Thanks so much for putting up such a piece!Trading perpetual futures or options contracts may be exhilarating, but armed with knowledge and smart strategies, you can navigate the journey with confidence. Remember, a mix of education, discipline, risk management, and continuous learning is the recipe for minimizing losses and maximizing gains. Whether you’re a newbie or an experienced trader, these tips are your compass to steer through the complex world of perpetual futures trading. And for those looking to take it a step further, and to plan towards a good retirement that will benefit in the near future 🚀📈
Now, here’s the real game-changer that can transform your trading journey it is a quick tip from my adviser JASON HERMAN PIERCE. Imagine being able to beat the difficult situation that surrounds investment or having good and laid out plans to strategically overcome the market challenges,No more worrying about losing trades or missing out on profitable opportunities. The laid plans,good foundation ,tools and other important techniques will allow you to identify good skills that will consistently lead to making profits and replicate the strategies effortlessly. It’s a time-saving, stress-reducing solution that empowers you to follow proven strategies without the guesswork and as such emphasis on good and better landing most especially when planning retirement which is paramount and must be properly followed by a well established mindset.
The trading landscape is ever-evolving, and your knowledge should evolve with it. Staying updated on market trends, technological advancements, and emerging trading strategies. Devote time to learning from successful traders, attending webinars, and reading reputable resources which will clearly explain the needed steps to attain a hood standard.
I think primary knowledge or a study to understand the basics of the portfolio is key to begin an investment journey. Education is the cornerstone of successful trading. Arm yourself with a solid understanding of the assets you’re dealing with, market trends, and the mechanics of perpetual futures contracts. Diving into financial news, analyze historical price data, and keeping a keen eye on the factors influencing your chosen assets has been the key things I learnt from JASON HERMAN PIERCE too, a suitable application of techniques led to a huge profit gain it is the case with a properly traded portfolio which I have actually benefited today.🎉
Trading with Confidence is a booster that can kelp on cconcetrate and build a good trading environment Trading option,perpetual futures or other contracts may be exhilarating, but armed with knowledge and smart strategies, you can navigate the journey with confidence. Remember, a mix of education, discipline, risk management, and continuous learning is the recipe for minimizing losses and maximizing gains and play a key value to the easy understanding and applications of terms
That’s why you trade not only Fundamentals but also technicals. I use straddles above and below support/resistance zones so that if the market moves. It can only move one way. Also don’t be greedy and take a lower RR for a higher strikerate. Goodluck
These are good for fomc days. High vol days. One day expiration too which I’ve found to be rip off. I see 2 week expirations for same price so why wouldn’t I buy or sell a 2week in case vol doesn’t spike that next day? Problem is there’s so much volume in the daily’s now that the premium is just crazy high. In unpredictable markets like we have right now pushing new highs waiting for huge pullback these are good to use. Days like today you can double down and sell one at bottom of day then wait for pullback like today back to open or above open making both side of straddle profitable. This is experience strategy because can really just keep going and exited winning position with looser still on. I like to take looser off before winning position too letting winner run to its target. This is when major support or resistance level breaks and market starts to run. Today had 100% pullback from moves so if took profit at bottom then back at top you’d be doing really good. I stick to micro S&P because raw seems to be more profitable
@@braddistler5697would it be possible to speak about strategies like this with you? I’m looking to start trading and you seem to know what ur talking about. Thanks
Guys, if you’re holding a straddle, you sell your losing leg of the straddle, not hold it to $0. Like in his example, you would’ve sold your call & held onto your put. Please don’t hold a $2800 call down to $0.
what if you sell the loser and then it reverses though, you would lose like 80% of your position every time, not saying your idea is bad but there has to be a strategy behind it you cant just sell when you think its gonna keep going down or vice versa
@@ryanotoole7084 all I would say is that you have to learn how to trade. I understand the market reverses, but if it does reverse, it’s probably because you don’t know where the pivot points are at. There’s all types of strategies but if you’re blindly trading, then yes, you’ll probably lose no matter what position you take, because you’re just chasing. Taking a straddle at critical support/resistance is a safer bet than going long at resistance or short at support. you dig?
It’s better to let the losing trade continue to go down (even to zero) until you lock in the gains on the winning option, because it’s still insurance protection until then. I have learned from experience that if the market reverses, you can quickly lose in the other direction. Now once you lock in the profits from the winning option, if there is anything left on the losing side, then sell that as well, then move on to the next trade.
@@Chukboss If the market is in a tight range and hasn't crossed your break evens on either side, you stand to lose most of the premium you paid to buy the puts and calls due to theta decay... Your break evens on both sides are relatively high... Call side break even will be strike price plus call price plus put price. Put side will be strike price minus (call price plus put price). Given that most markets are ranging between 70-80% of the time, achieving such high break evens, can be really tough, and most simulations show
whatever you do DONT do this method with 0 or 1 day options, time decay is a huge factor and its basically a gamble. If you want to do this method buy for like a month out at least
Time decay works in your favor for short straddles not long straddles as is the case in this video. Long straddles positions must be held for no more than a day or two.
Actually a smart move because fed talking about interest rates will make the spy very volatile so it will most likely swing in one direction heavily making either your put or call option with more then 100% gains
@@Rahul2000g an option is made up of intrinsic and extrinsic value. If spot decreases, typically you'd expect the put to increase. However, if volatility compresses substantially the value of the put option might not increase as much as the underlying decreased. TLDR, the intrinsic value gain didn't offset the extrinsic value loss to the overall position.
@@Rahul2000gright before a company announcement/earnings, or for spy/Spx government announcements, implied volatility increases so the price of the option will be higher because people are expecting a big move one way or both ways. Right after the announcement the implied volatility will return to normal and the value of the options will decrease. Unless the option you bought is deep in the money, more than likely you will lose on that trade.
What they don’t tell you is that you need to have a certain percent to off set the call and make some profit , what if the market doesn’t move at all You lose all the money , very risky in my opinion
@@702Fonzie Straddles make money, when the volatility is higher than the market thinks. If your trade before news, the straddle will be more expensive because everyone knows, that the vola will be high. So you need a situation where the volatility is higher than the expected volatility (the iv). This is not the case by just using news
I think of the market as a 3 head coin . It can go up , down or trade flat . He is right there are ways that you can take 2 out of 3 scenarios . It all depends on the strategy you use.
The implied volatility is so high the day before a fed event I’ve had very good luck starting my position a few days earlier. If you think about it if you buy a 14 day when iv is low the spread price will be the close to the same as a 7 day when the iv is high plus if you buy early you will benefit from iv rising.
hindsight is 20/20 and the Fed money police is fully digested and without the element of surprise SPY will not move as much in both direction. Your straddle is 100% loss. Think about it market makers will always price in a straddle in their favor! Retail traders will pay the price if you want to play. You are better off doing a bull spread or a bear spread as the out come is 50/50 and the reward of the winning side could be 100% of risk capital or more.
What he says appears to be contradictory . He says initially that when the price goes down then if you buy a put , the value of the put tends to go down . That surely is not correct . When the market goes down then the value of the PUT goes up surely !
Most times it seems the anticipated volatility is so baked in and thus the premiums so damn high that its takes a massive response to the anticipated event to clear the cost of both legs to clear break even. Just look at the put/call option table after a highly anticipated earnings event . Stock up 15 % and most options are in the red …both sides.. w the exception of the deep in the moneys of the winning side. .Wonder if NVDA will be that example soon.
@@dianeulett3149 Indeed, that's why we buy Put options - in hopes that the underlying asset price will go down, and thus _increase the value_ (price) of that Put option.
Slight correction. Market goes down and the put options price goes up. I know you know that though. Straddles are neat. How do you feel about strangles?
Volatility has to be larger than the breakeven point for the losing side of the straddle. Let's give this 30% chance and let's give 33 percent chance of not making any move. Then this strategy only works 30% of the time. That's very high risk
You do not want to do this with one day left or day of expiratioh. And if the Fed is going to speak that day your going to get high implied volatility and the and when t's over you'll expreience vol crush. As a general rule you want to sell high vol and buy low vol
He started off by saying “if the market goes down: the value of the put option goes down” when he should’ve said “value of put goes up” Because 5 seconds later he shows the market dive down and the put option value rise.
This isn't exclusive to options you can do this with leverage. He's talking about trading news / extreme VOLATILITY, if we broke with the news or bounced it was going to push market hard and your profit will out way the losing call, it's not an everyday or every week thing. He's right but personally I'd like to set my stops on news and stay with leverage to pull out if I see it reverse
Also you need a margin account to get level 3 or above. I switched to a cash account because of the pdt rule and now can’t do any multi leg options. I’m stuck at level 2 now.
“Your video on the importance of financial literacy is very satisfying. It is key for everyone to have a solid understanding of personal finance to make informed decisions and secure their financial future. What you have done in spreading awareness The contribution efforts are commendable!”
This works well if there is built up anxiety and a pending catalyst. In this case, a fed decision. You wouldn't do this trade on a slow no pending catalyst day.
Brilliant... so you guarantee one of your positions is worthless while assuming the move in the market will be of such significance to cover your loss and hopefully make you a small profiit. Statistically, this is a very bad idea as the market doesn't move enough to cover your loss.
One, teeny tidy piece to this … that your profits rely on the most with this trade. You need volatility to flood in and spike your extrinsic value. And definitely do not do this at less than 45 Dte
Love your wisdom. I am a full time sub teacher, and I want to trade options, but my available time to watch markets 4-7a or 9p-12a, sounds like forex? What's your opinion teacher, I like watching the charts? But I want to make money to stop teaching.
Buying options is very risky, people get lucky sometimes but one loss can wipe out several months of gains Most options expire worthless and time is against option buyers
@@ajaeellis3755 once you have over 50k I'd recommend just selling options, you can still be directional but you'll make way more money by being the insurance company not by being the policy holder via options buyer
Why trade long option positions 1 day before big fed announcements. You have less risk the rest of the month. The only reason to pay up for those big premiums is if you have an uncontrollable gambling (day trading) addiction and can't stay away from the action 1 day.
He forgot to teach (or purposely exclude) about market Expected Return. Those call and put premium are within the market expected return.... short story, ur most likely lose money because he price will be within the expected return range
Yep it can be done but rarely snd how much do you lose ion other days. One day dies nit matter unless you only do this on your first day snd never trade again . What matters is what you make in a year five years snd ten. The average traders makes 5 to 10 percent a year. If traders consistently made more they would not tell you they would just get rich snd retire.
Your second premise is incorrect: when you buy a put option and the market price of the underlying asset goes down the put option's value goes up. I assume that whatever you said after that is incorrect... my brain stopped listening right after that inaccuracy.
He never specifically mentions the price of SPX, and why the value of the 2 Put options ended up being worth $20,xxx? And why the cost was what it was. For a beginner this video was only half as informative (or even less) than it could have been. It also doest explain the risk of what happens if the movement of the instrument or security want as great & volatile as it was for the day. Also how the hell can you sell a put for higher than a current price for the next day? Don't Put's have to be lower than the current price?
You can buy a 1 DTE ATM put on SPX for about $1.5k (15 points). If SPX falls by more than 15 points, then it will be worth more than on the prior day (yes, the extrinsic will be decimated, but the intrinsic will be high). He's using the example where SPX falls by 100 points to demonstrate (but a 1-DTE ATM put would cost more than 15 points)
Yes and no. Because options you need the price of the stock to move to make money. With black and red you need one color to land and you'll break even. If the stock doesn't move a certain amount in either direction you lose money on both the call and the put
This only works if it drops the price a lot, because if the market rallied higher the same amount that it actually dropped the value of the calls would NOT increase the same amount as the puts did because of volatility expansion and contraction…so at this point you might as well just buy far OTM puts and hope you get drops more often than rallies…the options market is priced to perfection so buying straddles or strangles for news events is overall a losing strategy, selling them is higher probability, especially in bull markets
You can also lose on both when a black swan event comes. That's why you don't trade options with your whole account. May be max 10%. Personally If I can't use my whole account on a strategy then the strategy is inferior and not worth my time. That's why I will never trade options. They increase you leverage not risk reward ratio
That's like saying you shouldn't consume hamburgers or alcohol because they can accelerate disease and death. No one forces you to get over leveraged with options (nor do they with stock on margin or futures or getting too big of a mortgage or student loan or credit card balance). The goal is to use what you need.
This isn’t worth it for retail investors who could only afford to put a few trades like this one… this is only worth it for hedge funds with millions of dollars… while they may lose a few trades when they hit one it hits big offsetting the other loses and making a profit
Thanks so much for putting up such a piece!Trading perpetual futures or options contracts may be exhilarating, but armed with knowledge and smart strategies, you can navigate the journey with confidence. Remember, a mix of education, discipline, risk management, and continuous learning is the recipe for minimizing losses and maximizing gains.
Whether you’re a newbie or an experienced trader, these tips are your compass to steer through the complex world of perpetual futures trading. And for those looking to take it a step further, and to plan towards a good retirement that will benefit in the near future 🚀📈
Now, here’s the real game-changer that can transform your trading journey it is a quick tip from my adviser JASON HERMAN PIERCE. Imagine being able to beat the difficult situation that surrounds investment or having good and laid out plans to strategically overcome the market challenges,No more worrying about losing trades or missing out on profitable opportunities. The laid plans,good foundation ,tools and other important techniques will allow you to identify good skills that will consistently lead to making profits and replicate the strategies effortlessly. It’s a time-saving, stress-reducing solution that empowers you to follow proven strategies without the guesswork and as such emphasis on good and better landing most especially when planning retirement which is paramount and must be properly followed by a well established mindset.
The trading landscape is ever-evolving, and your knowledge should evolve with it. Staying updated on market trends, technological advancements, and emerging trading strategies. Devote time to learning from successful traders, attending webinars, and reading reputable resources which will clearly explain the needed steps to attain a hood standard.
I think primary knowledge or a study to understand the basics of the portfolio is key to begin an investment journey. Education is the cornerstone of successful trading. Arm yourself with a solid understanding of the assets you’re dealing with, market trends, and the mechanics of perpetual futures contracts. Diving into financial news, analyze historical price data, and keeping a keen eye on the factors influencing your chosen assets has been the key things I learnt from JASON HERMAN PIERCE too, a suitable application of techniques led to a huge profit gain it is the case with a properly traded portfolio which I have actually benefited today.🎉
Trading with Confidence is a booster that can kelp on cconcetrate and build a good trading environment
Trading option,perpetual futures or other contracts may be exhilarating, but armed with knowledge and smart strategies, you can navigate the journey with confidence. Remember, a mix of education, discipline, risk management, and continuous learning is the recipe for minimizing losses and maximizing gains and play a key value to the easy understanding and applications of terms
I have made more profit than i had before after coming to understand these simple values and logic.
And sometimes the market doesn’t move and u loss 100%
That’s why u do it on high volume
If that happens you loose the two trades, but if you are really good at getting volatility the RRR will be enough for you to cover the previous losses
That’s why you trade not only Fundamentals but also technicals. I use straddles above and below support/resistance zones so that if the market moves. It can only move one way. Also don’t be greedy and take a lower RR for a higher strikerate. Goodluck
@@Anon-tj2zk that works tbh
Good afternoon
this is how you F around and find out
🤣🤣🤣
😂😂
😅😅
He said that incorrectly. If you buy a PUT and the market goes down....the value of the PUT goes up.
Listen to it again
@@a.n.o.n.y.m.o.u.s...lol
@@a.n.o.n.y.m.o.u.s... 😂😂
when it goes side wise.. both put and call option will be in lose
u have little knowledge of option. u only make staddle when big move come either it go down or up
@@siddharthsinghyadav3582 you never can tell what if it opens flat! You are toasted
@@RonakVachhani this is a risk stupid if u r come to do a business different type of risk is involve
These are good for fomc days. High vol days. One day expiration too which I’ve found to be rip off. I see 2 week expirations for same price so why wouldn’t I buy or sell a 2week in case vol doesn’t spike that next day? Problem is there’s so much volume in the daily’s now that the premium is just crazy high. In unpredictable markets like we have right now pushing new highs waiting for huge pullback these are good to use. Days like today you can double down and sell one at bottom of day then wait for pullback like today back to open or above open making both side of straddle profitable. This is experience strategy because can really just keep going and exited winning position with looser still on. I like to take looser off before winning position too letting winner run to its target. This is when major support or resistance level breaks and market starts to run. Today had 100% pullback from moves so if took profit at bottom then back at top you’d be doing really good. I stick to micro S&P because raw seems to be more profitable
@@braddistler5697would it be possible to speak about strategies like this with you? I’m looking to start trading and you seem to know what ur talking about. Thanks
Guys, if you’re holding a straddle, you sell your losing leg of the straddle, not hold it to $0. Like in his example, you would’ve sold your call & held onto your put. Please don’t hold a $2800 call down to $0.
what if you sell the loser and then it reverses though, you would lose like 80% of your position every time, not saying your idea is bad but there has to be a strategy behind it you cant just sell when you think its gonna keep going down or vice versa
Ye
Win big to cover loss, study the stock you're betting on
@@ryanotoole7084 all I would say is that you have to learn how to trade. I understand the market reverses, but if it does reverse, it’s probably because you don’t know where the pivot points are at. There’s all types of strategies but if you’re blindly trading, then yes, you’ll probably lose no matter what position you take, because you’re just chasing. Taking a straddle at critical support/resistance is a safer bet than going long at resistance or short at support. you dig?
It’s better to let the losing trade continue to go down (even to zero) until you lock in the gains on the winning option, because it’s still insurance protection until then. I have learned from experience that if the market reverses, you can quickly lose in the other direction.
Now once you lock in the profits from the winning option, if there is anything left on the losing side, then sell that as well, then move on to the next trade.
I bought a call and a put on SPY one day, Spy barely moved at all, and both were eaten up by theta decay. I lost money
You could've profited from an iron condor that particular day, but might be a pretty risky strategy for most SPY days.
Because there was no catalyst for a major move. This is key
Please guys... Trade long straddles ONLY when you are sure of high levels of volatility, especially that close to expiry...
Can you explain plz?
@@Chukboss If the market is in a tight range and hasn't crossed your break evens on either side, you stand to lose most of the premium you paid to buy the puts and calls due to theta decay...
Your break evens on both sides are relatively high... Call side break even will be strike price plus call price plus put price. Put side will be strike price minus (call price plus put price).
Given that most markets are ranging between 70-80% of the time, achieving such high break evens, can be really tough, and most simulations show
Lol! You're joking right? The higher the volatility the more expensive the options. You would be smarter to sell the straddle when volatility is high.
@@user-nk4li1jh5ywrong. Volatility and IV are not the same.
whatever you do DONT do this method with 0 or 1 day options, time decay is a huge factor and its basically a gamble. If you want to do this method buy for like a month out at least
Very True! and good advice.
That Theta decay will eat away at your profits very quickly.
Good afternoon. Take me on the money trail
Time decay works in your favor for short straddles not long straddles as is the case in this video. Long straddles positions must be held for no more than a day or two.
Yup need big movement for this
Don’t have money for that. 0dte for me only.
When you buy a put option and the market goes down, the price of the put goes UP and not down.
Instructions unclear, I just blew up a $200 million porfolio.
Good afternoon. Take me on the money trail
Bullshit
Bullshit
@@billybeason350 Ever heard of Maricon Research, LLC?
You're doing great!
Actually a smart move because fed talking about interest rates will make the spy very volatile so it will most likely swing in one direction heavily making either your put or call option with more then 100% gains
Good afternoon. Take me on the money trail
If you buy a put and the market goes down, then the value of the put goes up. He said it goes down.
"tends to". Volatility could still kill the premium in your option.
@@DeviantFoxexplain?
@@Rahul2000g an option is made up of intrinsic and extrinsic value. If spot decreases, typically you'd expect the put to increase. However, if volatility compresses substantially the value of the put option might not increase as much as the underlying decreased. TLDR, the intrinsic value gain didn't offset the extrinsic value loss to the overall position.
he is into sales...not help
@@Rahul2000gright before a company announcement/earnings, or for spy/Spx government announcements, implied volatility increases so the price of the option will be higher because people are expecting a big move one way or both ways. Right after the announcement the implied volatility will return to normal and the value of the options will decrease. Unless the option you bought is deep in the money, more than likely you will lose on that trade.
What they don’t tell you is that you need to have a certain percent to off set the call and make some profit , what if the market doesn’t move at all You lose all the money , very risky in my opinion
Thats why he said "trade it intelligence"
Yeah. This is crazy.
Got so much to learn to trade options. This sounds counterintuitive but after reading the comments I see how it could work.
You mean the price of the put goes up. Huge error … you should probably fix it as a major market education center.
I think you mean.. "When you buy a PUT option and the market goes DOWN, the price of the PUT option tends to go UP."
Yep, and if you don't have move and IV drops, you will have significant loss.
True! This probably works when there’s big news the next day for volatility
@@702Fonzie no it does not. The news is already priced in in the iv
@@timmnicolaizik5515 So his straddle strategy doesn’t work
@@702Fonzie Straddles make money, when the volatility is higher than the market thinks. If your trade before news, the straddle will be more expensive because everyone knows, that the vola will be high. So you need a situation where the volatility is higher than the expected volatility (the iv). This is not the case by just using news
@@timmnicolaizik5515 gotcha appreciate the reply
I think of the market as a 3 head coin . It can go up , down or trade flat . He is right there are ways that you can take 2 out of 3 scenarios . It all depends on the strategy you use.
Gotta have huge range for this to work.
1) don't long options day before. You're paying for theta. You can do this same strategy ETH if needed with /ES options prior to the announcement.
ETH is electronic trading hours. /ES is the S&P Emini Futures
@@admin6228
The implied volatility is so high the day before a fed event I’ve had very good luck starting my position a few days earlier. If you think about it if you buy a 14 day when iv is low the spread price will be the close to the same as a 7 day when the iv is high plus if you buy early you will benefit from iv rising.
hindsight is 20/20 and the Fed money police is fully digested and without the element of surprise SPY will not move as much in both direction. Your straddle is 100% loss. Think about it market makers will always price in a straddle in their favor! Retail traders will pay the price if you want to play. You are better off doing a bull spread or a bear spread as the out come is 50/50 and the reward of the winning side could be 100% of risk capital or more.
Dangerous advice w/o mentioning how often this trade ends at a loss.
What he says appears to be contradictory . He says initially that when the price goes down then if you buy a put , the value of the put tends to go down . That surely is not correct . When the market goes down then the value of the PUT goes up surely !
This is the most understandable explanation I’ve seen so far thanks for not adding a bunch of nonsense like everyone else
When you buy a put option and the market goes down, the value of the put option goes up. Use your stops.
Better off with strangles/Iron Condor.
I prefer to just be right on the direction
thats how you lose full capital by not understanding options math!
Nice in hindsight, also fun way to promote 1DTE options lol
Buy put and market goes down … put value goes up 🆙
Most times it seems the anticipated volatility is so baked in and thus the premiums so damn high that
its takes a massive response to
the anticipated event to clear the cost of both legs to clear break even.
Just look at the put/call
option table after a highly anticipated earnings event .
Stock up 15 % and most options are in the red …both sides.. w the exception of the deep in the moneys of the winning side.
.Wonder if NVDA will be that example soon.
On the opposite side, if the stock goes sideways you would lose on both options so always have a risk management.
Thinking about doing this for earnings plays makes a lot of sense risky put if either side go crazy should be up big
Old news secrets out. New news these options are being aggressively priced and unless SPX has a big move u risk being middled
Most days you lose it all. And moves usually cone after iv is high. This is a surefire way to go broke.
100%. This straddle example is rttrded
"When you buy a Put Option and the market goes down, the Put Option's price tends to go down"?? Makes no sense...
He made an error is his video. I noticed it too.
@@dianeulett3149 Indeed, that's why we buy Put options - in hopes that the underlying asset price will go down, and thus _increase the value_ (price) of that Put option.
How about an Iron Condor ?
Biggest hack to options trading: time travel
Slight correction. Market goes down and the put options price goes up. I know you know that though. Straddles are neat. How do you feel about strangles?
Just had an annoying one on DIS.
Strangles are even better -- you can adjust the straddle for IV skew and rates, etc
Volatility has to be larger than the breakeven point for the losing side of the straddle. Let's give this 30% chance and let's give 33 percent chance of not making any move. Then this strategy only works 30% of the time. That's very high risk
Very well put
Could have lost 100% if it didn't move. Plus Vol crush.
and how many times do you loose compared to this one win?
He missed the put class
You do not want to do this with one day left or day of expiratioh. And if the Fed is going to speak that day your going to get high implied volatility and the and when t's over you'll expreience vol crush. As a general rule you want to sell high vol and buy low vol
He started off by saying “if the market goes down: the value of the put option goes down” when he should’ve said “value of put goes up” Because 5 seconds later he shows the market dive down and the put option value rise.
If you buy a put option and the market goes down the value of the put goes up.
Don’t trade this way you will lose your account
Much more to it
This isn't exclusive to options you can do this with leverage.
He's talking about trading news / extreme VOLATILITY, if we broke with the news or bounced it was going to push market hard and your profit will out way the losing call, it's not an everyday or every week thing. He's right but personally I'd like to set my stops on news and stay with leverage to pull out if I see it reverse
And how would you use leverage to get volatility exposure without a large directional bias?
Also you need a margin account to get level 3 or above. I switched to a cash account because of the pdt rule and now can’t do any multi leg options. I’m stuck at level 2 now.
But when the Market is sideways then you'll both the trades as both will get decayed.
Why ‘when you buy a put option, and market goes down, the put option tends to go down’? Was that an error? Or I’m not understanding?
Doesnt matter the direction?
Straight forward and informative 👍👌
“Your video on the importance of financial literacy is very satisfying. It is key for everyone to have a solid understanding of personal finance to make informed decisions and secure their financial future. What you have done in spreading awareness The contribution efforts are commendable!”
This works well if there is built up anxiety and a pending catalyst. In this case, a fed decision. You wouldn't do this trade on a slow no pending catalyst day.
Brilliant... so you guarantee one of your positions is worthless while assuming the move in the market will be of such significance to cover your loss and hopefully make you a small profiit. Statistically, this is a very bad idea as the market doesn't move enough to cover your loss.
why'd he say buy, you'd think he'd know what he's talking about... unless....
One, teeny tidy piece to this … that your profits rely on the most with this trade. You need volatility to flood in and spike your extrinsic value. And definitely do not do this at less than 45 Dte
He's on such a short timeframe that is about realized vol rather than IV. Still, this 1 DTE straddle concept is ridiculous
Love your wisdom. I am a full time sub teacher, and I want to trade options, but my available time to watch markets 4-7a or 9p-12a, sounds like forex?
What's your opinion teacher, I like watching the charts? But I want to make money to stop teaching.
Futures and futures options have longer hours, too
Good stuff sir!
Whwre can i het the best instructions on straddles and how to pick the entry-level as well as strike prices and length if time
Yeah but you also need to think about the higher Iv right before announcements like that
Buying options is very risky, people get lucky sometimes but one loss can wipe out several months of gains
Most options expire worthless and time is against option buyers
so what do u say to people being multimillionaires doing this?
u mad u can’t do it
@@ajaeellis3755 once you have over 50k I'd recommend just selling options, you can still be directional but you'll make way more money by being the insurance company not by being the policy holder via options buyer
@@ajaeellis3755 haha
I wish you can go ahead and do it and then share your results with us
@@ajaeellis3755 go be one of them
Good luck to you
What about decay of premium....option buyer needs momentum
This guy keeps post big money wins but no actual reality option trading! Don’t try this! If it barely moves like most would, you are done on both ends
Why trade long option positions 1 day before big fed announcements. You have less risk the rest of the month. The only reason to pay up for those big premiums is if you have an uncontrollable gambling (day trading) addiction and can't stay away from the action 1 day.
Is the options market 6x bigger than Stock market?
2% max loss would be a 1m account size. If it didn't go anywhere.
What happens if u do this for earnings?
He forgot to teach (or purposely exclude) about market Expected Return. Those call and put premium are within the market expected return.... short story, ur most likely lose money because he price will be within the expected return range
Yep it can be done but rarely snd how much do you lose ion other days. One day dies nit matter unless you only do this on your first day snd never trade again . What matters is what you make in a year five years snd ten. The average traders makes 5 to 10 percent a year. If traders consistently made more they would not tell you they would just get rich snd retire.
So does this work with earnings?
you mean to say sell a put and a call....
Your second premise is incorrect: when you buy a put option and the market price of the underlying asset goes down the put option's value goes up. I assume that whatever you said after that is incorrect... my brain stopped listening right after that inaccuracy.
I was thinking the same thing when he said that, it made no sense. Great to see you caught that as well.
I thought the brokers didn’t like it when you do this, Isn’t it against the rules?
You’ll profit of more volitlity than what’s priced in*. Those premiums will rise with the expectation of higher volitlity
He never specifically mentions the price of SPX, and why the value of the 2 Put options ended up being worth $20,xxx? And why the cost was what it was.
For a beginner this video was only half as informative (or even less) than it could have been. It also doest explain the risk of what happens if the movement of the instrument or security want as great & volatile as it was for the day.
Also how the hell can you sell a put for higher than a current price for the next day? Don't Put's have to be lower than the current price?
You can buy a 1 DTE ATM put on SPX for about $1.5k (15 points). If SPX falls by more than 15 points, then it will be worth more than on the prior day (yes, the extrinsic will be decimated, but the intrinsic will be high).
He's using the example where SPX falls by 100 points to demonstrate (but a 1-DTE ATM put would cost more than 15 points)
I do it with Leverage an inverse Etf, first I Buy cheap leverage and then inverse ones
To magnify the losses further? 😂😂😂
Very new here - think of me as a caveman - basically you're betting on black and red on the table at the same time?
Yes and no. Because options you need the price of the stock to move to make money. With black and red you need one color to land and you'll break even. If the stock doesn't move a certain amount in either direction you lose money on both the call and the put
This strategy will only work when we expect market to move in any direction aggressively, likely in times of news
He goofed, he said if i buy put and market goes down it loses, wrong. This trade is a very bad idea.
He said a put options value goes down if the market goes down...that's wrong....right?
Correct! Wrong! Put option moves HIGHER, if stock moves ... lower. (brain fart, due to camera anxiety)
Dont listen to this guy; he’ll make you lose your shirt.
Very risky but work for people with a 50k account 😅
my mind has been changed
I buy closed end funds which yield 9% + and I just walk away....until there's a dip, then I buy more.
Wow! Where does the 9% come from?
ok and how do i do this more then 8 times a year?
This only works if it drops the price a lot, because if the market rallied higher the same amount that it actually dropped the value of the calls would NOT increase the same amount as the puts did because of volatility expansion and contraction…so at this point you might as well just buy far OTM puts and hope you get drops more often than rallies…the options market is priced to perfection so buying straddles or strangles for news events is overall a losing strategy, selling them is higher probability, especially in bull markets
IV expansion/contraction on a 1 DTE???
That didn't factor in IV..IV crush gonna lower them gains the next day right
You can also lose on both when a black swan event comes. That's why you don't trade options with your whole account. May be max 10%. Personally If I can't use my whole account on a strategy then the strategy is inferior and not worth my time.
That's why I will never trade options. They increase you leverage not risk reward ratio
That's like saying you shouldn't consume hamburgers or alcohol because they can accelerate disease and death.
No one forces you to get over leveraged with options (nor do they with stock on margin or futures or getting too big of a mortgage or student loan or credit card balance). The goal is to use what you need.
What's about the spread
This isn’t worth it for retail investors who could only afford to put a few trades like this one… this is only worth it for hedge funds with millions of dollars… while they may lose a few trades when they hit one it hits big offsetting the other loses and making a profit
U said it incorrectly...when you buy a put and the mkt goes down the put value goes up (not down)
Cool
This is a good way to lose everything
Are straddles always profitable then going by this??
Yes; they're not.
Is this Peter schiffs dad?
Stonks works until they dont.