 and you don't pay or receive anything, but still have risk.
I just came upon this video, saw his primary strategy is selling puts, and realized this video came out before March 2020. Oof 😵
It’s not an automatic loss. The 5% delta moves farther away, as volatility rises. Far enough, that your short put doesn’t get exercised.
I liked selling puts until a couple weeks ago.. OUCH.. not a good strategy when you see 10% drops in a day
@@ScrambledDecksReviews Link not working
I thought rolling was a bad idea when selling Puts. You could get bigger losses that way if they work against you.
@@ScrambledDecksReviews ?
Very nice
I like the dude with the hat
What's wrong with the audio cutting out every now and then?? You'd think someone as rich as Tom could hire someone to get the audio right.
Seems like a lot of effort for 20%?
He looks like the guy from Hawaii Five-O
this man probably destroyed his account in 2022 lol.
Being smarter than a billionaire doesn't mean much.
how come every youtube video says its so great to sell puts. is this some conspiracy to get newbies to think they can make money selling puts so in reality they can get wiped out?
check out r/stocksandshit on reddit. guy posts a bunch of trades weekly and you can see how he manages it.
I think he works for Tesla.
imagine getting margin called these past few days....
19:23 he talks about having a hedge
Sweet
"well stock trading commissions are zero now"
It must be nice living in a capitalist society ahahaha....
In canada we still pay $10 to buy OR sell options. Canada has to be the most restrictive country to competition. Monopolies everywhere hosing everyone.
When a white belt in trading sits in and listens to black belts converse 😅
Could you tell me or direct me to a video that
Explains how to role a spread? 🙏
sure! www.google.com/url?client=internal-element-cse&cx=015477303216471237373:u_cnlyqjhzi&q=www.tastytrade.com/tt/shows/market-mindset/episodes/rolling-defined-risk-credit-spreads-05-22-2019&sa=U&ved=2ahUKEwjpnNbL2ojmAhUGbawKHW0eAkQQFjADegQIBxAC&usg=AOvVaw0dC4rLaJDbDdMb3n5GG-vM
Only a few brokers will give you this in an obvious manner. IB and TW seem to have their crap together on this
total waste of time. no mention of trading strategy details such as chosen dte, delta, % of capital used/trade, etc.
The math in finance is a joke for engineers.
So complicated to make 20%..
20% on a million is great
Hedge fund, mutual funds hava building of MBA's and they are lucky to beat the SP by a 1% point.
Dude is too excited and interrupts too much.
Whats David's Facebook page,?