Options Trading MYSTERY: How to Choose Your Strike Price 🔍
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- Опубликовано: 2 окт 2024
- Struggling to pick the right strike price for your options trades? Look no further! In this video, expert trader, The Financial Minutes, reveals his secret method for choosing strike prices to maximize profits. You'll learn how to balance risk and reward, leverage delta to your advantage, and capitalize on hidden opportunities with in the money vs out of the money options.
This video is packed with actionable insights for both beginners and experienced options traders.
Want to learn more about options trading strategies? Subscribe to The Financial Minutes for daily tips and tricks to level up your trading game!
linktr.ee/finimizeLINKS
Bro why u gotta cuss? I unsubscribed
@@daynajackson895 Shit I lost a sub
Who else thinks trading is not as easy as it seems watching RUclips videos?😌
Watching videos gives you the information, using the info and actually trading is what makes you a better trader
What do you mean? Trading is super easy. Trading profitably on the other hand...
You have to know why the markets move the way they do. People don't understand that one simple thing and it makes trading SPY options a big guess for most. How do people keep hitting profitable trades? How do they know which direction it's going to go over the next few mos? Simple. ... Compare the Central Banks Aggregate liquidity vs the SPY Index. Spy follows the aggregates liquidity and that is a fact proven since the beginning of time(SPY)... It's that simple.. Now go make your money's 😂. Lastly... TAKE PROFITS! Don't be greedy. Take your profits and stop giving them back. I had to learn the hard way my first few years trading. GL to ALL LFG GOOGLE Options for Jan 2024 get them now!
The fact he made this comment shows he’s not going to that next’s level make room for the dogs
Yeah the basics of trading sounds easy. But low sell high… sounds sooooo east haha
Just gotta be BALLS DEEP in every trade you make. BALLS. DEEP
That’s how you become a bagholder
@@Rockybalboa541 I'm talking about BALLS DEEP.
@@Chris-wk8nu oh you should Of said that
@@Rockybalboa541 forgive me for my lack of clarity. I’m very sorry.
😂😂😂😂
I am happy I am not the only person who is confused. I watched countless videos and I know most of the terminology but there are just some holes in my knowledge that makes me worried. I want to learn how to trade options because I think it can be a great skill and a good way to generate money when doing risk management and using safe strategies. I am pretty sure if I start options right now I would have a more deeper understanding, however, I think learning as much terminology and strategies till it is common sense will give me a more better chance at making a profit.
Thank You. I only clicked this video because of all that I have learned and lost. Made $30 finally on a trade. But I have trouble picking the strike and knowing when decay begins. Thank You
Woooah Woah Woah. That 'stache is ITM for sure.👍
Thompson Larry Brown Susan Williams Larry
THANKS FOR SPEAK SLOWLY AND CLEARLY
Thanks for clearly explaining strike prices, i was a bit confused before this video
i still am
If my options are losing money and I don’t wanna lose all my money I should sell before it expires?
Yes if you think the options will expire out of the money
The key is to not hold overnight.
Get in, get up, get out.
Do you do poorman selling of calls against your call options if you don’t have the shares?
Yes you can
I’m confused on one thing. Let’s say there’s a stock for $20 and magically next week it rose to $50. And I had 2 calls set in place. One for $30 and another one for let’s say $45, which call is making me more money? The $30 one right? If that’s the case wouldn’t it always be smarter to hold a smaller call and try to time it so that the price flies?
The $30 call will make you more in $ terms, the $45 call will make you more in % terms if you bought 1 of each.
Let’s say you bought into the 30 call for $10 premium and the 45 call for $1 premium.
30 call now has $2000 of intrinsic value and the 45 call has $500 intrinsic value.
For the 30 call you made 2000-10 = $1910 profit (191X profit)
For the 45 call you made 500-1 = $499 profit (499X profit)
In theory you could’ve bought 10 45 calls for $10 and turned 10->4990 vs 10->1990 by the 30 call
Super abstract explanation without numerical examples.
I'll try to make in less abstract and more concrete in the next vid on this topic. For now, focus on delta as a the market's estimate of the % chance of the option expiring ITM and weigh that against your own assessment of the % chance f the option expiring ITM.
Correction your option will be worth zero if it expires at the strike. You need spy to expire at the strike + premium paid to break even at expiration
This means if spy is below 295+134.5 or 429.5 you will lose money in this position. Now of course if spy goes up earlier than expiration the extrinsic + intrinsic value can put you in the green before expiration but strike is just one part of expiration and making money. If you buy very expensive options meeting strike is just first hurdle you must meet premium paid too
For anyone thinking of trading 0DTE options this is extremely important to understand. Price above strike early in day you will likely be green. As you approach end of day price must be above strike AND premium. Try to get rid of your ODTE options before noon for best gains.
Once I fully understand this, I’m going to use the day replay simulator to do live examples for people. The hard part about all of this is it’s hard to know without real world live examples.
That's a great idea! Just be open and honest that you are trading with paper money, because if you aren't people will find out and be pissed.
if your not confident in your trade . . . why are you placing the trade in the first place ???
Do you usually buy more than one contract for selling calls and puts? I know you need to have cash available in case shares are put and shares available to give up when you sell calls.
Coud you do a video with a example, like using paper and pen. I am visual and since i dont know any of this, would be easier to understand terms and how to do. Thank you
Hm, maybe in future videos. I have an iPad that I could draw on for visuals.
He makes it sound so difficult.
I just buy calls with a high delta and in the money. Done.
To sell for profit I set an extremely high sell price. However, I open my modify price window and watch the 3 minute chart and change the sell price accordingly. I dont make huge gains, but consistently make profit.
When you buy an option out of the money and the stock goes up you make money regardless of if it meets your strike price or not
If it goes up quick enough, sure
If you buy a couple contracts at 1.00, then it’s drops way down to .10 to buy the same thing, if you buy a pile of them at .10 it lowers your average of what you paid for them. So after you buy a bunch at .10, it may bring your average to .40 instead of 1.00. Now the current price only has to surpass .40 to make profit instead of 1.00. Can you explain that in a video or break it down please???
Ya I use averaging in all the time I can touch on it in a new video
Thank you very much
completely confusing
Let me know what you need help understanding, happy to answer any questions
how about choosing the most optimal strike price for a long straddle/ long strangle?
Depends how far you believe the stock will move vs your breakeven prices
Trading is not Winning a Lottery Ticket. You need to research as much as possible.
I just opened my first option today. I own a few very unprofitable positions, figured I might option them for some extra 💵
At least you’re getting your feet wet and getting some practice!
Don’t feel bad I and my Son was playing around and bought one practicing on paper trade. It was our first Lmbo we started loosing money right out the gate. I was like what the Whata! I thought oh well it not real money but sheesh!!! We’re all going to catch on and make that paper!!! So pls don’t feel bad you’re not the only one!!!!
Intrinsic value = stock price - strike price.
Provided the contract is In-the-money.
So, would I be for example, watching my charts as I would in trading stock, following market structure, price action etc and let’s say for example when I see price return to a key level that I expect to trend up from. So I’d select a strike price at I’d near the key level price anticipating an increase?
I don't understand how you would lose $13,450 dollars? Is it because you would have to buy $13,450 worth of shares? If so how woild that be considered lose that much money when you have that much worth of stock?
In this case you would lose $13,450 if SPY was below 295 strike price on the expiration date.
He’s making seemingly effortless and I understand he’s PUT DOWN
What do you mean?
What is in the money? What is a strick price ? What!!!!
Strike price is the price you agree to buy 100 shares at with calls, or sell 100 shares at with puts. A call is in the money when the stock is above the strike price you choose and a put is in the money when the stock is below the strike price you choose. Calls above, puts below or CAPB for short!
yeaaa Mr. FAkE
Williams Kenneth Young Jessica Lee Karen
Gonzalez Jason Jones William Davis Kenneth
My first trade today 60 dollar profit 😂
Thanks for the update and keep doing what you do. My journey in the current market has taught me a lot of lessons, at the top of that list is that it never pays to live above one's means. I have managed to grow a nest egg of around $600k to a decent 7 figures in the space of a few months. Sad to say but a lot of us have poor money management skills. My 2 cents -get an advisor to keep you accountable and aid you make better decisions, Bryan Webster has been helping me a lot, all through my journey. I find it better to pay a little bit more for peace of mind than worry about money or market trends and still get >burned.
I will rate his strategy 90% accurate.
Ok Greg this might be a stupid question for you but I'm still in the learning process i need a little help here: If you BUY a call or a put for example 1.25 ($125dlls) and the price goes against you and you let the contract expire, what's the worst scenario?
***You only loose what you pay for the premium? in this case the $125? or
***You need to buy the shares as well?
this gets me a little confused, what i know is to get out of the contract before expiration date but i just want to know what will be the worse scenario that could happen? I'm not in to selling yet because i perfectly understand the risks on "the Wheel" and i don't have the money to buy or sell 100 shares, that's why I'm more into buying calls and puts because i suppose you only loose what you pay for the premium and that's it.
Thankyou for your help i really love your channel.
Buying an option gives you the *right*, which you can decide to exercise or not. So if you don’t wish to buy/sell 100 shares worst case scenario is losing the premium paid for the option if it expires out of the money.
Worst case is you lose all your money in that option. Your strike price is the number you need to watch. If you don't hit that price either with calls or ours you will lose all your money.
Just keep this is mind the further your strike price is from the actual stock price. Harder the stock has to work to make you profitable before the expiration date. Also the longer expiration date the longer you give the stock to reach the strike price you choose. Question have to ask yourself is are you giving the stock enough time to reach strike price you choose. Maybe it needs two or three months instead of 1 month.
You will only lose 125.00
Please help me understand if I’m doing this right.
Say is a stock is currently at 70, and i think it’s going to start selling from 75 so i get a put at the 75 strike price? Would this be in the money or out of the money?
For a put it's in the money when strike price > current price. With a $75 put and the stock trading @ $70 it would be in the money as you can exercise the option to sell the stock for a higher price.
@@TheFinancialMinutes I’ve noticed that, do you think it’s worth it is it’s anywhere from $2-4? Which would be around 2/400 for a contract? I’ve did my first one and it turned out profitable, I had 46% return in a day
If the stock is trading $5 below the strike it will have at least $5 intrinsic value and trade for $500. The rest of the contract's value comes from it's extrinsic value which depends on time to expiration and the individual stock's volatility.@@GiftedInvestor
10 strike long call was cheaper than 11 strike call wtf lol. Buy the 10.
The closing bell can do some weird shit to premiums and the bid-ask spread
What? I need a breakdown of the charts
I've never been good at technical analysis, so probably not the best person to teach that
you are amazing brother thanks 🙏 for everything
Bro you’re saying put and calls the same
Nice start 1:08 for puts you made look like the same like calls
I appreciate your effort - still, do not see the numbers you speak. Though you don't think you're talking too fast; the numbers you report don't add up. The material is good to know but you need to "show" how it works. Painfully slow perhaps but a better way to secure a listener, follower, or member - whatever your goal in making the video in the first place.
Thank you! I do receive value (learning more) but confidence is not quite as high enough to refer to as my reason(s) to justify that trade. Sadly that may just be my ability and is not a reflection of your knowledge.
So when you sell a put you have to wait until expiration? Theres not getting rid of it early like buying calls/puts?
Right. Unless the buyer decides to exercise the option early.
You can still close the position by backing back the put option. This can be done before expiration to "get rid of it early"
Which app or site did you use in the video?
Robinhood
Options trading is a probability game
Yup
Break even price is confusing. Isn’t break even only for shares when assigned?
Correct
@@TheFinancialMinutes awesome thank you.
Does open interest and volume matter?
Yeah it can definitely affect price movement, since market makers have to hedge their positions
Here ( 3:37 ) you say 0.6 delta which would mean 60% winning 40% change of loosing according to this example ( 2:49 ) yet later on in the video 4:37 you say there’s a 94% chance it’s a loosing trade so I’m a little confused how you calculated that
Delta is a way to measure the chance of the option being in the money, the chance of profit is based on your breakeven price which is above the strike price for the call option to be in the money, or below the strike for a out to be in the money
If I believe a stock is going to rise from $10 - $20 and take exactly 1 month. whats the best strike price to choose? Is it to buy it at $19 and let it run a bit, or buy the $20 strike and sell right when it hits it? Always confused
Whichever has the highest multiple when you compare your price target with the breakeven price.
$19 call might cost you $0.50 for 2X profit, but if the $17 call is $1 that would be a 3X profit
Thank you.
God Bless
Sorry so if lets say my call option were out of the money meaning my strike price is lets say $30 and the stock price is $25, and I'm close to my expiration, I don't need to exercise my rights to buy the $30 dollar contract and I should just let it expire? I lose whatever I use to buy that option nothing more right? Compared to exercising that option to buy the $30 dollar price, which will make me lose less?
Think of it this way: If you can buy the shares at $25 stock price, why would you exercise your option to pay the $30 strike price?
You only lose the price you paid for the option, compared to losing $5,000 buying the 100 shares of stock at the new $25 price.
thanks for the video
are most of the strategies you use require level 3 or 4 options trading, I’m only at level 2
Yes I mostly trade spreads which requires level 3
@@TheFinancialMinutes Do you have any video how level 2 options margin trading account can make money with single leg option? TQ
love the stache King
Thanks 👨🏼
Keep the content coming.
🙏
Ngl out of the money calls make no sense
They’re ok if you expect more volatility than the market, and you’re planning to sell before expiration
They are cheaper so you can buy multiple contracts which can multiply your gains tremendously when and if the stock trades in your favor
I listened to this whole thing and I’m still confused shit crazy lol
Bro, you lost me at Robinhood.
thanks, review last 5m again
do you make more money when it expires in the money or out of the money? If a put expires out of the money how will you make money with the stock price going up instead of down how you wanted, you would be selling it for a cheaper price losing money, right?
💎
Are your trades in a taxable account
Yes they're in a standard individual account
@@TheFinancialMinutes thanks
Ahh, the Good Ole days of living in your parents attic!
Ya wish I could go back to those days without bills
Just by looking at his chart I can tell hw does not know what the hell he is doing
Chart analysis never has been one of my strengths, I’ve always studied macroeconomics and how Fed policy shifts the market
Can I trade just for the premium?
Yup no need to hold to expiration for assignment/exercising
@@TheFinancialMinutes how would i go about that. Just pick a date and price?
@@adriana-jn8rubuy and sell it like you would a stock trade.
Same way just sell it before expiration or when you see your desired premium @@adriana-jn8ru
This didn’t help at all.
I have a question and really need help. Im trading $TSLA and did a 3 option spread for $45 and was up $330 at one point and couldn’t close. Bid is $0.00. Any other way to close or will i end up owing hundreds of thousands of dollars? Also, im using a cash account not a margin account.
You could close each leg separately
So for call option stock prize needs to go up above your strike price. When doing one, I'll always choose a higher strike price, knowing the stock will go pass it? So this is a bullish play, am I right?
Yes you would want the stock to go up beyond your strike price by the expiration date, so this would be a bullish trade
@@TheFinancialMinutes thank you. It's so confusing watching all kinds of videos about this play. Thank you! I understand your vid than the others by far. Keep it up.
@@TheFinancialMinutes I'm this one is for buying call option,right...Not selling ?
If you are in profit could you close before the option expiring?
@@jquilespr yes! Anytime
I know i suggested this before but we need that in depth video of the call credit spread vs the put debit spread comparison pro cons when to use all that good stuff which is better. Just did a trade that was very profitable using them together combined looking at you BBBY 🤑. Keep up the good work.
Sure I can work on that. Thanks Mark!
Buying a stock is like buying an option that never expires
Absolutely! Time decay doesn't exist in shares
@@TheFinancialMinutes
The appeal of options is that they're cheaper and the profit potential is high but I can never time the market right on optionable equities
wassup bro! I just moved from trading stocks to learning options and I'll probably be in your channel for a while
That’s awesome! Best of luck trading
Lets say you trade pullbacks and price is coming down to entrypoint, and i have a 60 cent or so scalp. It seems that atm options need to move like a dollar or 2 to break even with premium included.. would i have to go deep itm to get alot smaller breakeven move and make profit?
If you're scalping you shouldn't be worried about breakeven, since it only applies to expiration. You're just trading the premium so if the option moves 60c with an ATM option you'll make ~0.30 per contract.
@@TheFinancialMinutes first of all thanks for getting back so quick... just to be clear then, if price hits my entry point of lets say 140. I would pull up options chain and buy an atm 140 or slightly lower itm and be good to go?
@@johnnorris10 For me it depends on my stop loss. I set my risk by multiplying the delta for an option by the distance from my stop.
@@TheFinancialMinutes ok thanks again for getting back, do you have a instagram or anything i can ask if i have any questions down the road?
Discord is the best place to reach me
discord.gg/A7VHNFk
Very nice stuff, thanks for such a good video,i think it is also proper to understand the basics of the portfolio. Option has been a great deal and a profiting portfolio when you want to diversify your portfolio, options trading gives you a simple alternative to trading stocks or investing in mutual funds. Options come with an average 5% return with an 80% winning ratio❤.
While they carry their own risks which can be avoided, options can be an excellent way to expand your portfolio. Not to mention, option come with quick returns so you don’t have to play the waiting game with future contracts and that's the main reason i have massively made profits within a decade ($6,460,382)❤.
Once you learn the ins and outs, you can feel more confident when you start investing also when the signals are perfectly engaged
Options trading allows you to buy or sell stocks using a good pattern. While trading stocks on the stock market it can't get complicated, options offer a more straightforward trading venue. However, you still have to pay attention to trends and patterns.
When you trade options, you buy and sell stocks, ETFs, bonds, and other assets. The difference lies in the method. For example, rather than buying one share, you can buy 100 or more at once for a lower price. This feature makes options attractive as a quick way for investors to make money.
Meanwhile! like a stock. The price of the option depends on several factors, including:
•The asset’s market price
•Volatility
•Expiration time
•Specific market factors
Options can be a risky form of trading. You can gain profits fast, but you can also lose money just as fast with incorrect market predictions due to the unguided risk
I have learnt so much from my point the simple tricks that can earn a good fortune, When you trade options, you can choose between two basic options positions: call and put. The options position you choose depends on your plans for the underlying asset. How much time you want to invest in waiting to buy or sell also matters.
Some types of options take longer to sell, like futures contracts. As the options holder, you can purchase options with contracts of varying lengths based on your trade’s underlying asset.
How you buy and sell your assets depends on what you believe the underlying asset price will do. The different asset types indicate whether you predict that the price will rise or fall. If you’re right, you make a profit. If you’re wrong, you lose money. That's when a good pointer plays a key role.
JASON HERMAN PIERCE has really been good in his field and executed good trade with huge gains .
10:30 🔑
Great Vid
Great informative content! Thanks for sharing
Thanks for watching!
Very informative video. THANKYOU