No need to know/predict/anticipate - it's called trend FOLLOWING, not trend PREDICTING. Flip the forecasting mindset into reactionary. Price action through non-time based optics.
To begin with small capital this mindset is good, but when you have enough capital and as you know markets are done to share risks not rewards, in this dog eat dog world of trading, you will need to include non-directional strategies in the long run. Anyways, what works for you should not be touched until it stops giving you the results. So go on, nothing is right nothing is wrong, only results and long term learning. Enjoy the process. being in the process fully is required.
Thank you! You finally explained to me why it's harder to be profitable with tighter legs, even though the ROI looks better and pit charts looks very similar. Tight legs kill your Vega exposure, exactly what you're relying on to generate profit!
Hi Dr Jim. You are advocating trading with NO regards to direction, but then you mentioned when selecting the strategy that if you were bullish on the stock, then you'll do CSP or put credit spread. Wel, that's having a direction bias, isn't it? Also, the put credit spread that show has the short option ATM, and if stock sells off, that will drag SP ITM!
What He is saying, even if you had a directional bias You can trade directional but first take consideration of volatility, it is rising or contracting? Actually even in those trades He was little long vegas that if a big price movement ocurred upward with higher iv the spreads still has time and some hedge due long vegas . And also what He is saying is that there is a bunch of tools and strategies in the tool box to draw from in case of volatility contraction.
Is there anyway to get a copy of the slides you use? Just for my own use to study. I've watched a few of your videos and the slides are the best I've seen.
Great content. There was a time this would have been too much too fast. After years of trading - it was just right. It will definitely improve selecting and managing my options trades. Thanks so much!🙂
so i have traded define risk options for years now and have just really started to paper trade strangles and undefined risk strategies to get my mechanics and the nuances figured out. ive found the efficiency of futures options and how far my capital goes to be rather appealin but i cant find anything to further educate myself on the differences in mechanics as far as deltas it seems kind of scarce or im just not looking up the right things. certain things like decent spread sizes to use that give you high probabilty or if there is things you you have learned(dos and dotns sort of thing). i have been figuring it out so far pretty well but curious if you could point me in the right direction or where you recommend.
Please buy the Martin O'conell 'The business of options' it explain very well your Questions, it takes time to master and learn option trading but once You get it is like any other business, You need tonhave the skills and knowledge to run it.
Thanks nice video! I am new in this, where is the candlesticks, I expected to see bullish engulfing and bearish engulfing candles during high volatility session!
I have come to love trading volatility, measuring VIX against Vix futures to determine contango/backwardation along with charting this on multi-timeframe bollinger bands (my custom indi) using 2h, 4h, 8h, 1d bands. Seeing volatility on multiple timeframes measures the volatility of volatility to see it ramp up and decline across time. Using the bollinger bands also allows measuring vix against its mean to compliment info presented in this video.
The problem when selling volatility is that if you are wrong on volatility and that was to spike like it did couple months ago when it hit 65… you are done !!! Now ur drowning like the titanic. And yes you could manage it by selling more premium or adding a long or any other strategy but gosh that feeling of being busted is worse than being wrong on a direction. I traded options for years and is ok when it works but when it does not u end up giving up gains plus more!!!
There is a video of Jim in March of 2020 (the bottom of the market during the pandemic), where he experienced at least a 50 percent draw down. All of his non direction positions became directional. Do you think he had enough capital to take assignment of his short puts… no. He had to reset the portfolio.
Did you read Natenbergs's book? He explain when is time to sell volatility and how to asses risks! He explain how to get risk ratios among different short volatility spreads, not all spreads lose more, as an example a short straddle is riskier than a long butterfly, also He explains how many IV points Your position can sustain before going to the street? Spreads sizes plus risk sensitivities among spreads matter a lot, You understand them with practice and by paying respect to Old option traders.
it went right over my head... not quite... like i kinda understood stuff... but for me it feels like this stuff needs to rest in my head for a day or a week before i actually use it to start making trades. is this normal or is it just me? anyone?
Trading volatility is to make profit from the difference of implied volatility and the actual volatility. It is very hard to beat the market. Some best experts only make 9% annual return of margin.
@@OptionsForSalethat is reasonable especially if willing to take assignment and get called away. And even more reasonable if using a cash account no margin
22% is less than a simple long on sp500 will pedicure therefore your not better than a basic random long entry on sp it nq. lol. Taking good trades take so much work especially consistently and intraday.
A skosh "machine gun delivery" overwhelming ...i need a class with exercises to actually process all that is said here..different people learn different waya but still interesting!
Ok but... it's still direction. You're banking on high volatility going down or low volatility going up. You're betting on price action or lack thereof. It's still binary betting just applied differently.
Then don't look at volatility when you trade direction. There is a point in the market when you need to trade direction, it will tell you, its out there, staring at you and you must take advantage of it . Try to search for it, it will be your other weapon.
Thanks Dr J; trading direction baffles me--like the Max Cohen character in Pi--and looking for sensible trading alternatives. Thanks again for diving deep into this great topic; appreciate you!
Trading volatility is too complicated for mainly…99% of wanna be traders, I traded volatility in the pit in Singapore for BNP Paribas, 25 years later I still sell VIX but my main returns come from Nasdaq stocks long time holdings.., it s just way easier ✌️, the only thing really useful is to hedge a portfolio or your assets by buying VIX when times gets rough, diversification is bull…t 😜
Hey Jim. Just came here to say thank you and let you know you’re awesome. You are like my options Duolingo. Appreciate it.
Excellent presentation and packed with understandable examples, Thanks
1. trade volatility not direction
2. volatility is mean reverting
3. IV vs IVR
4. how to trade volatility
reversion to the mean?
No need to know/predict/anticipate - it's called trend FOLLOWING, not trend PREDICTING.
Flip the forecasting mindset into reactionary. Price action through non-time based optics.
To begin with small capital this mindset is good, but when you have enough capital and as you know markets are done to share risks not rewards, in this dog eat dog world of trading, you will need to include non-directional strategies in the long run. Anyways, what works for you should not be touched until it stops giving you the results. So go on, nothing is right nothing is wrong, only results and long term learning. Enjoy the process. being in the process fully is required.
Thank you! You finally explained to me why it's harder to be profitable with tighter legs, even though the ROI looks better and pit charts looks very similar. Tight legs kill your Vega exposure, exactly what you're relying on to generate profit!
Hi Dr Jim. You are advocating trading with NO regards to direction, but then you mentioned when selecting the strategy that if you were bullish on the stock, then you'll do CSP or put credit spread. Wel, that's having a direction bias, isn't it? Also, the put credit spread that show has the short option ATM, and if stock sells off, that will drag SP ITM!
What He is saying, even if you had a directional bias You can trade directional but first take consideration of volatility, it is rising or contracting? Actually even in those trades He was little long vegas that if a big price movement ocurred upward with higher iv the spreads still has time and some hedge due long vegas . And also what He is saying is that there is a bunch of tools and strategies in the tool box to draw from in case of volatility contraction.
Is there anyway to get a copy of the slides you use? Just for my own use to study. I've watched a few of your videos and the slides are the best I've seen.
Excellent presentation! Thank you.
Great content. There was a time this would have been too much too fast. After years of trading - it was just right. It will definitely improve selecting and managing my options trades. Thanks so much!🙂
Great info!
11:50 selling volitility 19:40 VIX 23:20 IVR
Great job. Great go-to. Easier to be 1/2 right than 100%
Your work is great. So appreciate your effort! TY
As the price of the underlying moves away from the strike price, IV will drop. Price direction matters.
Lol, not always.
incorrect. Not always. research volatility skew
Awesome, I was looking for this, thanks!
so i have traded define risk options for years now and have just really started to paper trade strangles and undefined risk strategies to get my mechanics and the nuances figured out. ive found the efficiency of futures options and how far my capital goes to be rather appealin but i cant find anything to further educate myself on the differences in mechanics as far as deltas it seems kind of scarce or im just not looking up the right things. certain things like decent spread sizes to use that give you high probabilty or if there is things you you have learned(dos and dotns sort of thing). i have been figuring it out so far pretty well but curious if you could point me in the right direction or where you recommend.
Please buy the Martin O'conell 'The business of options' it explain very well your Questions, it takes time to master and learn option trading but once You get it is like any other business, You need tonhave the skills and knowledge to run it.
The book.
Great insight and well explained. Great job Dr Jim!
For fb earning can I just use Delta and market maker move
Sounds like something that the Fractal Energy indicator would help with. Since it shows price expansion and contraction
Another brilliant presentation. Thank you.
Thanks nice video! I am new in this, where is the candlesticks, I expected to see bullish engulfing and bearish engulfing candles during high volatility session!
This is a dumb question, shows you know nothing about this industry
@@predatorxzn what business do you have dude.. mr smart ass ... middle finger U!!!
@@predatorxzn says mr smart ass .. middle finger to U!
@@predatorxzn smart ass unatombwa mkunduni wewe!! nyoko zako!!
I have come to love trading volatility, measuring VIX against Vix futures to determine contango/backwardation along with charting this on multi-timeframe bollinger bands (my custom indi) using 2h, 4h, 8h, 1d bands. Seeing volatility on multiple timeframes measures the volatility of volatility to see it ramp up and decline across time. Using the bollinger bands also allows measuring vix against its mean to compliment info presented in this video.
I am confused even more . I wish there was a link to the full video for this.
Great content Dr Jim, keep it coming.
So do most of you consider 30-40 ivr high?
Any book recommendation? What are the two books behind you? Thanks but a bit complicated!
Let me check this video out sounds good
Have you? What do you think?
The problem when selling volatility is that if you are wrong on volatility and that was to spike like it did couple months ago when it hit 65… you are done !!! Now ur drowning like the titanic. And yes you could manage it by selling more premium or adding a long or any other strategy but gosh that feeling of being busted is worse than being wrong on a direction. I traded options for years and is ok when it works but when it does not u end up giving up gains plus more!!!
There is a video of Jim in March of 2020 (the bottom of the market during the pandemic), where he experienced at least a 50 percent draw down. All of his non direction positions became directional. Do you think he had enough capital to take assignment of his short puts… no. He had to reset the portfolio.
So true
@alexbarrett9077 what kind of portfolio adjustments would you do if puts are getting assigned or you're realizing the losses?
Did you read Natenbergs's book? He explain when is time to sell volatility and how to asses risks! He explain how to get risk ratios among different short volatility spreads, not all spreads lose more, as an example a short straddle is riskier than a long butterfly, also He explains how many IV points Your position can sustain before going to the street? Spreads sizes plus risk sensitivities among spreads matter a lot, You understand them with practice and by paying respect to Old option traders.
@@alexbarrett9077 spot on
Thanks Doc! All the questions I had that no one else seems to answer.
I could never understand all this mumbo jumbo but with this incredible explanation I get it.
it went right over my head... not quite... like i kinda understood stuff... but for me it feels like this stuff needs to rest in my head for a day or a week before i actually use it to start making trades. is this normal or is it just me? anyone?
🎉 Thanks for the information, Professor
Ive been trading volatility for years, but it's direction that always gets me! 😂
Trading volatility is to make profit from the difference of implied volatility and the actual volatility. It is very hard to beat the market. Some best experts only make 9% annual return of margin.
Great video
Great info
I never trade my hunches because they are usually market manipulated.
Basically, Long or short still depend on put money in direction. Without direction can not make money on market.
so vol is independent .. thanks
How much did you make this year from trading profits? This is literally the only thing that matters prior to this entire discussion
@kexh You can't expect an answer to this question, and you couldn't possibly believe any answer you might receive.
@ agreed. A simple “this strategy of trading volatility made me x% this past year” would suffice from any tasty trader
@kexh On average 22 - 32% ROC annually. More if you are willing to take the risk.
@@OptionsForSalethat is reasonable especially if willing to take assignment and get called away.
And even more reasonable if using a cash account no margin
22% is less than a simple long on sp500 will pedicure therefore your not better than a basic random long entry on sp it nq. lol. Taking good trades take so much work especially consistently and intraday.
WOW. I opened an account but never funded it. I didn't know how robust the platform was for options.
before even fully watching! I already see gold being shared
A skosh "machine gun delivery" overwhelming ...i need a class with exercises to actually process all that is said here..different people learn different waya but still interesting!
Short straddle has the highest vega. Combine it with 30dte
Ok but... it's still direction. You're banking on high volatility going down or low volatility going up. You're betting on price action or lack thereof. It's still binary betting just applied differently.
Then don't look at volatility when you trade direction. There is a point in the market when you need to trade direction,
it will tell you, its out there, staring at you and you must take advantage of it . Try to search for it, it will be your other
weapon.
directional trading makes way more money than those low risk strategies, refine better your systematic strategies is better imo
intereesting moves
Thanks Dr J; trading direction baffles me--like the Max Cohen character in Pi--and looking for sensible trading alternatives. Thanks again for diving deep into this great topic; appreciate you!
Don’t know if this was groundbreaking but informative for sure. Maybe cut half out. Appreciate regardless
Get them likes up ppl🎉🎉
This is just a fancy way of saying: buy the dip.
good
This is a bless
The man used the phrase "passage of time" kamal quote .. Red flag has been thrown. Lmao
Trading volatility is too complicated for mainly…99% of wanna be traders, I traded volatility in the pit in Singapore for BNP Paribas, 25 years later I still sell VIX but my main returns come from Nasdaq stocks long time holdings.., it s just way easier ✌️, the only thing really useful is to hedge a portfolio or your assets by buying VIX when times gets rough, diversification is bull…t 😜
Dang your hair looks good in this video!
Yea looking good Jim!
This could be a 7-8 min vid
Thinking this firm’s purpose, much like CNBC, is to fill air time.
Seeing the twin towers volatility ref may have been poor taste but great video otherwise and thank you
Still trading direction. People can continue to sell premium - I’ll buy it and than sell it back to you.
heteroscedasticity hype!
its still directional 🥴
Be a buyer if u want to suceed in the ling run
"Wanna learn how to stop trading directionally??"
"Yes!"
*Proceeds to demo 3 directional trades*
🤡🤡🤡
Gosh these clowns keep inventing the wheel everyday thinking they found something new…
Loved the Tom animation. He's so average.
Way too fast pm the IVR explaining
Hallo
We call this approach: A scam
I tried to hang with this video, but I have no idea what you're saying... or what it means.
You should start at something more beginner friendly, this stuff is pretty advanced