@@projectfinance No lie...thanks in large part to your videos, now up 1100. Would probably have been more, but waiting on the Fed decision tomorrow. Now 2 whiskeys!!
This is one of the best options channel. I have a question, what are the main points around choosing selling Strangles vs Iron Condors? (excluding Straddles and Flys), - Margin Impact? Number of Legs? EDIT: I just see a video recommended from your channel comparing the two! oops! EDIT #2: What are your thoughts on Naked Puts / Vertical Spreads vs. Strangles & ICs given the Call side in a bullish market could be tested a lot more.?
I'll be launching soon and you are in my opinion a fantastic guy! To me and I think your wonderful channel proves it UA-cam is the contemporary library where you can reeducate, retrain and upgrade your competence and abilities in a vast array of subjects including options.
Hi Chris, I am pretty new in trading options, have a question refer to your example 2 collapsing stock price. You short it at (6.35 put / 6.20 call), which the sell put is $0.15 greater than the sell call. In between the short put goes ITM and had a significant loss about ($48 - $12.55 = $35.45 / share),wouldn't the losses is only at $15 for the entire portfolio? Because during such situation, the sell call will rise significant and the sell put will fell significant and the loses I was wondering is only the difference between the trade price of $15?
Brandon, The overall loss on the strangle is about $35.45 since the strangle was sold for $12.55 and reached a price of $48 during the stock collapse. When it comes to each leg, the short call would have experienced a significant decrease in value, leading to profits on the short call side. However, the short put exploded in value and the losses from the put were much greater than the profits on the call. So, you're right in that the short call portion of the trade was profitable, but overall the position was not profitable because the short put's value increased so much. Does that answer your question? Please feel free to follow-up if I didn't answer the question you intended. -Chris
Excellent video. However, It seems to me that if I own the stock, there is no risk. Assume the stock price = $100. I sell the put option for $90 and the call option for $110. If the expiry price drops below $90 I buy more stock and if the expiry price rises to above $110, I sell the stock at a profit. I keep both premiums in both cases. Am I making a mistake? I cannot see the danger. Am I being stupid?
You are right about how it works. The danger is that the stock plummets and you have to buy more shares at $90, which is bad if the shares fall to $50. And, you'll need the money in your account to actually be able to purchase the shares.
Another outstanding video, Chris. Question: In Example Trade #2 (Stock Collapse) Would there not be a good chance of being assigned at the point the stock falls $20+ in the money resulting in being short 100 shares @ $482.45? Many thanks for sharing your knowledge and for the efforts in putting these vids together!
Thank you, Amato! I appreciate the kind comment. When the short put is deep-in-the-money with very little/no extrinsic value, the chance of assignment is much higher than it is when the option has more extrinsic value. However, we still can't say 'it's likely that you'll get assigned' just because the option has little extrinsic value. I would say it's still rare, just more probable than when the option is not as in-the-money. In any case, a trader who is assigned on a short put can sell the shares immediately and then sell the long put to unwind the entire position. I hope this helps! -Chris
@@projectfinance but if its 20 ITM in that case 462 but u got the 482put and it gets assigned to you, whos gonna buy the the shares at 482 when they could get em at 462? so how could u sell them immediately??
@@Eastbaypisces If you own the 482 put and the stock is at 462 and you exercise the put, you sell/short 100 shares of stock at $482/share. A trader who is short that same put you exercised will be forced to buy 100 shares at $482/share, the opposite trade you did.
Hi Omar, Unfortunately, it doesn't quite work that way as option prices steadily lose their extrinsic value as they approach expiration. Since strangles consist of out-of-the-money options (all extrinsic value), these options wouldn't be worth very much, if anything, right before expiration. Additionally, by purchasing a strangle that expires the same day, you NEED the stock price to move notably in either direction, otherwise, you'll lose everything you paid for the strangle. To make money buying strangles, the stock price needs to move significantly in either direction and/or implied volatility needs to increase (the stock's options get more expensive due to the market anticipating increased movement from that stock) before too much time passes.
what is the different application scenario using short strangle and short straddle. it seems both of them are using to predict stock price moving in a certain range. so what is the right stradegy to using them. thank you.
Short strangles have strike prices that are further away from the stock price, which results in lower maximum profit since out-of-the-money options are sold for less premium than at-the-money options. Short strangles also have a higher probability of making money since the strike prices are away from the stock price. Short straddles collect more overall premium relative to short strangles because at-the-money options have the most extrinsic value relative to any other options. However, with short straddles, the assumption should be that the stock price will remain somewhere near the straddle's strike price as time passes. Or, that the stock price will trade near the straddle's strike price at some point closer to the expiration date of the options. Some traders just have different preferences and some may sell straddles each month as opposed to selling strangles each month. Both strategies profit from the same scenario - the stock price remaining in a range as time passes, but both strategies vary greatly in their profit potential and 'range' of maximum profitability. I wouldn't say one strategy is 'right' over the other one, as it's a matter of the trader's preference. Does this help?
Hello I have one question , if I have the cash for the put to be secured and own 100 shares to sell the call is this almost risk free ? Especially if it’s a stock I would like to hold long term anyway ! ?
Yes that would be a covered strangle (long 100 shares, short put, short call). If the stock plummets you buy another 100 shares. If the stock surges you make the max profit on the covered call and short put. It’s a capital intensive strategy but it can work nicely if the stock trades in a range!
Is the strategy going to cost be $8.09 or $809 dollars? Basically what I’m trying to say is that can I start with $200, I’m just kinda confused on how much it cost...
That's what the option premium collected was in that particular example. In that example, the maximum profit potential is $809. Selling strangles is a highly risky strategy that requires a significant amount of margin/buying power. You would not be able to sell a strangle with $200 in your account, as you'd need $2,000+ to have a margin account, which is required when selling naked options. I generally don't recommend selling strangles at all, regardless of account size.
@@projectfinance Thanks, now I finally understand. So what Strategy do you recommend? I’m fairly new to this I’m just trying to start the right way, you know what I mean. Thanks in advance.
As a beginner, I would look into the spread strategies as a starting point: ua-cam.com/play/PL33AZa4cv-o6r4wU-2pMzz_vjdvI94AYU.html The vertical spread strategies have limited loss potential and can be structured in a way that results in very little loss potential (by trading spreads with narrow widths between the long and short strikes).
I generally sell strangles ~50 DTE then close them out after a week or two, so I'll add some super out of the money, 15 DTE calls/puts for cheap just in case things go against me in a major way
Yo man, I think it would be a good idea if you re-did these videos with you drawing them out for more "interactivity" Your videos are my go-to for stuff but when you kinda just throw a ton of info on the screen and then talk about it without highlighting which specific part you're talking about its slightly more of a bitch to watch.
What you mentioned is pretty much the same (which I prefer). Short stangle is another fancy word for MMs to allow traders to play options with limited capital (or margin) but comes with a higher risk. The likelihood of a blown account is increased.
![АЛАУДИНОВ у Скабеевой: эти их ВСУ нас НЕ ДОГОНЯТ 😁 [Пародия]](http://i.ytimg.com/vi/an0anqU4WGQ/mqdefault.jpg)
Your videos are so informative that even a newcomer in this field can understand it. Thanks for your kind help.
I made $400 after one night of watching your videos. I owe you a beer/whiskey
Glad to hear it! I'm a big fan of sour beers and also whiskey!
@@projectfinance No lie...thanks in large part to your videos, now up 1100. Would probably have been more, but waiting on the Fed decision tomorrow. Now 2 whiskeys!!
@@projectfinance Quick update...up another 4k since my first post. You da man
@@diverdown81 hey can we connect and talk about stocks or something , my insta is e_L_L23
Gotta love pre-2020 stonk videos
This is one of the best options channel. I have a question, what are the main points around choosing selling Strangles vs Iron Condors? (excluding Straddles and Flys), - Margin Impact? Number of Legs? EDIT: I just see a video recommended from your channel comparing the two! oops! EDIT #2: What are your thoughts on Naked Puts / Vertical Spreads vs. Strangles & ICs given the Call side in a bullish market could be tested a lot more.?
I'll be launching soon and you are in my opinion a fantastic guy! To me and I think your wonderful channel proves it UA-cam is the contemporary library where you can reeducate, retrain and upgrade your competence and abilities in a vast array of subjects including options.
Thank you. Useful and informative video 🙏🏻
Hi Chris, I am pretty new in trading options, have a question refer to your example 2 collapsing stock price.
You short it at (6.35 put / 6.20 call), which the sell put is $0.15 greater than the sell call.
In between the short put goes ITM and had a significant loss about ($48 - $12.55 = $35.45 / share),wouldn't the losses is only at $15 for the entire portfolio? Because during such situation, the sell call will rise significant and the sell put will fell significant and the loses I was wondering is only the difference between the trade price of $15?
Brandon,
The overall loss on the strangle is about $35.45 since the strangle was sold for $12.55 and reached a price of $48 during the stock collapse.
When it comes to each leg, the short call would have experienced a significant decrease in value, leading to profits on the short call side. However, the short put exploded in value and the losses from the put were much greater than the profits on the call.
So, you're right in that the short call portion of the trade was profitable, but overall the position was not profitable because the short put's value increased so much.
Does that answer your question? Please feel free to follow-up if I didn't answer the question you intended.
-Chris
Can you guys do one on ..understanding a position statement and what to pay attention to....please
It's not supposed we are covered while the price remains into the range? why in the second example show a loss even before to cross the lower strike?
Thank You Very Much
Excellent video. However, It seems to me that if I own the stock, there is no risk. Assume the stock price = $100. I sell the put option for $90 and the call option for $110. If the expiry price drops below $90 I buy more stock and if the expiry price rises to above $110, I sell the stock at a profit. I keep both premiums in both cases. Am I making a mistake? I cannot see the danger. Am I being stupid?
You are right about how it works. The danger is that the stock plummets and you have to buy more shares at $90, which is bad if the shares fall to $50. And, you'll need the money in your account to actually be able to purchase the shares.
Good strategy but unfortunately rh doesnt allow you to sell strangles, do u know any broker that allows u to sell strangle naked??? Thank you
What's the difference between short strangle, iron butterfly and iron condor? it's the same shit?
Another outstanding video, Chris. Question: In Example Trade #2 (Stock Collapse) Would there not be a good chance of being assigned at the point the stock falls $20+ in the money resulting in being short 100 shares @ $482.45? Many thanks for sharing your knowledge and for the efforts in putting these vids together!
Thank you, Amato!
I appreciate the kind comment.
When the short put is deep-in-the-money with very little/no extrinsic value, the chance of assignment is much higher than it is when the option has more extrinsic value. However, we still can't say 'it's likely that you'll get assigned' just because the option has little extrinsic value. I would say it's still rare, just more probable than when the option is not as in-the-money.
In any case, a trader who is assigned on a short put can sell the shares immediately and then sell the long put to unwind the entire position.
I hope this helps!
-Chris
Gotcha. Thanks!
@@projectfinance but if its 20 ITM in that case 462 but u got the 482put and it gets assigned to you, whos gonna buy the the shares at 482 when they could get em at 462? so how could u sell them immediately??
@@Eastbaypisces If you own the 482 put and the stock is at 462 and you exercise the put, you sell/short 100 shares of stock at $482/share. A trader who is short that same put you exercised will be forced to buy 100 shares at $482/share, the opposite trade you did.
What if I secured this buy simply buy 1 call and 1 put OTM?
Then it would become an Iron Condor, which is fine but not very profitable over time.
you cats are so damn good at this,thanks for the education..........
Thank you, Jose! I appreciate all the support!
can we buy call for upside further expiration?
Hey can I buy a short strangle that expires the same day? Would'nt that be easy to make money?
Hi Omar,
Unfortunately, it doesn't quite work that way as option prices steadily lose their extrinsic value as they approach expiration.
Since strangles consist of out-of-the-money options (all extrinsic value), these options wouldn't be worth very much, if anything, right before expiration.
Additionally, by purchasing a strangle that expires the same day, you NEED the stock price to move notably in either direction, otherwise, you'll lose everything you paid for the strangle.
To make money buying strangles, the stock price needs to move significantly in either direction and/or implied volatility needs to increase (the stock's options get more expensive due to the market anticipating increased movement from that stock) before too much time passes.
what is the different application scenario using short strangle and short straddle. it seems both of them are using to predict stock price moving in a certain range. so what is the right stradegy to using them. thank you.
Short strangles have strike prices that are further away from the stock price, which results in lower maximum profit since out-of-the-money options are sold for less premium than at-the-money options. Short strangles also have a higher probability of making money since the strike prices are away from the stock price.
Short straddles collect more overall premium relative to short strangles because at-the-money options have the most extrinsic value relative to any other options. However, with short straddles, the assumption should be that the stock price will remain somewhere near the straddle's strike price as time passes. Or, that the stock price will trade near the straddle's strike price at some point closer to the expiration date of the options.
Some traders just have different preferences and some may sell straddles each month as opposed to selling strangles each month.
Both strategies profit from the same scenario - the stock price remaining in a range as time passes, but both strategies vary greatly in their profit potential and 'range' of maximum profitability. I wouldn't say one strategy is 'right' over the other one, as it's a matter of the trader's preference.
Does this help?
nice,thank you for your contribution
Hello I have one question , if I have the cash for the put to be secured and own 100 shares to sell the call is this almost risk free ? Especially if it’s a stock I would like to hold long term anyway ! ?
Yes that would be a covered strangle (long 100 shares, short put, short call). If the stock plummets you buy another 100 shares. If the stock surges you make the max profit on the covered call and short put. It’s a capital intensive strategy but it can work nicely if the stock trades in a range!
@@projectfinance thank you this makes me feel more safe about trying this strategy out…
Is the strategy going to cost be $8.09 or $809 dollars? Basically what I’m trying to say is that can I start with $200, I’m just kinda confused on how much it cost...
That's what the option premium collected was in that particular example. In that example, the maximum profit potential is $809.
Selling strangles is a highly risky strategy that requires a significant amount of margin/buying power. You would not be able to sell a strangle with $200 in your account, as you'd need $2,000+ to have a margin account, which is required when selling naked options.
I generally don't recommend selling strangles at all, regardless of account size.
@@projectfinance Thanks, now I finally understand. So what Strategy do you recommend? I’m fairly new to this I’m just trying to start the right way, you know what I mean. Thanks in advance.
As a beginner, I would look into the spread strategies as a starting point: ua-cam.com/play/PL33AZa4cv-o6r4wU-2pMzz_vjdvI94AYU.html
The vertical spread strategies have limited loss potential and can be structured in a way that results in very little loss potential (by trading spreads with narrow widths between the long and short strikes).
Brilliant!
So do you sell of the call and put before they expire or do you let them expire?
You close the winning side and roll the loser.
Hey so if I short strangle and covered it immediately, I would take the profit? since the stock price has not really move
No because the strangle's price wouldn't have changed much.
From 1-10
How safe would your rate this strategy ?
1 out of 10
I sell puts all the time but adding a short uncovered call scares the crap out of me. I guess i need to learn more about it.
I generally sell strangles ~50 DTE then close them out after a week or two, so I'll add some super out of the money, 15 DTE calls/puts for cheap just in case things go against me in a major way
Yo man, I think it would be a good idea if you re-did these videos with you drawing them out for more "interactivity" Your videos are my go-to for stuff but when you kinda just throw a ton of info on the screen and then talk about it without highlighting which specific part you're talking about its slightly more of a bitch to watch.
It's on the list. I need to redo all of the old strategy vids as they suck.
What if you just make sure the call is covered and the put is cash secured...
What you mentioned is pretty much the same (which I prefer). Short stangle is another fancy word for MMs to allow traders to play options with limited capital (or margin) but comes with a higher risk. The likelihood of a blown account is increased.
seems like a suuuuper risky iron condor
Yes, exactly right. A short strangle is an iron condor without the protection.
Unlimited losses!!!!😵 I’m good on this