Great video. Could you specify what the delta was on each leg at the onset? 210 call was what, ~ 0.35 delta... 185 put was what, -0.40d, and the 110 put was what, -0.05 delta. Thanks
Seth I was wondering all along you were talking about a $210 call but at the profit and loss calculation you exercised a $185 call. Is that some kind of error?
I believe several mistakes were made in this video. First, at one point you say Index options when you are actually referring to NVDA. Secondly, your example has you buying a 210 call, not a 185 call that you calculate your earnings from. $25 difference obviously. Love your stuff but this video was a mess and could really confuse inexperienced people
@David I think that you are missing the point of the strategy, its a synthetic long position, you enter if bullish the under. it is designed to replicate being long the stock, and uses leverage to make your money go further and able to place additional trades and allow diversification. in your max loss scenario, if you went long the stock at $192 instead of the risk reversal, you would have lost $8200 vs $7300 for the RR.
Thanks for the video! There are some concepts I don't understand. Can someone please explain it to me? 1. Margin loan interest. Selling that 185 put will cost 3 months margin loan interest, around $200. It's not in the final calculation. The $108 positive cash flow can't even cover the interest. 2. Unlimited Risk. If the market crushed like last year, The 185 put will cost unlimited money. Why sell it? 3. Why don't you just buy the $210 call? Then you get the same return, avoid the huge risk, and keep your margin loan for something better?
A credit spread involves purchasing one option and selling a second option with the same expiration date but differing strike price. Here three options were used. The bottom 2 were a credit spread to capture some premium if the price does not move much. The other option was to capture an explosive move in price if it does go up.
So what call ? 210, 205 or 185 ? May be doesnt matter, right? :-) What a mess again. Probably you should hire anyone who is able to watch and to check the video before uploading on youtube.
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Thank you for this, just registered thanks from Ireland
Great video. Could you specify what the delta was on each leg at the onset? 210 call was what, ~ 0.35 delta... 185 put was what, -0.40d, and the 110 put was what, -0.05 delta. Thanks
Seth I was wondering all along you were talking about a $210 call but at the profit and loss calculation you exercised a $185 call. Is that some kind of error?
I believe several mistakes were made in this video. First, at one point you say Index options when you are actually referring to NVDA. Secondly, your example has you buying a 210 call, not a 185 call that you calculate your earnings from. $25 difference obviously. Love your stuff but this video was a mess and could really confuse inexperienced people
The power and number of different options strategies never cease to amaze. Thanks to Seth for posting this one.
Facts!!
@David
I think that you are missing the point of the strategy, its a synthetic long position, you enter if bullish the under. it is designed to replicate being long the stock, and uses leverage to make your money go further and able to place additional trades and allow diversification. in your max loss scenario, if you went long the stock at $192 instead of the risk reversal, you would have lost $8200 vs $7300 for the RR.
Can you clarify on the risk reversal on equity options. I thought you only get paid $100 per point on index options?
Thanks for the video! There are some concepts I don't understand. Can someone please explain it to me?
1. Margin loan interest. Selling that 185 put will cost 3 months margin loan interest, around $200. It's not in the final calculation. The $108 positive cash flow can't even cover the interest.
2. Unlimited Risk. If the market crushed like last year, The 185 put will cost unlimited money. Why sell it?
3. Why don't you just buy the $210 call? Then you get the same return, avoid the huge risk, and keep your margin loan for something better?
SUGGESTION: Please also start showing your strategies on a risk graph. That is what many of us are used to.
I don't see a difference between risk reversal strategy and credit spread. Are they the same?
A credit spread involves purchasing one option and selling a second option with the same expiration date but differing strike price. Here three options were used. The bottom 2 were a credit spread to capture some premium if the price does not move much. The other option was to capture an explosive move in price if it does go up.
@@bhobba thank you for the explanation 🙏
Good morning, You're welcome to We are very happy to serve you.
please correct the information in the video, the numbers are wrong
If stock closes at 145 what is the loss. Below 185-11=174 it will be big loss upto 110.explain your view
exactly
love it Seth! pretty cool way to play for long side!
Thanks.
So what call ? 210, 205 or 185 ? May be doesnt matter, right? :-) What a mess again. Probably you should hire anyone who is able to watch and to check the video before uploading on youtube.
The guy in the video looks like he used to party like🎉 AMF 🎉