The Best Kept Secret For Buying Calls
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- Опубліковано 11 бер 2023
- I show the technique I use for finding which Strike and Expiration to choose from when buying long Calls.
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What's interesting is in a bear market (or for overbought stocks) the same thing can be done by buying puts ATM or ITM. And in addition to that, all of the gains / losses here were if one decided to hold until expiration. If you actually cut your losses much much sooner than the expiration, the returns would be even better.
This gentleman truly offers great investing ideas to consider, and definitely deserves a HUGE number of subscribers! Please share his wisdom with all your friends!👍👍🥇
I have been doing this strategy for the last 6 months. It’s nice to see it back tested. Just a rookie trader
bro got a calculator to multiply a percentage through the year 😭 i guess i just over estimate the general public’s capabilities. thank u for all the useful info bruh 🙏🏼
You just taught me a lot in 18 minutes. Thank you.
Thank you for your generous sharing of great analytical tools and strategies.
Clear, easy to understand and very helpful technical analysis. Thank you so much!
Smart dude MC is the best. I use that to learn how to trade put spreads and then made my own scanner that gave me trades that I had 96% win rate. Only knock on mc is they don’t have spx option chain
Awesome video! Thanks for sharing your insights, I will definitely be buying 3 months out.
great informative video.Thanks for sharing
Another great research, thank you
I want to leave a comment that I really appreciate your videos and learn alot.
Got a new sub outta me. Looking forward to seeing and learning more
Thanks for the insight. I'll have to give it a look. I've been liking trading leaps and generally sell leaps puts at the same price that I buy leaps calls to lower the initial credit. Worst case scenario, you get put into shares at a price that you were willing to pay. If the trade goes your way, the put goes worthless, you collect current interest (around 5% on your money) and whatever the call makes you. Keep up the good work.
Thanks, great info
Awesome video
Thank you 🙏🏼
this is amazing thank you
Excellent!
Great informative video!
I am working this strategy into my paper trading account. Even in this psychotic choppy market, one can use oversold indicators as a trigger to enter trades along with other technical signs. Practice makes us better, never perfect.
Sounds like a good plan.
Tanks very good explanation Lesson
Hope you did do the long calls and made ton of money and that is,why we don't see new content. But you have the best material and we hope to see more.
Thanks. I'll be back to making more videos at some point. I just wanted a UA-cam break for awhile.
Interesting video. Thanks for sharing!
Thanks Ford the video. Now for 2024
Excellent video! Thanks. It would be great to see also this strategy with the spy
Noted!
Great video well explained without unnecessary jargon. Question - what strategy would you use in a Bear market ?👍👍
Thanks. I usually lose money in a Bear market the same as everyone else 😁. But if you were good at knowing when the market changed, simply buying Puts or Put debit spreads would do very well.
This is awesome! When do you cash in and close out these trades? Do you go to expiration?
These backtests are assuming you hold until expiration. In real life I personally wouldn't have the patience and would probably close the trades early (which is probably why I don't buy a lot of Calls 😁).
Great video. It truly is eye opening. If you bought a leaps call and it was down 50%, would you close the trade or continue to hold it?
I depends on whether or not I thought it would go up again (looking at the chart) and what the overall market is doing. It also depends on how much time is left. I have definitely closed them early for a loss before if I think that it's the best thing for a bad situation. You can always roll it (for a loss) to a better strike and expiration, too. You could see if that makes sense. It's hard to give a definitive answer because it's situational (at least for me). Some people probably have strict rules about when to close trades. I don't really.
@@yieldcollector Thanks for your answer. Have a great day. Good luck trading.
I'm a newbie and I'm planning to do the Wheel Strategy in the beginning, but this looks great as well. So where do you set the strike price to buy with these numbers? And what do you use to decide if it's a bull market? Using any specific indicators or what is your thoughts on that?
Tough questions! If were just to buy Calls like in this video, I would probably choose the strikes which are slightly in-the-money that are 90 days away. Personal preference though.
As far as overall market conditions, I try not to complicate things too much. I look at an overall 1 year chart of the major indices and draw a line for highs and lows. Is the chart showing higher highs and higher lows? Or lower highs and lower lows? Or indecisive with lower highs and higher lows? I also look at the 200 day SMA. Is price above or below it? Is the SMA sloping up or down?
@@yieldcollector sounds great. But I guess I will start with the Wheel until I feel comfortable enough.
You buy long calls, leaps far out in time and sell short 1 t-6 week calls against them. If the underlying is SCARY BUY A PUT with enough time on it to cover how long you think you will hold your call. I will reduce the percent returns, but prevent you from getting arse hammered of the underlying decides to death dive.
Thank you
You're welcome
Hey brother...excellent video! I'm a full on LEAP trader...I had no idea about this Chameleon site. Are you using the paid subscription?
Thanks. Yeah I'm on the paid subscription.
Great video. Question: do you use both this and option alpha presently? Seems there’s some overlap, but I’m new to options trading. At work I’m a BI and AI guy, so the application isn’t an issue - it’s the decision on the tool set I’m interested in. Thanks!
Yeah I use both of them. There is definitely a lot of overlap, especially since OA introduced "Trade Ideas" for manually finding trades (which is a cool feature). OA is mostly for auto trading and I use MC for finding individual trades. MC really shines when finding earnings trades (which is what I use it for most). It doesn't bother me to have 2 subscriptions since I use OA with Tradier so my OA is free.
@@yieldcollector thanks very much. I have OA as of this week and I’ll subscribe to MC. As a newer options trader (lots of years in stocks), the barrier to entry is knowledge- at least for me. The investment in these tools seems almost nothing to me compared to the gains they offer. Thanks again!
Yeah as a newer options trader, MC and OA can feel overwhelming I would imagine. For OA the live beginner workshops are great app.livestorm.co/optionalpha/beginner-demo . For MC, there is a learning curve and not many places to learn it lol. That's why I try to make videos about it. @ttfweb1
Good video. Most of your etf/ stocks were good examples except Tsla has not been great this year.
Yeah TSLA has been very disappointing lately.
Do you buy long puts? If you also do a long put in future video on market chameleon that would be awesome, thank you for the insight
I don't really buy many long Puts, if I am bearish I usually will just sell a Call Credit spread.
Of you buy a out of the money options with a month or two out using the nearest support or resistance level as a strike price. Volatility alone will make you money
for your back test, the results are holding the option to expiration?
I believe so, but Market Chameleon doesn't specify that.
what is your criteria, generally, for determining bull or bear market?
I keep it really simple. I look if the 50SMA is above the 200SMA. It's not perfect, but that usually gives me a good idea.
How does the win rate compare to the delta for any given strike and expiry date? Or at what delta does the win rate start to exceed 50 percent?
It is very stock specific. Once you get to ATM and go ITM that's when the win rate is usually best. Some stocks never make it above 50% win rate at all. It is hard to make a blanket statement about all stocks.
@@yieldcollector they must use a proprietary calculator
@@edbrandt8972 Whatever they use, it is very impressive.
Take a look at MSFT simply buying the ATM call with 4 DTE. Market Chameleon shows a win rate of 42.7% with a average return of 18.6% What are your thoughts on that trade annualized?
Wow, that looks impressive.
I'm guessing from these findings that if you want to Short stock using long puts, at the money or in the money is the way to go
Yeah that would be my guess as well.
What is your preferred minimum IV with these long calls?
If I am buying a long Call I would like to see the IV Percentile (or IV Rank) below 30.
Thanks.@@yieldcollector
Looks like EXPE might be a decent target for this strategy, developing a nice base around 90.00, looks like it created a higher low recently, thoughts. What does market chameleon show for EXPE?
I just looked, and the backtest for EXPE wasn't good. There is a free 7-day trial if you want to screen other stocks marketchameleon.com/Subscription/Compare?pap_aid=YieldCollector
@@yieldcollector Thanks
I just bought some Msft 255.00 calls expiring 1/19/24. Will sell Otm calls against it.
Nice. Good luck to you.
How much did you profit
Great video and ideas.
Thanks
Did you give up on youtube?
Thanks. I'm just taking a break from UA-cam for a while. I'll be back to make some more videos at some point.
Why would you buy an otm call for a pmcc instead of itm?
I buy itm Calls for a PMCC. Maybe I misspoke. I don't remember the context.
What about doing a video showing the same strategy but only with buying put options in a bear market…
I would like to make that because I am curious about the results as well. But this Market Chameleon option chain backtester uses the last 4 years of data to get the results. I can't really isolate it to only check during bear markets, so the overall results will look terrible because of that. Although I just checked in the list of trades in the results and the Puts performed well for 2022 for what it's worth. If you are good at market timing, buying Puts at the right time seems to be a great strategy.
this video 11 months ago, you wished you bought long calls 😂, im just learning options now, i was trading cash and margin only, and already see the benefits of options and looked for techniques and found your vid
Are you going to create a bot for this strategy?
Most likely.
When you buy call that expires in 6 months, when do you close the position?
The backtest results from the video are showing what happens when you hold the Calls to expiration. That seems like the best way to capitalize on the huge gains. I haven't actually done much straight up Call buying. I usually only buy Calls when trading spreads. Making this video changed my mind though. I will be doing a lot of Call trades from now on. I will hold them as long as possible to try for some "Home Run" results. Easier said than done, though.
As part of a spread trade, I usually close them out early when they are near full profit potential.
@@yieldcollector I never buy 6 months expiration or leap options as well. So, not sure in this market situation, the longer you hold is a good idea due to the uncertainty and time decay. Maybe, close out the position when gaining 50% (just my thought).
Yeah maybe. Hard to argue against taking a 50% profit!
Not sure whether you realized it or not. The win rate is easy to see from delta. If ATM strike is 0.50 delta, then the win rate is 50%. If delta is 0.2 (OTM), then the win rate is 20% (80% chance that it would expire worthless). If it is 0.8 delta then win rate is 80% as 20% chance of expiring worthless.
The delta values are a quick way to see approximate probabilities. With Market Chameleon, the actual win rate of each strike is calculated using actual backtested results. That is entirely different from probabilities.
That's not what delta IS, though, or even supposed to be.
Look at his chart, it shows 0.8 delta winning 50% of the time and the 0.5 delta winning 39% of the time.
@@tonyrichmond9428 I understand. But in Options world, they say, if the strike is 20 delta then 80% chance that it is going to be OTM (or 20% chance that it is going to be ITM). So, indirectly, it is the odds of winning.
This video is a year old any update on progress on the call options ?
I haven't really traded them. Although in hindsight I wish I would have, because I imagine that the strategy would have performed really well over the last year.
@yieldcollector would've crushed! I prefer spreads - bull calls and puts recently
I wished I had watch this 9months ago
Make us a new Video I want you👏 to show more of the app your using your gonna say its worth it, but will u show since u don't work for them ???🤞🤞🤞🙏🙏🙏
What impact does dividends have on leaps?
Not much as far as I can tell.
Ben: have you an OA bot for buying calls? Possible?
Yeah it's possible. That was actually next up on my bot creation list.
@@yieldcollector Perfect. Thx.
@@yieldcollector You got me into the OA world. Thanks for that. I will look for this bot
In bear market buy long puts.... 😂😂
If your trading options, sell them YOU MUST HAVE COLLATERAL. Options include stock or leaps, or in some cases cash (cash secured puts).
its not as easy as your explaining it those are just very optimistic valuations . your win rate is high only because of theta as u get closer to your DTE you see how those change . it also comes down to how you manage your position as you get closer to your expiry date .
Definitely got distracted by the dog in the first minute!
The star of the show.
I blew up my first account buying out of the money, lol basically a lottery ticket.
Yeah I pretty much did the same thing when I first started.
@@yieldcollector do you have any videos for small accounts or people starting out? I'm about a year into my options journey. So far been selling puts and covered calls.
If you have a smaller account, I would recommend doing Poor Man's Covered Calls instead. I made a video about how to trade this strategy ua-cam.com/video/ZpWGmz39pFQ/v-deo.html . I also made a video on how to choose stocks for the PMCC trade ua-cam.com/video/-oqqI05E67s/v-deo.html .
@@yieldcollector what brokerage lets you do the pmcc I've tried on vanguard but it won't let me do it on there lol
I am not sure if Vanguard allows PMCC trades or not. I have accounts at TD Ameritrade and Schwab and they both allow you to do it. TD is merging with Schwab soon, so I recommend Schwab. Also, you need to be approved for trading spreads (whichever broker you choose).
I can’t disagree more on long strategies. The only problems with “back testing”, is it works till it doesn’t. It’s curve fitted. Selling premium is the only way to be consistent in my opinion. I’ve done both fir a very long time and selling has yielded the best returns. The only long positions I have are if I’m assigned stock from a short put. I’d compare my portfolios with any long trader. I use to use a system called vector vest and back tested till I was a trillionaire. It works on computers but not in the real world.
I also prefer the slow and steady profits of selling options. But to each their own.
Any trader saying this is the only way is a trader no one needs to be listening to.
I have yet to meet a trader with my gains: Penny stock, low-range break, equal dollar value each company, well over 100 companies per set-up, losses cut at about 25%, first 100% gain of each stock sell half the position, unless it supernovas, then sell all on the spike's first 1-day chart head-and-shoulders top. Holding time is 1 day to 1 1/2 years. Average holding time 1-6 months. Gains/losses/fees & commissions all factored in leaves a massive profit. Tax liability is low also due the the low portfolio turnover, unlike "successful" day trader with 270 setups a year.
I will put my market gains up against anyone else's.
Friend. So I guess risk reward comes into play. Yes you get a good return but with calls you have the chance of losing everything
Yes definitely. That's why I always keep my long Call trades pretty small.
@@yieldcollector I come from the forex world and we usually collect, 2:1, 3:1 risk reward for trades but for some reason with options it’s less than or equal to 1:1? Which i don’t quite understand.
@@SimplyScalping You can understand the leverage when you look at the delta of your strike. The delta shows how much an option price would change for every $1 move in the underlying. So lets say you buy the 100 strike NVDA option that expires Oct 18th (89dte) for $24.30. That would cost you $2,430 for 1 contract which represents 100 shares. It has a delta of .80 which means that the option price will increase $.80 for every $1 move upwards. This gives you much greater leverage than buying the 100 NVDA shares outright (which would cost $11,800) .
wont work, have to be a preimium subcriber. sucks
This is a cool back tester. When would you suggest taking earnings for these long calls? seems like for it to be profitable, you just need to sell 1DTE?
Yeah you could close the positions out at 1dte. You could also close it early if it runs up a lot and you are happy with the profit.
If you're EXTREMELY bullish on something, you could finance your long calls by selling puts. This is best if you're extremely bullish AND you're okay with owning the underlying stock (in case it goes against you and your puts get assigned).
thanks bro