Would love to see your style applied to a truly small account, maybe 5-10 thousand. You could show off some trades by your beginner traders, I've seen they have very small daily limits.
Buying one of these spreads instead of 10 would cost under $3k. Is that small enough for you? I don't work for these folks, but what matters in trading is your discipline - not the size of your account. If you can show consistent gains with minimal losses, any funding firm would be happy to take you on.
Thanks for demonstrating a perfect trade. It would be good to see the other side, when things are not going in the way you had plan, how to get out with minimal lose. People don't blow accounts because they succeed but because they lose money. Please accentuate how much would have been lost by the trader if he would not known when to exit and would have left the option expire.
A problem I have that’s related to that is, I cut my wins short and let my losses run. I’ve learned to get out at a semi acceptable profit but when Im under water I for some reason think “It’s gotta turn around”. It’s a total mental dysfunction. It makes zero sense. I think it’s fomo on both ends. I heard a woman on cnbc say “You have to be stoic, void of all emotion or you’ll get crushed”. Luckily for me Im aware of it and that prevents me from over trading, but it’s still a bitch to get past. I need to get through my thick skull that when a trade starts going against you, GET OUT!!! You can always get back in. It’s better to lose 3% twice than 30% once. Of course every situation is unique so you have to use your noggin and stay within yourself.
Option woulda been assigned on that day. Where I’m getting lost is he is selling the calls for the stock being at 154. If he sold covered calls for 150 how would he still get the full amount of it
It would of capped you at 150 though so isn’t that roughly minus another 4600 bux because the March calls didn’t expire worthless? Someone correct me if I’m wrong
Hi Seth, think there was an omission in the PnL Where is the Cost of the March 150 Calls you sold under the same assumption that those were sold by the buyer at close with no premium and in the money? That would be a cost of $4.60 X 1,000 = $4,600 which means selling the March call netted $170 If that's correct, the Profit was $25,850 ($30,450 - $4,600) and the return was 89.38%, still 4X+ the 21.56% buying the stock Couple side notes: 7:39 the comment bubble says "FNV closes at $154.34 on the day", that may have been lod, but little confusing at first when you were using $154.60 as the actual closing price in the PnL 8:25 on the Final Profit Calculation Slide the label on the bottom line says "Net Cost of...", think you met "Net Profit of..."
ou can chart options ondemand on TOS, yes the march 18 150 strike calls that he sold did not expire worthless so basically they yield $0 he had to buy them back at expiration date for almost the same amount he got in premium when sold them in February. The profit he took was only the premium he got by selling the Feb 18 calls and the appreciation from the deep in the money July 15 calls he bought the premium indeed went to 51Bid - 56ask on march 18 2022 neat at the close of the day
Exactly, I trade the weeklies in the XSP, though it's not as liquid as SPY, which I also trade. I primarily sell credit spreads, broken wing butterflies, iron condors etc. I do the poor man's covered calls / puts on occasion but with a small account and depending on the strike price, it's a challenge.
Exactly. Lol.. maybe under $5K/max $10K. Most people don't have $28K simply sitting in their banks. Those being in the stock market for a while losing touch with the reality!
What a great way to utilize capital to produce outstanding returns. I've heard this type of trade also referred to as a "Poor mans covered call" or "Bullish diagonal spread". Its very important to know methods such as these to have the most efficient use of capital as possible. Thanks for the recap Seth!
You missed a step. When closing this position you will have to buy back the short calls and it would cost more than the premium you received so you need to subtract that from the total. I’m still a fan of the PMCC.
ou can chart options ondemand on TOS, yes the march 18 150 strike calls that he sold did not expire worthless so basically they yield $0 he had to buy them back at expiration date for almost the same amount he got in premium when sold them in February. The profit he took was only the premium he got by selling the Feb 18 calls and the appreciation from the deep in the money July 15 calls he bought the premium indeed went to 51Bid - 56ask on march 18 2022 neat at the close of the day
Wouldn't the profit be more like $25,850? I say this because if the short calls are ITM then profit is capped at the $150 and anything over the $150 you are making on the long calls but would have to pay to buy back on the short calls canceling out anything over $150. If I'm missing something here please let me know. Thanks
ou can chart options ondemand on TOS, yes the march 18 150 strike calls that he sold did not expire worthless so basically they yield $0 he had to buy them back at expiration date for almost the same amount he got in premium when sold them in February. The profit he took was only the premium he got by selling the Feb 18 calls and the appreciation from the deep in the money July 15 calls he bought the premium indeed went to 51Bid - 56ask on march 18 2022 neat at the close of the day
Almost every trade I've took a loss on, the PTD rule had a factor in it. Either forcing me to stay in due to a partial fill, changing my trade strategy, etc. Been trading for 5 years, this year I went full time, but I'm still under PTD. Id love to get to 25k using options but options scare the hell out of me. Maybe I should start learning.
PDT is a blessing. It will make you a better trader when you surpass it. Learn to trade with it. Swinging overnight, taking smaller positions or having multiple accounts should help you get reps in.
@@alark8903 It wasn't a reps thing. Sizing up would have been more of an issue as well. Anyways that was 6 months ago... all is good now. New broker, multiple accounts, cash accts, futures etc. I trade Market Profile mostly and stick to indexes 90 percent of the time. Some equities, but rarely. I still stand by the data...my data shows most of my bigger losses happened on overnight swings... we all trade different at the end of the day. I stick with what works for me now.
If you compare c.c. on the shares to synthetic c.c. then you should really look at the percentage gained on shares vs percentage gained on credit received. The covered calls cancel out.
not much because the stock price never went below 125(they bought when it was around 127.5) and they bought deep in the money 6 month expiry options to be able to sell calls at out the money strikes with 1 month expiry.
Your channel has truly changed my life. i've been studying and researching about crypto for a while now, do to the economy crisis and i got stuck at some point on the learning curve. now i can say I'm truly improving my understanding of this whole new world and making great profit weekly, all thanks to you
comparing 2 strategies side by side whilst the ideal scenario unfolded for the options one is just ridiculous. there's huge veiled risk with what you are recommending. yea of course options have more asymmetric upside but risk is way harder to manage. in the very realistic scenario where price dropped to a 100$ you'd be down -25% with the spot market play and almost -85% with the options one. tldr you can make 4 times as much if you risk 4 times as much and get lucky with expiration timings. you are essentially saying to someone with a 30k account(absolute number actually irrelevant) go all in in one trade. and you are introducing yourself as a head of any derivatives department of a hedge fund. lol. in fact this video is the very example of what beginners should not do, leverage their account immensely because they have no patience to grind it with 2-3% risk plays
poor man's cc with longer expiration on the longs gives you more time to make on the shorts and hopefully you hit your strike +, That example works out great but we know that's the exception not the norm. What would the outcome have been if the stock was at $149 at close? You'd close the longs for whatever they were worth or is there a way to roll without taking a beating? Any answers??
I really like SMB's videos, but this one is missing a step. When the stock price exceeds the strike price of the short call in the last example (the March 150 calls), Seth says that they close the trade by selling the long calls originally purchased for a huge profit. However, he does not show the close of the short March 150 calls. If he does not close that short call, the trader would be obligated to sell 100 shares @ $150/share! So that part of the trade cannot be ignored. And selling short March 150 calls that are ITM at expiration would reduce the overall profit of the trade. It is still a very profitable trade, just not as profitable as shown.
All sounds rosy cozy, but unless you can pick the right stocks and the right setups, none of these fancy smancy strategies will work. And not to mention, if your calculation is off by one day, you will lose your wholw long call investment into thin air.
Would love to see your style applied to a truly small account, maybe 5-10 thousand. You could show off some trades by your beginner traders, I've seen they have very small daily limits.
Buying one of these spreads instead of 10 would cost under $3k. Is that small enough for you?
I don't work for these folks, but what matters in trading is your discipline - not the size of your account. If you can show consistent gains with minimal losses, any funding firm would be happy to take you on.
Thanks for demonstrating a perfect trade.
It would be good to see the other side, when things are not going in the way you had plan, how to get out with minimal lose.
People don't blow accounts because they succeed but because they lose money.
Please accentuate how much would have been lost by the trader if he would not known when to exit and would have left the option expire.
A problem I have that’s related to that is, I cut my wins short and let my losses run. I’ve learned to get out at a semi acceptable profit but when Im under water I for some reason think “It’s gotta turn around”.
It’s a total mental dysfunction.
It makes zero sense. I think it’s fomo on both ends. I heard a woman on cnbc say “You have to be stoic, void of all emotion or you’ll get crushed”. Luckily for me Im aware of it and that prevents me from over trading, but it’s still a bitch to get past.
I need to get through my thick skull that when a trade starts going against you, GET OUT!!!
You can always get back in. It’s better to lose 3% twice than 30% once. Of course every situation is unique so you have to use your noggin and stay within yourself.
I was thinking the same thing. I’d like to see how this went if it went down. Deep in the money calls would still have a lot of value
Option woulda been assigned on that day. Where I’m getting lost is he is selling the calls for the stock being at 154. If he sold covered calls for 150 how would he still get the full amount of it
It would of capped you at 150 though so isn’t that roughly minus another 4600 bux because the March calls didn’t expire worthless? Someone correct me if I’m wrong
Hi Seth, think there was an omission in the PnL
Where is the Cost of the March 150 Calls you sold under the same assumption that those were sold by the buyer at close with no premium and in the money? That would be a cost of $4.60 X 1,000 = $4,600 which means selling the March call netted $170
If that's correct, the Profit was $25,850 ($30,450 - $4,600) and the return was 89.38%, still 4X+ the 21.56% buying the stock
Couple side notes: 7:39 the comment bubble says "FNV closes at $154.34 on the day", that may have been lod, but little confusing at first when you were using $154.60 as the actual closing price in the PnL
8:25 on the Final Profit Calculation Slide the label on the bottom line says "Net Cost of...", think you met "Net Profit of..."
Ryan, yeah I realized that this morning. We'll edit the video and make the correction. My apologies, it was an oversight. Still not a shabby return :)
Yeah they never factored in the loss on the March rolled short position. Still love SMB, tons of great content!!!!
Yeah I noticed this too. Please edit the video.
ou can chart options ondemand on TOS, yes the march 18 150 strike calls that he sold did not expire worthless so basically they yield $0 he had to buy them back at expiration date for almost the same amount he got in premium when sold them in February. The profit he took was only the premium he got by selling the Feb 18 calls and the appreciation from the deep in the money July 15 calls he bought the premium indeed went to 51Bid - 56ask on march 18 2022 neat at the close of the day
More videos like this to grow small accounts...
But 28,000 its not a small account
Exactly, I trade the weeklies in the XSP, though it's not as liquid as SPY, which I also trade. I primarily sell credit spreads, broken wing butterflies, iron condors etc. I do the poor man's covered calls / puts on occasion but with a small account and depending on the strike price, it's a challenge.
Exactly. Lol.. maybe under $5K/max $10K. Most people don't have $28K simply sitting in their banks. Those being in the stock market for a while losing touch with the reality!
@@manojreddy123 LOL, It is funny what some people consider a small account. Good info on this channel though.
you can trade 1 contract instead of 10 , 3200 account would suffice.
What a great way to utilize capital to produce outstanding returns. I've heard this type of trade also referred to as a "Poor mans covered call" or "Bullish diagonal spread". Its very important to know methods such as these to have the most efficient use of capital as possible. Thanks for the recap Seth!
I appreciate the clear explanations with examples and tables. Thank you sir.
You missed a step. When closing this position you will have to buy back the short calls and it would cost more than the premium you received so you need to subtract that from the total. I’m still a fan of the PMCC.
ou can chart options ondemand on TOS, yes the march 18 150 strike calls that he sold did not expire worthless so basically they yield $0 he had to buy them back at expiration date for almost the same amount he got in premium when sold them in February. The profit he took was only the premium he got by selling the Feb 18 calls and the appreciation from the deep in the money July 15 calls he bought the premium indeed went to 51Bid - 56ask on march 18 2022 neat at the close of the day
Yes.
Just curious.... what level of Options trading do you need to trade synthetic covered calls?? Can you do that with Level 1 authorization? Thanks
This is really valuable. Thank you for sharing
This information is Gold.
just a credit spread is what you should do instead of high risk covered call on gold miners
if the covered call strike price hits, where do you get the 100 shares to sell?
QuadRupled! Love it.
What is considered a small account?
How do you sell calls and not own enough of the underlying stock shares to cover?
it is called call credit spread...or bear credit spread...look it up
Wouldn't the profit be more like $25,850? I say this because if the short calls are ITM then profit is capped at the $150 and anything over the $150 you are making on the long calls but would have to pay to buy back on the short calls canceling out anything over $150. If I'm missing something here please let me know. Thanks
You are absolutely right Superchevy. I'll make the correction. Return is still not bad.
@@sethfreudberg4750 Absolutely, thanks for the reply
ou can chart options ondemand on TOS, yes the march 18 150 strike calls that he sold did not expire worthless so basically they yield $0 he had to buy them back at expiration date for almost the same amount he got in premium when sold them in February. The profit he took was only the premium he got by selling the Feb 18 calls and the appreciation from the deep in the money July 15 calls he bought the premium indeed went to 51Bid - 56ask on march 18 2022 neat at the close of the day
High conviction max leverage is my strategy
Almost every trade I've took a loss on, the PTD rule had a factor in it. Either forcing me to stay in due to a partial fill, changing my trade strategy, etc. Been trading for 5 years, this year I went full time, but I'm still under PTD. Id love to get to 25k using options but options scare the hell out of me. Maybe I should start learning.
Change to a cash account
PDT is a blessing. It will make you a better trader when you surpass it. Learn to trade with it. Swinging overnight, taking smaller positions or having multiple accounts should help you get reps in.
@@alark8903 It wasn't a reps thing. Sizing up would have been more of an issue as well. Anyways that was 6 months ago... all is good now. New broker, multiple accounts, cash accts, futures etc. I trade Market Profile mostly and stick to indexes 90 percent of the time. Some equities, but rarely. I still stand by the data...my data shows most of my bigger losses happened on overnight swings... we all trade different at the end of the day. I stick with what works for me now.
thank you
If you compare c.c. on the shares to synthetic c.c. then you should really look at the percentage gained on shares vs percentage gained on credit received. The covered calls cancel out.
Can I do this at a level 1 trader? Not to these numbers but the synthetic? Or do I need margin and like level 3 options?
I think is level 3 for spreads with options , covered calls with stocks is level 1
How much would the July 100 calls you were long drew down had the stock price pulled back 10%?
not much because the stock price never went below 125(they bought when it was around 127.5) and they bought deep in the money 6 month expiry options to be able to sell calls at out the money strikes with 1 month expiry.
also consider the comment below by @audacity2270, not al stocks behave the same, open a chart of bbby and you can see by yourself
Speaking of FNV i think i shall grab some Jan 125 calls on this tomorrow. Great price potential for some 4 month outs and hedge against inflation
is smb capital still funding options traders?
Your channel has truly changed my life. i've been studying and researching about crypto for a while now, do to the economy crisis and i got stuck at some point on the learning curve. now i can say I'm truly improving my understanding of this whole new world and making great profit weekly, all thanks to you
What do you consider a small account?
What if the July calls expire worthless?
you lose the full amount minus the premium you managed to actually sell in that period, I'm guessing you lose like 75% or so if the stock tanks .
comparing 2 strategies side by side whilst the ideal scenario unfolded for the options one is just ridiculous. there's huge veiled risk with what you are recommending. yea of course options have more asymmetric upside but risk is way harder to manage. in the very realistic scenario where price dropped to a 100$ you'd be down -25% with the spot market play and almost -85% with the options one. tldr you can make 4 times as much if you risk 4 times as much and get lucky with expiration timings. you are essentially saying to someone with a 30k account(absolute number actually irrelevant) go all in in one trade. and you are introducing yourself as a head of any derivatives department of a hedge fund. lol.
in fact this video is the very example of what beginners should not do, leverage their account immensely because they have no patience to grind it with 2-3% risk plays
+1 this is not a synthetic covered call, more like a calendar spread
It called "Poor mans covered call" or "Bullish diagonal spread"... the more you know :-)
Interesting , would you share what's is an actual synthetic covered call?@@ЕвгенийБагрянов-н9э
poor man's cc with longer expiration on the longs gives you more time to make on the shorts and hopefully you hit your strike +, That example works out great but we know that's the exception not the norm. What would the outcome have been if the stock was at $149 at close? You'd close the longs for whatever they were worth or is there a way to roll without taking a beating?
Any answers??
I really like SMB's videos, but this one is missing a step. When the stock price exceeds the strike price of the short call in the last example (the March 150 calls), Seth says that they close the trade by selling the long calls originally purchased for a huge profit. However, he does not show the close of the short March 150 calls. If he does not close that short call, the trader would be obligated to sell 100 shares @ $150/share! So that part of the trade cannot be ignored. And selling short March 150 calls that are ITM at expiration would reduce the overall profit of the trade. It is still a very profitable trade, just not as profitable as shown.
All sounds rosy cozy, but unless you can pick the right stocks and the right setups, none of these fancy smancy strategies will work. And not to mention, if your calculation is off by one day, you will lose your wholw long call investment into thin air.
So this would be nice to implement with 10x less 😅
The problem with this strategy is IF THERE IS AN EVENT THAT SLAMS THE STOCK YOUR LOSSES WILL EXCEED ANY CREDIT TAKEN IN
yes they mention that on another video titled something like mistakes to avoid when doing covered calls
Yip Yip
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