These videos have pretty good content, but instead of the PP-slide text summary, there should be a graph that shows p&l and the price of the underlying. To visualize the trade, the movement and the strikes.
You can treat each leg separately (a Put Debit Spread and a Put Credit Spread). If you breach the lower long strike, just roll this 'Credit Spread' to the next week, at different strikes, preferably for a small credit. Same time you close the debit spread for a great profit (lottery ticket side). By adjusting and managing, this is a great trade.
Great clip, thanks. How about showing a break out trade using options. What I am curious about is what your delta buy would be along with your days to expiration (dte). Thank you.
Thanks for the video. I would be keen to know if there are any adjustment strategies for BWBs or the standard management is just to stop out without trying to adjust the trade? Thank you.
Very to the point and objective explanation. Listening and learning is Fun. Please introduce some more complex strategies that may require high capital but have high probability of profit and are profitable in long term. Thanks
Hi there! Fantastic video. I’m confused though, are you trading weekly options from the day they come out, or are you trading monthly options just for one week, in that last week of the month. I know you were doing this 52 times in a year so I am assuming you are trading weekly options. If so, how many days to expiration is your entry point?
So here’s a good technical question so you sold an option combination either vertical or the broken butterfly. What is the stop loss? So let’s say you sold the option for 2.00. Would you set a stop limit order at 2,20? As a 10% protection?
Thanks for the great video! Can you help me understand what is "ten delta strike" in the video? is it 10 delta call and -10 delta put option? Thank you
Also, for those traders on your desk who trade monthly options, 12 times a year, what is the entry point time-wise? - still a week to expiration or 30 days approximately in advance? Thanks so much!
This was great, thanks, I been tryin to find out about "option picking strategy" for a while now, and I think this has helped. You ever tried - Winoorfa Option Olegroson - (Have a quick look on google cant remember the place now ) ? Ive heard some super things about it and my neighbour got excellent results with it.
Is the volatility so low thatcwe are unable to create the spread with a 58c credit? The credit is only 30c at best on 11 Jul 2109. Shifting the 2nd PUT down increases credit but also increases the BPE.
Interesting - I trade options differently. I've found that options with liquidity on "in-play" stocks can be traded as stock substitute if you get the direction right and trade ITM in the direction of the stock. Five of the last six day trades I've done have been +10% or more, 3 have been 25%. The one loser was -10% and had I overnighted, it would've been +40% due to a gap up. Entry and exit timing is very important for that kind of trade. 83% accuracy is a hot streak - not the norm. Thanks for sharing.
If you're this good then grow a pair, use your real name, and start your own UA-cam channel. PS - Your returns are Risk of Ruin piss poor for that kind of trade. Any long single strike strategy should return at least 50% when you win, or you don't know what you are doing. So maybe you should stay behind an anonymous alias!
In worst case you lose 4710$. Worst case is if SPX goes to 2800 or bellow. In 2800 case your 5 2830 puts would be worth 30x100x5, but on 10 2820 puts you would owe 20x100x10. Difference is 5000$, but you already earned 290$ so capital required is 4710$
I prefer to trade the BWB strategy on liquid ETFs because their weekly and monthly standard deviations are more predictable. I think one has a better chance of hitting the ‘lottery’ OR minimizing losses using this strategy in conjunction high IV ETFs that are above or below their 21dma or 34dma. SPX is just too volatile for my liking.
It's all about probabilities - based on back testing you can get an idea of your returns at the end of the year factoring in losses. A solid options strategy should result in nice returns if you stick to it especially through the losing months
I like to sell cash covered puts and covered calls. Only risk is losing on actually owning stock, so don't do this on crappy stocks. With covered calls you only cap your potential gains. Otherwise, collect sweet sweet premiums all week every week.
Yeah I think any time you are above the 20 MA, selling at the 10 delta will be hard to get 6%. You'd need to do this on a down day where the butterfly gives you a bigger credit. Weird.
@@InfiniteQuest86 FYI, I was able to put this trade on today with a 6% potential. But at a delta of -14% for the short strike. Overall position delta is 6.68 so not bad. July 5 expiration.
@@InfiniteQuest86 I put the position on and sold a bear call spread to reduce the downside risk. The overall position is delta neutral and potential return increases to 10.1% for the week. We'll see what happens.
@@robertnoonan Yeah, I really like your variant. The risk/reward for moving it closer to ATM feels a bit crazy to me. But I guess that's why they also say to cap the loss before it gets out of hand.
Along with stretagy please show pay off graph in every situation in favour view and against view pay off graph and breakeven point of both the side are required to understand better way
Worst case, you could lose $4710. That is why, after he explained the trade, he said the broker would "require you to set aside about $4700 for this trade."
If it were a simple vertical spread of five points the margin would be $500 per contract. That’s five points times 100 shares equals $500. 10 contracts times $500 would be $5000 maintenance requirement. I don’t understandThe spread, however I imagine the broker does something like that to get $4700 of the maintenance requirement
I wish it was that simple.. u didn't mention If market gaps down to 2800 we lose $4700.. Even if it gaps down 30-40 points your 10% stop loss will hit.. so u need 16 good trades(16*290) to recover this 1 loss of 4700.. is this really what you teach at SMB .. haha
@@brennanmanion2905 Hi , do you know the time of that particular segment? Cant seem to find it. I only found the only where it's mentioned the price closes near the sold strikes near expiration ie strike 2825.
@@brennanmanion2905 Hi, Brennan. I'm a little fuzzy, okay okay, I'm a lot fuzzy, on what you mean by roll down out of the trade. Could you give an example or two of what it means to roll down out of the trade? Thanks, Brennan.
you5711 I meant to write “roll out”. Basically you liquidate, not at a full loss; at a small loss. You sell to close the current option while selling to open an option at a later date.
The thing is, he didn't buy a butterfly, he bought a broken wing butterfly. In a butterfly, the distance between the middle strike and the upper strike is equal to the distance between the middle strike and the lower strike. In a broken wing butterfly, the distances are not equal. In his trade, the upper strike was 10 points above the middle strike, and the lower strike was 20 points below the middle strike, which is how he was able to put on the trade with a credit. You can see the difference in strike prices in the options table if you pause the video at 5:12. He goes over the credit calculation at 5:58.
Why are you tailgating on Buffet's name and reputation? What does his investment capital ability have to do with the 99%? And when the frick did he ever enter a trade with a less than 90-day hold in mind? Why not offer "I'll show you how to get rich like Mike Jordan, and not lose it like Mike Tyson", same relevance.
Fools gold looks valuable to the ignorant, I think you be ignorant; otherwise you would be less than impressed with this presentation. 15% returns on large chunks of capital, LOLLLLLLLLLLLLLLLL
You obviously live off table scraps, so I see your point from your point of view. Must be hard living your life satisfied by so little. Former Franciscan monk?
Love this !
Found an application w AAPL on weekly
It took me a while to digest
Apple @ 262
Buy aapl 250 put
Sell 2 AAPL 240 puts
But aapl 220 put
These videos have pretty good content, but instead of the PP-slide text summary, there should be a graph that shows p&l and the price of the underlying. To visualize the trade, the movement and the strikes.
thanks for suggestion
Yes, show the risk profile, that would be helpful!
You can treat each leg separately (a Put Debit Spread and a Put Credit Spread). If you breach the lower long strike, just roll this 'Credit Spread' to the next week, at different strikes, preferably for a small credit. Same time you close the debit spread for a great profit (lottery ticket side). By adjusting and managing, this is a great trade.
Which broker would you recommend to give this awesome strategy a try?
I was wondering, which moving averages do you use the EMA or the SMA and which do you prefer? Thanks You explain things very well Thank You..
Great clip, thanks. How about showing a break out trade using options. What I am curious about is what your delta buy would be along with your days to expiration (dte). Thank you.
Thanks for the video. I would be keen to know if there are any adjustment strategies for BWBs or the standard management is just to stop out without trying to adjust the trade? Thank you.
Thanks Seth. I have learned so much from you.
Very to the point and objective explanation. Listening and learning is Fun. Please introduce some more complex strategies that may require high capital but have high probability of profit and are profitable in long term.
Thanks
thx! we have some more complex ones on the channel in the options playlist
Which would you use if you are trading on Robinhood? SPY?
This sounds really interesting. Im curious as to how often the "lottery" is hit compared to the losses.
You could always backrest this on a paper account. That's what I would do as it puts the proof right in front of you. Good luck!
Amazing! It’s like rigging the odds in your favor! Subscribed!
Hi there! Fantastic video.
I’m confused though, are you trading weekly options from the day they come out, or are you trading monthly options just for one week, in that last week of the month. I know you were doing this 52 times in a year so I am assuming you are trading weekly options.
If so, how many days to expiration is your entry point?
So here’s a good technical question so you sold an option combination either vertical or the broken butterfly. What is the stop loss? So let’s say you sold the option for 2.00. Would you set a stop limit order at 2,20? As a 10% protection?
And is that a safe bet because I understand some stop limit orders or not activated.
Thanks for the great video! Can you help me understand what is "ten delta strike" in the video? is it 10 delta call and -10 delta put option? Thank you
Savvy Desi Yes, that's correct.
Can we use it as Intraday??
Also, for those traders on your desk who trade monthly options, 12 times a year, what is the entry point time-wise? - still a week to expiration or 30 days approximately in advance? Thanks so much!
Thank you so much. This is exactly what I was looking for.
Do you have a similar powerful strategy for weekly income in a down market?
David Kamnitzer I would imagine that you would do the same thing except you'd do it with call options instead of with puts.
@@hermanambriz no. Calls usually don't provide the same premium in stock indices
Strategy 5:04
I've learned so much from yall at smb capital. Thank yall so much!
Nice video. Do you have any videos / strategies on Iron Flies?
Not sure, check our "Options Playlist" we may have some in there
This was great, thanks, I been tryin to find out about "option picking strategy" for a while now, and I think this has helped. You ever tried - Winoorfa Option Olegroson - (Have a quick look on google cant remember the place now ) ? Ive heard some super things about it and my neighbour got excellent results with it.
Love the BWB!!
Is the volatility so low thatcwe are unable to create the spread with a 58c credit? The credit is only 30c at best on 11 Jul 2109. Shifting the 2nd PUT down increases credit but also increases the BPE.
Interesting - I trade options differently. I've found that options with liquidity on "in-play" stocks can be traded as stock substitute if you get the direction right and trade ITM in the direction of the stock. Five of the last six day trades I've done have been +10% or more, 3 have been 25%. The one loser was -10% and had I overnighted, it would've been +40% due to a gap up. Entry and exit timing is very important for that kind of trade. 83% accuracy is a hot streak - not the norm. Thanks for sharing.
If you're this good then grow a pair, use your real name, and start your own UA-cam channel.
PS - Your returns are Risk of Ruin piss poor for that kind of trade. Any long single strike strategy should return at least 50% when you win, or you don't know what you are doing.
So maybe you should stay behind an anonymous alias!
In worst case you lose 4710$. Worst case is if SPX goes to 2800 or bellow. In 2800 case your 5 2830 puts would be worth 30x100x5, but on 10 2820 puts you would owe 20x100x10. Difference is 5000$, but you already earned 290$ so capital required is 4710$
Is there any reason the strategies discussed by him wouldn’t work in equities despite him talking in terms of indexes?
Many thanks .. as always
I prefer to trade the BWB strategy on liquid ETFs because their weekly and monthly standard deviations are more predictable. I think one has a better chance of hitting the ‘lottery’ OR minimizing losses using this strategy in conjunction high IV ETFs that are above or below their 21dma or 34dma. SPX is just too volatile for my liking.
Thanks again!!!
does theta play a role in index options
I feel like $4700 worth of risk is excessive for a potential profit of $290.... or is there something I'm missing?
It's all about probabilities - based on back testing you can get an idea of your returns at the end of the year factoring in losses. A solid options strategy should result in nice returns if you stick to it especially through the losing months
In Indian market margin requirements are way to high for nifty and banknifty options. What kind of strategy one should use?
I like to sell cash covered puts and covered calls. Only risk is losing on actually owning stock, so don't do this on crappy stocks. With covered calls you only cap your potential gains. Otherwise, collect sweet sweet premiums all week every week.
As of today's close, the return for this trade is only about 3.6% of held capital. Do you wait until the return is 5% or more?
Yeah I think any time you are above the 20 MA, selling at the 10 delta will be hard to get 6%. You'd need to do this on a down day where the butterfly gives you a bigger credit. Weird.
@@InfiniteQuest86 FYI, I was able to put this trade on today with a 6% potential. But at a delta of -14% for the short strike. Overall position delta is 6.68 so not bad. July 5 expiration.
@@robertnoonan Yeah, I messed around with strikes today to see what was going on during the actual trading session, and I found the same thing.
@@InfiniteQuest86 I put the position on and sold a bear call spread to reduce the downside risk. The overall position is delta neutral and potential return increases to 10.1% for the week. We'll see what happens.
@@robertnoonan Yeah, I really like your variant. The risk/reward for moving it closer to ATM feels a bit crazy to me. But I guess that's why they also say to cap the loss before it gets out of hand.
Along with stretagy please show pay off graph in every situation in favour view and against view pay off graph and breakeven point of both the side are required to understand better way
Worst case, you could lose $4710. That is why, after he explained the trade, he said the broker would "require you to set aside about $4700 for this trade."
They will never do it. They never want to expose risk side of trade. :-) They want you starry-eyed.
Good
Could someone explain why the initial capital is 4700$? thank you
Simone Marrazzo I think it is closely equivalent to the maximum loss of the trade.
If it were a simple vertical spread of five points the margin would be $500 per contract. That’s five points times 100 shares equals $500. 10 contracts times $500 would be $5000 maintenance requirement.
I don’t understandThe spread, however I imagine the broker does something like that to get $4700 of the maintenance requirement
And if
Nice
I wish it was that simple.. u didn't mention If market gaps down to 2800 we lose $4700.. Even if it gaps down 30-40 points your 10% stop loss will hit.. so u need 16 good trades(16*290) to recover this 1 loss of 4700.. is this really what you teach at SMB .. haha
You are supposed to roll down out of the trade. This is what good option traders do. You must react to the market still with this trade.
@@brennanmanion2905 Hi , do you know the time of that particular segment? Cant seem to find it. I only found the only where it's mentioned the price closes near the sold strikes near expiration ie strike 2825.
@@brennanmanion2905 Hi, Brennan. I'm a little fuzzy, okay okay, I'm a lot fuzzy, on what you mean by roll down out of the trade. Could you give an example or two of what it means to roll down out of the trade? Thanks, Brennan.
you5711 I meant to write “roll out”. Basically you liquidate, not at a full loss; at a small loss. You sell to close the current option while selling to open an option at a later date.
at ten percent stop, you back the fuck out. bail soon enough and you lose 470. that's 2 trades
real traders watch on 2x speed.
😀👌🏻👌🏻
This strategy is all good and well...until it shits the bed.
When you buy a butterfly, it's usually debit and NOT credit
The thing is, he didn't buy a butterfly, he bought a broken wing butterfly. In a butterfly, the distance between the middle strike and the upper strike is equal to the distance between the middle strike and the lower strike. In a broken wing butterfly, the distances are not equal. In his trade, the upper strike was 10 points above the middle strike, and the lower strike was 20 points below the middle strike, which is how he was able to put on the trade with a credit. You can see the difference in strike prices in the options table if you pause the video at 5:12. He goes over the credit calculation at 5:58.
Thank you@@you5711. Make sense
@@nickpatel1965 You're welcome, Nick.
Why are you tailgating on Buffet's name and reputation? What does his investment capital ability have to do with the 99%?
And when the frick did he ever enter a trade with a less than 90-day hold in mind?
Why not offer "I'll show you how to get rich like Mike Jordan, and not lose it like Mike Tyson", same relevance.
stop the warren buffet references..
Fools gold looks valuable to the ignorant,
I think you be ignorant; otherwise you would be less than impressed with this presentation.
15% returns on large chunks of capital, LOLLLLLLLLLLLLLLLL
You obviously live off table scraps, so I see your point from your point of view.
Must be hard living your life satisfied by so little. Former Franciscan monk?