There is a thing that I call “Average Up”, from the moment you decide to open positions DO NOT ever open all at once. Open them in groups of higher and higher credit limit-orders which end up being a very very efficient Credit Spreads-then follow his advice. Thanks for the video
I just did that today, the position moved a little against me, so I sold more contracts for higher premium, still making sure to manage my risk and not overleverage myself. Basically just scaling in to a position
you are the best teacher, way better than the ones i paid for before finding you. Thanks a lot man and keep up the good work. If you ever hold a life class, i want in. Cheers!
Wow Davis, you have a talent for taking what could be confusing and and making it very easy to understand! Thanks for sharing your talent! I really appreciate it!!
Great video. I believe you said in a video 2 months ago that is the stock price reaches your short strike that you should close at 21 days. Here you say to to nothing until it reaches your breakeven. What is your preference?
Hi, hope you are well! Just wondering how likely it is to find a 1/3 in premium? I'm finding it difficult to find a 1/3 of the width in premium Thank you ❤
Well explained . superb video . Thanks. I always asked myself where is the right time to roll or not the position. I think that 21 days is the right time to analyze the situation, I were assigned at 15 days to expiration. If is possible to roll with a credit is right to do it, instead close the position.or going inverted ATM
Thanks Davis, I always look forward to your videos as it always makes a lot sense unlike other youtubers and I've watched hundreds. I've been trading quite a bit of credit spreads after watching your videos and have got very good results so far from what you teach! Please also make videos on how to manage other strategies as I'm learning tons from it. Thx!!
Hi Davis I have a question. Early assignment means close both the sell put and buy pull or can be just the sell put alone? Meaning I have the purchase the 100shares.
Great video. What’s your magical expiration date ? I like weekly Every time I am at a loss of credit spread I usually turn it into an iron condor to lower my loss and basically you using the same capital you used for “losing” other spread.
Not really but it may prevent you from being assigned on the short leg of a call spread if it's ITM. Watch this: ua-cam.com/video/d8zD8GjHoTg/v-deo.html
so waiting until the last day where all the time value is gone would be bad? I've never been too sure about those tasty trade numbers. I've been waiting to the last day as frequently there is a reversal and no need to roll or if no reversal buy back and move to later date etc I normally do about every two week spreads
It can be a bit scary closer to expiration looking at a massive red. Would you consider adding to the short strike and buying same size closer to ATM thus creating a small debit spread to reduce max loss, bump up max gain, as well as reduce gamma risk?
Thanks for another awesome video Davis!! I always panicked when the stock touches my short strike. Now I know what to do and when to sit on my hands and do nothing. Can you also do a video on rolling credit spreads? Keep up the awesome work and keep the videos coming!
Excellent video on trade mechanics, Davis! 👍👍Would be interesting to include the profit target discussion in the video. My preference is 80%, would be curious to know yours.
What do you think of a very long expiration date like 6 months or a year? How do you manage if the price raises significantly early on? How to get out after max profit?
Hello, thanks for your great job. In one of your videos, which you published 4 months ago - you mentioned always managing position at 21 DTE. I wonder if you meant managing only losing position at 21 DTE, or regardless whether it is losing or profitable? Even if it is only 10% profit of credit - is it better to close it at 21 DTE? Wonder what studies say about it. Thanks for an answer. P.S.: In this video you say do nothing if position is profitable regardless whether it is 21 DTE, or not
Great video!! I get that it doesn’t make sense for buyers to exercise early, but, in my experience, humans do a lot of things that don’t make sense. Do we know empirically how frequently people do exercise early? I would love to see those stats.
When any position is in, or even near the money on expiry you MUST close the position. This is VERY important! Because, you can only trade up to 04:00pm - but options can be exercised till 05:30pm. A wild swing in the aftermarket can wipe your account!
Just a question... Let's imagine that I opened a call credit spread and the market starts rallying and the price touches my short strike and is directing towards the long one. Could I make a box to reduce the overall risk? I mean, if I open a put credit spread, same DTE and exactly on the same strikes, the premium received from the sale should be subtracted to the maximum loss, right? So we could say that we can use a box to manage a losing spread. (Also an Iron condor or an iron butterfly could be possible)
@user-mf2fd6dq8x I coulda/woulda, cos I was about to do it, and thank God I didn't. I still placed that trade in paper trading and is not going well so far... I'll try to fix it with an iron condor/butterfly and then a box a see what happens...
A great video, but maybe I found it too late. I have one ITM which expire tomorrow (Dec 29). It's UPS, which is at $156.87 right now. I have the long at 155 and the short at 157.5. So, I'm not sure how to act with this one today when the market opens. It is still running. Should I close the trade now or what would be the best approach here?
Quick question, how come when I open a credit spread trade the first day I am losing money but the stock price is not close to my strike price? Should I let time decay on that option?
Don’t use all your pre-allocated money to open all the spreads at once rather in groups of 2-5-3 with limit-order of collecting higher credits. Most likely at the end you will have an efficient trade because it’s almost impossible to always time the market precisely but this way you can eliminate that correct timing. Alway ask for more than current offering credits and it almost always gets filled eventually during the day.
Mr. Davids, I paid $10 to buy a 5pt wide SPX Butterfly. The price passed the BE point from the low side since I was not able to get out. Will I get a trouble? Thanks, in advance.
The butterfly is generally a low risk high reward defined risk trade with a low win rate. So even if SPX crashes, the most you could lose is what you paid for it. And since its on SPX, there's no early assignment risk. I'd just hold it to expiration since it's the risk you've already accepted upon entry. Furthermore, the butterfly is a very slow spread, meaning you'd only be able to realize most of the profits near expiration.
hi I have a little question. : if you put options on spy or qqq, it is most likely that we won't get more than 10 % ROI with a DTE of 45 days . So isn't it more profitable to invest passively in the etf knowing that the average of ROI is about 10% after 50 years? thanks for your great videos
21 dte means 21 days left to expiration. Generally, I stick to 45 - 60 dte on entry. That's when the implied volatility is historically overstated compared to the actual volatility, hence the edge. I explain that here: ua-cam.com/video/z0ZpIplIbbY/v-deo.html
My issue with options is that it ties up your margins and your money for the DTE which could be up to 60 days or more even sometimes Which prevents you from proceeding with other opportunities as they arise, so I believe in a very short term options to keep opportunities open and accounts available and for a quick rollover if needed, any comments are welcome please?🎉
Get Your Copy of The Options Income Blueprint For FREE:
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There is a thing that I call “Average Up”, from the moment you decide to open positions DO NOT ever open all at once. Open them in groups of higher and higher credit limit-orders which end up being a very very efficient Credit Spreads-then follow his advice. Thanks for the video
I just did that today, the position moved a little against me, so I sold more contracts for higher premium, still making sure to manage my risk and not overleverage myself. Basically just scaling in to a position
Adding to the same position? Or a position further out?
@@krisw7625further out, increase the chance of expiring worthless
@@krisw7625same
Excellent video. Excellent explanation
I love this guy. In all his videos, he explains everything very well. Huge thumbs up!
Outstanding Commentary!!! Thank You!!!
Glad I found this channel. Awesome info. Going to just have fun setting iron condors and spreads.
👍
you are the best teacher, way better than the ones i paid for before finding you. Thanks a lot man and keep up the good work. If you ever hold a life class, i want in. Cheers!
You're welcome 👍 And thanks for your support, appreciate it ☺️
Wow Davis, you have a talent for taking what could be confusing and and making it very easy to understand! Thanks for sharing your talent! I really appreciate it!!
Thanks and you're welcome!
Great explanations of spreads. Thanks for the insight!!
☺️
Good video. Your assertion that you will have losing trades is right on.
Thank you for this video. I’ve been looking for a video that addresses managing credit spreads and you video is very helpful.
this video added value to my understanding on WHEN TO TAKE ACTION TO REAPAIR A LOSING POSITION CREDIT SPREAD, thanks!!
You're welcome 👍
Great video. I believe you said in a video 2 months ago that is the stock price reaches your short strike that you should close at 21 days. Here you say to to nothing until it reaches your breakeven. What is your preference?
Very informative video. Now I have a better idea as to when to roll losing trades. You explain everything so clearly. Thanks!
You're welcome 👍
Thank you for your videos! They are awesome. It is really appreciated all the hard work that you do.
You're welcome 🤗
How do you manage for weekly expiration credit spreads?
Hi, hope you are well!
Just wondering how likely it is to find a 1/3 in premium?
I'm finding it difficult to find a 1/3 of the width in premium
Thank you ❤
Great video Davis, well explained. Best.
Well explained . superb video . Thanks.
I always asked myself where is the right time to roll or not the position.
I think that 21 days is the right time to analyze the situation, I were assigned at 15 days to expiration.
If is possible to roll with a credit is right to do it, instead close the position.or going inverted ATM
You're welcome 👍
Thanks Davis, I always look forward to your videos as it always makes a lot sense unlike other youtubers and I've watched hundreds. I've been trading quite a bit of credit spreads after watching your videos and have got very good results so far from what you teach! Please also make videos on how to manage other strategies as I'm learning tons from it. Thx!!
Very nice! And sure, will be creating a series on managing losing trades for other strategies as well 👍
@@optionswithdavis Can't wait, thank you!
Hi Davis I have a question. Early assignment means close both the sell put and buy pull or can be just the sell put alone? Meaning I have the purchase the 100shares.
How would you adapt this for 0DTE credit spreads?
Great video. What’s your magical expiration date ? I like weekly
Every time I am at a loss of credit spread I usually turn it into an iron condor to lower my loss and basically you using the same capital you used for “losing” other spread.
Watch this:
Part 1 - ua-cam.com/video/3Z8gcBCePSs/v-deo.html
Part 2 - ua-cam.com/video/i4dkoe7NTJU/v-deo.html
Thank you Davis, great as always. Could you explain other strategies as calendar spreads and double diagonals please
You're welcome 👍 And thanks for the suggestion. I seldom use those strategies but will consider creating a video on them in the future.
Thanks Davis for the fantastic video. Will dividends have an effect on the 21-day rule?
Not really but it may prevent you from being assigned on the short leg of a call spread if it's ITM. Watch this: ua-cam.com/video/d8zD8GjHoTg/v-deo.html
Hi Davis, on the graph you are showing with the green and purple lines, what is the vertical y-axis representing?
The PnL.
Very Interesting. Tx a lot
You're welcome 👍
Great video thanks! Can you tell us which software you use to generate the PnL graphs
You're welcome 👍 It's the TD Ameritrade platform.
so waiting until the last day where all the time value is gone would be bad? I've never been too sure about those tasty trade numbers. I've been waiting to the last day as frequently there is a reversal and no need to roll or if no reversal buy back and move to later date etc
I normally do about every two week spreads
It can be a bit scary closer to expiration looking at a massive red.
Would you consider adding to the short strike and buying same size closer to ATM thus creating a small debit spread to reduce max loss, bump up max gain, as well as reduce gamma risk?
Thanks for another excellent video Davis!!
You're welcome 👍
Awesome video, thanks😊
You're welcome ☺️
What an incredible video!
☺️
Thanks for another awesome video Davis!! I always panicked when the stock touches my short strike. Now I know what to do and when to sit on my hands and do nothing. Can you also do a video on rolling credit spreads? Keep up the awesome work and keep the videos coming!
You're welcome and sure 👍
Excellent video on trade mechanics, Davis! 👍👍Would be interesting to include the profit target discussion in the video. My preference is 80%, would be curious to know yours.
Great vid, thx!
Another awesome sharing! Thanks!
You're welcome 👍
What do you think of a very long expiration date like 6 months or a year? How do you manage if the price raises significantly early on? How to get out after max profit?
See this: ua-cam.com/video/Q6_ND6FY5JI/v-deo.htmlsi=kRO4s8bKv9i8oWTt
That's too long for this strategy. Run a Bull put spread or sell deep Call
Hello, thanks for your great job. In one of your videos, which you published 4 months ago - you mentioned always managing position at 21 DTE. I wonder if you meant managing only losing position at 21 DTE, or regardless whether it is losing or profitable? Even if it is only 10% profit of credit - is it better to close it at 21 DTE? Wonder what studies say about it. Thanks for an answer.
P.S.: In this video you say do nothing if position is profitable regardless whether it is 21 DTE, or not
Close short option positions at 50% profit or 21 dte, whichever comes first. This is according to TastyTrade research
Great video!! I get that it doesn’t make sense for buyers to exercise early, but, in my experience, humans do a lot of things that don’t make sense. Do we know empirically how frequently people do exercise early? I would love to see those stats.
Gold mine ⭐️⭐️⭐️
☺️
Hi David, what happens when we have a loss on expiry? Do we need to purchase the stocks? Thx for explaining
When any position is in, or even near the money on expiry you MUST close the position. This is VERY important! Because, you can only trade up to 04:00pm - but options can be exercised till 05:30pm. A wild swing in the aftermarket can wipe your account!
Just a question... Let's imagine that I opened a call credit spread and the market starts rallying and the price touches my short strike and is directing towards the long one. Could I make a box to reduce the overall risk? I mean, if I open a put credit spread, same DTE and exactly on the same strikes, the premium received from the sale should be subtracted to the maximum loss, right? So we could say that we can use a box to manage a losing spread. (Also an Iron condor or an iron butterfly could be possible)
@user-mf2fd6dq8x I coulda/woulda, cos I was about to do it, and thank God I didn't. I still placed that trade in paper trading and is not going well so far... I'll try to fix it with an iron condor/butterfly and then a box a see what happens...
U have that possibility. Check the new strategy on Optionstrat
What is 21 days to expiration. please explain.
A great video, but maybe I found it too late. I have one ITM which expire tomorrow (Dec 29). It's UPS, which is at $156.87 right now. I have the long at 155 and the short at 157.5. So, I'm not sure how to act with this one today when the market opens. It is still running. Should I close the trade now or what would be the best approach here?
Better to close if u can
Quick question, how come when I open a credit spread trade the first day I am losing money but the stock price is not close to my strike price? Should I let time decay on that option?
Don’t use all your pre-allocated money to open all the spreads at once rather in groups of 2-5-3 with limit-order of collecting higher credits. Most likely at the end you will have an efficient trade because it’s almost impossible to always time the market precisely but this way you can eliminate that correct timing. Alway ask for more than current offering credits and it almost always gets filled eventually during the day.
great vid!
Thanks ☺️
Mr. Davids, I paid $10 to buy a 5pt wide SPX Butterfly. The price passed the BE point from the low side since I was not able to get out. Will I get a trouble? Thanks, in advance.
The butterfly is generally a low risk high reward defined risk trade with a low win rate. So even if SPX crashes, the most you could lose is what you paid for it. And since its on SPX, there's no early assignment risk. I'd just hold it to expiration since it's the risk you've already accepted upon entry. Furthermore, the butterfly is a very slow spread, meaning you'd only be able to realize most of the profits near expiration.
hi I have a little question. : if you put options on spy or qqq, it is most likely that we won't get more than 10 % ROI with a DTE of 45 days . So isn't it more profitable to invest passively in the etf knowing that the average of ROI is about 10% after 50 years? thanks for your great videos
You are comparing 10% in 45 days versus 10% anually
@@Kingnothing3277 10% in 45 dte on spy? Unfortunately it doesn't exist
How does max loss work? If you let it expire itm do you take max loss?
yes both legs itm is max loss. you never want it to get to max loss thats why they manage at 21 days
21 days out of how many days? What about if the expiration period is 28 days weekly options - half of 28 is 14 days?
21 dte means 21 days left to expiration. Generally, I stick to 45 - 60 dte on entry. That's when the implied volatility is historically overstated compared to the actual volatility, hence the edge. I explain that here: ua-cam.com/video/z0ZpIplIbbY/v-deo.html
If you feel the trend will continue, what if you close the short position, but keep the long position?
Close and rewrite @higher Strikes
My issue with options is that it ties up your margins and your money for the DTE which could be up to 60 days or more even sometimes Which prevents you from proceeding with other opportunities as they arise, so I believe in a very short term options to keep opportunities open and accounts available and for a quick rollover if needed, any comments are welcome please?🎉
i cant roll credit spread on robinhood.. i had to closed my credit spread for $1200 lost on nvidia..if i didnt, i would have lost more. not worth it..
You have to close it and then open another one for more net credit
RH is crap 💩. They added rolling now. Still the Worst broker ever
Once again , people should not be fear about getting assigned because the broker hold enough capital right?
Fear is risk
You can still get assigned at 180
bad skill if the price break down your BE, maybe there will never bounce. so you will have a huge loss.
Sounds like Raynor
Midnight trader loves tasty as do I
My friend you have verry good content in your channel. Have you though about a discord channel? I am in!!
Thanks 👍