# 1 rule - Don’t hold options until expiration. Theta time deterioration makes it not worth it. Rule #2 - Get in, get up and get out. Who cares if you could have made more. Rule #3 - make a plan and stick with it unless you see a reason to abort your plan. So plan on changing your plan. Rule #4 - only take small risks until you become consistently right and consistently profitable. Rule #5 - you have to learn how to not trade before you can learn how to trade. Rule #6 - don’t look at failure as failure. It’s an opportunity to practice your technique and perfect your performance. Rule #7 - most successful traders failed more than anyone else. The only difference is they kept going.
What if I buy an option for 1 month out. Let's say stock price is $100 and strike price is $107 4 weeks out. On the first day price goes to $104 and the option price tripled is it bad to get out early and out of the money? Let's say I'm not confident it will ever hit $107 and just want to exit early. Is there ever a time this is profitable even out of the money? Serious question from a rookie.
@@realMDizzy You have to pay attention to what’s going on every day. There may be a reversal signal on the chart. The fed might put out out a statement and tank or spike the whole market. It’s all basically a judgment call on your part. Like right now, with this debt ceiling crap going on it’s impossible to look 2 days into the future because you don’t know what these political numb nuts are gonna do. Two days ago it looked like it had a good chance to get settled, the market was in a bullish mood. Yesterday the negotiations blew up and the market went down with the ship. There’s no shame in taking a profit of any kind. Youve got to learn to trust your instincts, if something doesn’t smell right it’s probably because it’s not. I took a small profit on a overnight play yesterday. At the opening bell everything went stagnant. I hung on for about 15 minutes then got out. It turned out to be the right move. It may spike up Monday morning but under the current circumstances, I wasn’t willing to take that risk. It’s about sticking to your plan and your rules. On that particular trade I was only playing for an overnight, not a week long ordeal, I was getting out in the morning win or lose. I stuck to my plan. I think that’s where most people get in trouble. They change what they’re doing in the middle of the trade and forget or abandon the reason they got in it in the first place. Be patient. I think it’s best at the beginning to take one or a small handful of stocks or pairs or whatever you’re trading and watch how their charts behave. I get in trouble when I hear some news blurb and jump into something Im not familiar with. I don’t do that often, but when I do it doesn’t end well.
@@realMDizzy Look at rule #2, if you're made a comfortable profit on the option, sell the option and get out. You could sit there all day running "what-if" scenarios. "What if the price does go to $107 and I could have made more money?", if that was the philosophy then no one would ever sell any of their positions.
Exactly I panicked when the market was crashing and all my calls were in bleeding red. I made most of my money back with some patience as I was firm with my initial bullish assumption. OTM options only. 😊😊😊. Easily over 100% gains.
@@jakobfolmar6604 um.... when you sell an option back, who TF do you think is giving you the money? You should be thankful people hold them to expiration. 🤣 Also you need a person on the other end. Your broker and the clearing house do take care of this for you. But in an extreme case, nobody will be willing to buy your option back (or sell them to you) and yes, you will hold it to expiration.
@@jakobfolmar6604 Glad you found those unicorn stocks where you go to a "market" yet buy and sell with no one. 🤣 For every buyer, there is a seller. For every seller, there is a buyer. This isn't a video game. :-)
@@JonValtandtheEvilRobots Dude do you think I'm not aware of buyers and sellers? I'm saying I trade super liquid stocks and market in and out of options in a second with no slippage. No shit when I sell someone buys the difference is I'm not buying and selling shit penny stocks.
@@sethfreudberg4750 would you say this is more applicable to short-term calls versus long term? Is it less likely that the calculation of the delta on a long OTM call is accurate? What is the downside of purchasing a cheap 6month - 2yr OTM Call on a company that you are long-term bullish on (Boeing for example)? The time decay should be pretty low and if the stock has an 3-4 day rally within that time period, you can usually sell for 3-5x profit moths before expiration.
The 90% is also skewed by historical data. During the volitility of this past 5 months "lotto tickets" have had a much higher chance of hitting. The volitility will cool. But an example where the opportunist can profit off an obvious momentum move like we've seen in SPX during early June 20
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This greatly depends on the underlying. For example, buying OTM options on a trending stock with low IV is a pretty solid bet. The option will be cheap and trending stocks can make huge moves which aren't calculated into the IV. Lots of money there. I'll also be pretty happy to buy OTM options on huge price moves. If the price shoots up 4 standard deviations it's almost a damn certainty the price will drop back down. Easy and quick money.
I've bought multiple calls way out of the money and I got a minimum of double my premium back without even reaching the break even. I don't know anyone who holds till exp. Sell during the time when you're above your premium. It may not be thousands of dollars, but it's a good chunk of change every time.
I think it depends; yes it’s common for an option to be worth somewhat more than bought it for at some point before expiring. Sometimes way more, sometimes like 10% more at most. Other times, the value just drops. It depends on how the stock moves; how far out the expiration is, how far OTM, whether IV is going up or down… If the stock only goes down or stays flat, what then? Maybe you sell while there is still time value. A very short-term option loses value quickly. But a long-term far OTM option is not very sensitive to movement of the underlying, right? I find myself looking for “cheap” calls that are not too far out of the money and expire at least a few weeks out.
That’s the whole point of trading. If you buy something at $1.00 and the bid goes up to $1.10, you just made a 10% profit. I may be mistaken but isn’t that higher than the current interest rate? So what’s the problem? Yeah, it would be nice to make 1000% on every trade but that ain’t gonna happen. Don’t get me wrong, Im not disagreeing with you. Yeah OTM’s are risky, but so is everything else. Ive watched charts with multiple time frames crossing the 200 ma blow up in people’s faces in less than 24 hours. Nothing is guaranteed in trading or in life. Take what you can get when you can get it because if you hesitate it may no longer be available.
Say your option goes from 100 to 110 and you have broker fees 5$ buy and 5$ sell you are at 0. If volatility falls it stays flat then you -20% constantly
Can still profit if you buy an option contract when it's Out of the Money and sell it before expiry when it's still Out of the Money, just less Out of the Money. Buy Low Sell High works for options too, regardless of being in the money, right?
Still a bad bet because the option premium can decay faster than the increase in the stock price. A far out of the money option has very low delta, the stock has to move A LOT and very fast before the option appreciates in value. You have much better odds with near or at the money options, albeit with higher capital commitment.
You could, but you’d want to at least take enough profits to cover the initial trade IMO. It is possible the stock keeps rising fast enough that it expires in the money.
Hello Sir, thank you for this valuable video. However, isn't delta suppose to mean the percent you get per $1 increase in the share price? For example, if the delta is 0.8 in a call option that means you will get $0.8 for each $1 that the share price increases? Thank you.
Delta can also be correlated to standard deviation.. a 16 delta which is one standard deviation away from the current value.. understanding delta, stand deviation takes understanding beyond what the underlying meaning of the greeks
Delta and Gamma changes with the every $1 change in price of share. Theta time dependent (decay/changes every day). Theta depends on Implied Volatility. Roho interest rate (doesn’t have that much impact on it)
@@Mellowyellow8888 is there somewhere i can read about delta and standard deviation? meaning is the ratio always correlated that 16 delta = 1 standard devaition on all underlyings?
Im in a trade right now where im up 2,000% on a OTM call. 50%+ to breakeven. How in the world do you consider that a blunder. It's all about timing and execution.
But you could sell your call option at a higher price, if the price did rise a decent way better than the theta. It can be a profit if you sell it at a good time before expiration
You could, but will you? Many people don't because they hold out for bigger gains. It's easy to say "I'll just sell for gains" now, but when you're seeing that green number shoot up rapidly, are you absolutely positive you won't let greed get to you by holding for more?
Yup. literally take Elliot Wave theory and find a stock with long term upside on the horizon, preferably one that is at the end of the final wave and buy any cheap out of the money call . with no intention but to 2x your looking at multiple long term 2x 5x even 10x on long term options and absolutely no intention of exercising . but still this strat helped me 5000% on wkhs options and held a single contract and completely financed my excercise at 19. so tell me otm is stupid, theres more to it.
@@jaynova3905 it was MARA and Riot when they were 2 and 3 dollars respectively in november last year before btc broke above 20k. once in a lifetime play right there lol
well done! i think it is smart to keep an open mind: saying, like Seth says, "never buy otm calls" is like denying that in your toolbox you have screwdrivers as well as many other tools that, at the right time, are of GREAT value. It boils down to MINDSET. It is never "either this strategy or that other one". In my world it is always "both strategies", if understood and played at the right time. So, well done to you licensetocole
I don’t understand why in these kinds of videos the guy always assumes you’re a total idiot who buys the contract and then lets it expire, thereby “proving” 9/10 times it’s a bad trade. You should be managing the option the entire way. I’ve made plenty off of buying OTM options when an asset is at the top or bottom of a trend, and then selling the contract within a week or so. They’re cheap and require a lot less capitol for similar profits as compared to buying the equivalent multiple of 100 shares of the same asset. They’re also great for hedging when using married puts and the such.
Well if you've never had an option lose money immediately or a few days after buying it than I do not know what reality you're a part of but I want to go there.
Juliao Martin okay and? It all fluctuates. Until you close it out it didn’t lose anything. I’ve had options drop after purchasing and then made profit after closing them out a month in prior to expiration. That’s called management.
Have to agree... I understand why a prop desk trader wouldn’t swing trade or scalp options because of scaling issues and the need for intense monitoring, but the video doesn’t acknowledge that you can sell before expiration at all.
10:16 i did not understand, if the stock raillied $4 everyday for 36 days. At this point wouldn't it be well above your strike price after the first day. $18.10 buy in price $19.50 SP?
Just to make everyone smile, I did actually made 4000% profit on an OTM put of Priceline. And I did sit there week after week trying to do it again (and lost of lot !) but had I only had the patience to strictly stick to this strategy, I might not have lost that much due to this rare but timely return. You're welcome to come and shake my hand anytime ! 😂 Meanwhile, I'll be watching your vids on "how to lose less money" ...and time !
@Lalchhanchhuaha Hmar For that one, I probably bought an option expiring the following day (expecting a huge drop per technical analysis which happened). Options are super cheap when expiring 1-2 day later, even more on low volatility. I have made awesome returns few times but overall lost way more trying to replicate with higher bets. Buying both side (calls and puts) would probably have prevented those losses and offer great return 70-80% of the time but never did. Playing a tiny portion of port (1% or less) both ways when stock consolidation is due for breakout (or once confirmed) should pay off over time (with TA skills)
Sir, i am very much new to options trading. I have a doubt sir. Please guide me. Sir, i brought a call option of otm....the question is if the price of the otm share decreased and it didn't increase from the strike price so what will happen in the expiry day. Will i loose my money?
Some brokerages have current percentages for sellers of probability of profit, if you reverse for purchase that percentage. You have purchase percentage of win
For every option strike in the option chain, alongside things like bid, offer, volume and open interest, you should be able to see a Probability of Expiring ITM or a Probability of Expiring OTM. P(ITM) is a roughly similar number to Delta. Buying a 10% P(ITM) or 0.1 Delta option is indeed a longshot. Strictly a "Probability of Profit" on any proposed trade is a more complicated concept.
Question about OTM LEAPS I would like to understand the case where i buy cheep OTM options for specific Stock i believe it can reach my target price. I know that time decay will work against me all the way until the stock will be ITM. My question is that i don't care about the value of the option since i will exercice the option and get it cheeper then the market value at X time. example, I buy OTM option for 2025 - Strike $20, current price $10 - premium $0.5 i assume the price in 2025 will be for example $50, i still making money even if my LEAPS lost value due to time decay, so when i exercie i will make $30 profit - premium. Is my logic correct ? or am i missing something here ?
So letd say your holding an options contract and after hours your not allowed to hold does the options price adjust after hours when market starts at 930... 630 for me and traders flud the price?? Up or down if you buy a call and the after market drops 5 percent will you lose on the options trade when market opens? Automaticly or just as the traders / options traders buy or sell the option the opening market
You still made money. No way anyone hold it till expiration. This video a bit misleading. That being said I think still better to not buy otm option as theta and delta are not in your favor.
so basically if you hit your call and your option expires you make money?? cause I did hit the call but I also sold it at that moment lol because I saw profit and I was like sweet I put 125$ and made about 68$ or something if I was holding it would the rewards be greater after it expired???
@@Ukacip I dont really know the answer to this question for im still knew to trading but one thing i do know is its never wrong to take profits haha so God bless and LETS MAKE THIS MONEY!!
uhhh....so no mention of technical analysis???? THIS IS WHY I BUY OTM CALLS!!!!! as of today i have 50 calls on XOM with a strike price of 47.50....exp nov 20, 2020. at the time the stock is currently trading at 36.75. Based off of technicals...i expect to sell around 42.20😎....NEVER HOLD!!!!!!!
I understood "Delta" to represent the amount the price of the option changes relative to a $1 change in the price of the underlying, which is different from "probability expiring of ITM". Am I wrong?
No, not wrong. But.....Delta is also a close approximation to the probability of the underlying reaching that strike price. eg. a delta = 0.1 (or -0.1) has a roughly 10% chance of reaching that strike at or before expiry.
Not true. You click on the option and act as if you’re going to buy the contract. When they ask how many contracts you want to purchase, you can then click on highlighted bid price and scroll down. There, you’ll find the Greeks. You aren’t obligated to buy the contract to see the greeks. Hopes this helps you. HNY
I don’t hold out the money options to it expires that’s crazy. And I use a stop loss alarm that tells me if my setup fails. So I’m out before I lose all money on the option. In other words I know if my setup fails way before the contract expires. I use break out strategies on out the money options, to get value in the option quickly . I’m a directional leverage trader.
An almost exact analogy is scratch off lottery tickets. People post their $500 winner and everyone gets jealous. They don’t disclose the hundreds or thousands of tickets they bought prior to getting a “big” winner. Then a really big winner comes along. You know the Mega jackpot winner. Extremely extremely rare but of course happens. That is the GME scenario with the redddit user holding for 17 months.
Makes sense, thanks. What I'm struggling with is that calling them (those delta calculations) "probabilities" seems wrong. The future probabilities are unknowable, they cannot be inferred from prior knowledge or observations. It's not like rolling a die where you know there is a 1/6 probability to roll a 6. These are a different animal, they come with a very shaky assumption that some quantity observed in the past (whatever statistic is being observed) will remain unaltered in the future. But that's mere speculation, nobody can know if this will hold true or not.
You have a point. Delta is not a prediction. It's only a statistical probability based on today's stock prices and volatility levels and the time remaining to expiry. As soon as you introduce an underlying trend that you believe can persist non-randomly or a strong conviction that prices or vols will deviate, then your prediction will not match delta. However, a 10% statistical estimate of something coming in-the-money is probably still a huge longshot unless you know something wild that the market does not.
Well an example would be seeing every FAANG stock hit ATH during a global pandemic, massive civil unrest, and financial instability. At that precise timing, it would be reasonable to assume the 90% statistic may not hold true. And last week on 10-12 June. It wasn't 90% chance in reality. I certainty won't question the accumulated experience held by this trader. But the exception to the rule is worth mentioning.
@@sethfreudberg4750 Yeah it’s maddening how close they are. I’m working on a theory right now that seems to work for the past year but I need to work through the previous 10 years’ data because I trust the algorithm over my own judgment. Given that math/engineering PhDs developed/maintain it that’s the best default position to have.
Hi Seth, what about buying reasonably out of the money calls very far out so time decay isn't as much as a factor, and selling them before time decay becomes too great? Does this work for swing trading and managing risk? Thank you in advance.
yes, that's what I do for cheap otm options. Theta decay ramps up exponentially in the last month of the options life, so if you're playing an otm option on a binary event (like earnings) it's better to buy the option a month past the earnings date. it's also a great reason to sell weekly otm options because the theta decay is immense
@@Deucenheimer Many retail traders do it so this concept is not a myth :) You can be successful selling naked put or call until you are struck by lightning with a 2+ SD move. You can cap your risk by buying protection wings. Are you selling premium around earnings? If so what is your strategy? Have you done back testing? Just curious... Cheers
People trying to talk down about out the money options and everything of the like, it dosent matter what you trade, it matters where there's opportunity good traders, scalp swing hold, sell options and buy options. Claiming there's no point in buying out the money options is a joke, so instead of doing that we could risk 100,000$ of collateral to sell calls for a 1% return each week, ye it's all better trading until it fails which again happens because let's be honest your not the only trader out there, Find opportunity and take it
Come on, you know you’re not gonna hold long calls to expiration, nobody does. And I’m not saying buying cheap out of the money calls should be a primary strategy, however if you understand how convexity works in options it’s not a bad trade if you have the right set up. Options with different strike prices do not take a similar linear path once they’re in the money. I know many people that will buy cheap out of the money puts about 60 to 90 days out… and yes, most of the time they’re going to lose that money but they’re hedging for a 3+ Sigma move. If they get that you’d be surprised at the enormous returns.
The info you provided is flawed because your logic assumes holding the option till expiration; however, if you buy a very far OTM Call and then the stock moves up immediately, you WILL make a profit even if it hasn't crossed your break-even point yet.
@@simonjohnson1381 Selling puts has a different outcome if you get assigned. If you intend to own the underlying then it is a good way to get it cheaper. If your intention is only to get the premium then the risk of getting assigned should be evaluated at the time the put is sold.
Seth, While I totally agree with what you are saying, if PCLN, now of course BKNG rallies right after you bought the call for 1.00 it could be at 2.00 or 3.00 or more in a day or two without getting to the strike price and you could make money. Not a strategy I would use, but you should mention that it is possible but not likely. Thanks these are great videos
Thank you for the great content; I subscribed to the myth of the 1000% for some time and blew up some accounts before. It’s a blunder. I was wondering if you can talk someday about scalping options. I watched all your videos including the one on directional options trading and the one with Bella where you discussed why equities traders are also successful in options trading ... I would appreciate if you could talk some day about options scalping. I found some success doing this with scalping SPY and TSLA options. Thank you for ur great contributions!
I’ve made stupid mistakes …. I once bought options an I just forgot I had them … like how does someone forget .,, I did … last week I was up 300% on my account an decided to buy put options an I accidentally got calls… smh an my account was below the 25k so when I tried selling I got hit with daytrading violation…. I would’ve been up 400-500% …
Just easier to sell deep out of the money 45 DTE puts and buy deep in the money LEAP calls. It's not a lot of money but I've never lost a trade selling puts.
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Yep - long LEAPs and short strangles or iron condors around the core position. Rinse and repeat every 20 days or so. Hold the long LEAPs for long term capital gains treatment - DONE - millions.
Yeah, so the way you fight theta is going out like 300 days in the contract…and buying puts otm is a way better bet especially if you believe a big move to the down side is coming. The premiums are deflated and your delta gradually goes up. Buying calls otm on the other hand can be harder because premiums are inflated and theta is also working against you.
There is another way to make money. Don't wait for the option expiry day. If you BUY the option and if the premium increases to a reasonable level, just SELL the damn thing. That is profit !! I guess most people don't wait to exercise an option. Option selling is a better idea, but margin is needed for that.
This is what Havebeen doing during the recent bull run and been very profitable tho with a big drawdown yesterday due to selloff, you still dont have to assign the put sold and take loss buy it back. also only trade it on stocks or etfs you are willing to own in thelong term, how about that?
buying deep itm long expiration calls or puts makes more sense. if you get the direction and timing right ;) it is cheaper than buying / shorting the underlying. but anyway go with rtt, rhino, kevlar, cib, m3, m3u, etc. butterflies for the win with management.
there is a big flaw in your reasoning: buying a 10 delta call could give great profits at earnings on stocks with potential and much talked about. Play it 4 times a year and maybe you will be in profit. It is obviously a very aggressive strategy to which one can allocate 5% of its trading capital. If you hit jackpot, that's great. If not, that's sustainable too. So i would not discount this strategy as easily as you did in this video. ciao!
That's wrong. It wouldn't have to get anywhere near that price for you to make profit. Your example assumes 1) that you hold until expiration and 2) that you are planning to exercise the option at or very close to expiration. 99% of people do not exercise options nor hold them until expiration. You could have a very far out of the money call and make great gains if a stock went up only 15% or so in a given day. Then you could just close it out long before expiration and pocket the gain from the premium increase without exercising.
is there people who become rich trading options? Or trading stock? Besides the money managers, well i know Edward Thorp did it and James Simons but the use other people money to do it like a headfunge do, but let say someone with an small account, cuz i think most people have at least 30 to 50k account but some even less than 10k. Lets say a pro trader with 1k can make a million?
Why keep till expiration to lose all money. Why you are talking as if one cant sell early and limit the loss. Why buy at 10 delta, i buy at 35-40 delta and i make money by selling at profit. I dont buy one month option though, i would choose expiration to cover two earning announcements.
It depends what you trade as options Most of the tech options are data driven tech giants I swing trade tech options which are usually calls on a 3 week ish swing trade which suits me at the moment But i can day if need be etc
Honestly. My contracts don’t have to be in the money. I just want to sell it more than what I paid for it. That’s a profit. You can buy ten $10 contracts. That’s $100 dollars and if that contracts goes up another $5 $10 dollars. That’s a profit. Like Tesla goes up $10 dollars everyday. Up or down. Delta of 10 is $10 dollars. Tesla goes up or down $10. That’s money. If you buy more contracts. More money. Buy a contract for months out and only trade your MAX LOSS per trade. You’re be fine. People like this guy doesn’t tell the whole truth. I watch a contract go from $1 to $18. If you brought 50 $1 contracts 😮. For months out. The IV will eventually spike up and the delta will also go up.
Summary of the video - out of the money calls are bad. They have a low delta so it's like playing the lottery. You will lose 9/10 times but might win once. Not a good strategy.
This guy lost my attention / respect by only talking about holding an option to expiration. Yeah, in the example given you lose 9/10 times - IF YOU HOLD TO EXPIRY. Ever consider selling the option for a gain BEFORE it expires worthless??? Or setting a stop loss to sell the option if it decreases in value by a certain percentage?
# 1 rule - Don’t hold options until expiration. Theta time deterioration makes it not worth it.
Rule #2 - Get in, get up and get out. Who cares if you could have made more.
Rule #3 - make a plan and stick with it unless you see a reason to abort your plan. So plan on changing your plan.
Rule #4 - only take small risks until you become consistently right and consistently profitable.
Rule #5 - you have to learn how to not trade before you can learn how to trade.
Rule #6 - don’t look at failure as failure. It’s an opportunity to practice your technique and perfect your performance.
Rule #7 - most successful traders failed more than anyone else. The only difference is they kept going.
I love this!
What if I buy an option for 1 month out. Let's say stock price is $100 and strike price is $107 4 weeks out. On the first day price goes to $104 and the option price tripled is it bad to get out early and out of the money? Let's say I'm not confident it will ever hit $107 and just want to exit early. Is there ever a time this is profitable even out of the money? Serious question from a rookie.
@@realMDizzy You have to pay attention to what’s going on every day. There may be a reversal signal on the chart. The fed might put out out a statement and tank or spike the whole market. It’s all basically a judgment call on your part. Like right now, with this debt ceiling crap going on it’s impossible to look 2 days into the future because you don’t know what these political numb nuts are gonna do. Two days ago it looked like it had a good chance to get settled, the market was in a bullish mood. Yesterday the negotiations blew up and the market went down with the ship.
There’s no shame in taking a profit of any kind.
Youve got to learn to trust your instincts, if something doesn’t smell right it’s probably because it’s not.
I took a small profit on a overnight play yesterday.
At the opening bell everything went stagnant. I hung on for about 15 minutes then got out. It turned out to be the right move. It may spike up Monday morning but under the current circumstances, I wasn’t willing to take that risk.
It’s about sticking to your plan and your rules. On that particular trade I was only playing for an overnight, not a week long ordeal, I was getting out in the morning win or lose. I stuck to my plan. I think that’s where most people get in trouble. They change what they’re doing in the middle of the trade and forget or abandon the reason they got in it in the first place.
Be patient. I think it’s best at the beginning to take one or a small handful of stocks or pairs or whatever you’re trading and watch how their charts behave. I get in trouble when I hear some news blurb and jump into something Im not familiar with. I don’t do that often, but when I do it doesn’t end well.
@@realMDizzy Look at rule #2, if you're made a comfortable profit on the option, sell the option and get out. You could sit there all day running "what-if" scenarios. "What if the price does go to $107 and I could have made more money?", if that was the philosophy then no one would ever sell any of their positions.
Superb. I am seeing myself in mirror
You can sell before expiration with profit still out of the money lol
Yeah...this guy is an insurance salesman. His idea of good trading is collecting premium. The authority he's speaking with is extremely biased
Exactly I panicked when the market was crashing and all my calls were in bleeding red. I made most of my money back with some patience as I was firm with my initial bullish assumption. OTM options only. 😊😊😊. Easily over 100% gains.
Yep, I do it everyday! Lol
Depends when it expires and when you bought it and for how much.
An ITM call with have intrinsic value. You would have made more.
@@celiner5595 so over night my otm goes up 2700% still otm I’m lost should I sale r keep
This all assumes you hold to strike date. Which almost no one does.
Exactly. hes saying expires worth anything at all. Who the fuck is going to hold till expiry?
@@jakobfolmar6604 um.... when you sell an option back, who TF do you think is giving you the money? You should be thankful people hold them to expiration. 🤣
Also you need a person on the other end. Your broker and the clearing house do take care of this for you. But in an extreme case, nobody will be willing to buy your option back (or sell them to you) and yes, you will hold it to expiration.
@@JonValtandtheEvilRobots um maybe the shit stocks you trade. Not SPY FB AAPL AMD MU Ect ect.
@@jakobfolmar6604 Glad you found those unicorn stocks where you go to a "market" yet buy and sell with no one. 🤣
For every buyer, there is a seller.
For every seller, there is a buyer.
This isn't a video game. :-)
@@JonValtandtheEvilRobots Dude do you think I'm not aware of buyers and sellers? I'm saying I trade super liquid stocks and market in and out of options in a second with no slippage. No shit when I sell someone buys the difference is I'm not buying and selling shit penny stocks.
Man, I almost made a killing on my first option trade. I just made one small mistake. I bought a call when I should have bought a put.
lucky on that ;)
Hahaha
But.....Most don't hold until expiry. Sell for profit before hand or stop out
True, but with time working against you, you could see your options deteriorate in value every day even with a mild daily rally.
@@sethfreudberg4750 would you say this is more applicable to short-term calls versus long term? Is it less likely that the calculation of the delta on a long OTM call is accurate? What is the downside of purchasing a cheap 6month - 2yr OTM Call on a company that you are long-term bullish on (Boeing for example)? The time decay should be pretty low and if the stock has an 3-4 day rally within that time period, you can usually sell for 3-5x profit moths before expiration.
The 90% is also skewed by historical data. During the volitility of this past 5 months "lotto tickets" have had a much higher chance of hitting.
The volitility will cool. But an example where the opportunist can profit off an obvious momentum move like we've seen in SPX during early June 20
John-Stephen Byerley you used call or put ?
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This greatly depends on the underlying. For example, buying OTM options on a trending stock with low IV is a pretty solid bet. The option will be cheap and trending stocks can make huge moves which aren't calculated into the IV. Lots of money there.
I'll also be pretty happy to buy OTM options on huge price moves. If the price shoots up 4 standard deviations it's almost a damn certainty the price will drop back down. Easy and quick money.
But you'd also have made tons with itm
I've bought multiple calls way out of the money and I got a minimum of double my premium back without even reaching the break even. I don't know anyone who holds till exp. Sell during the time when you're above your premium. It may not be thousands of dollars, but it's a good chunk of change every time.
I think it depends; yes it’s common for an option to be worth somewhat more than bought it for at some point before expiring. Sometimes way more, sometimes like 10% more at most. Other times, the value just drops. It depends on how the stock moves; how far out the expiration is, how far OTM, whether IV is going up or down… If the stock only goes down or stays flat, what then? Maybe you sell while there is still time value. A very short-term option loses value quickly. But a long-term far OTM option is not very sensitive to movement of the underlying, right? I find myself looking for “cheap” calls that are not too far out of the money and expire at least a few weeks out.
That’s the whole point of trading. If you buy something at $1.00 and the bid goes up to $1.10, you just made a 10% profit. I may be mistaken but isn’t that higher than the current interest rate? So what’s the problem? Yeah, it would be nice to make 1000% on every trade but that ain’t gonna happen. Don’t get me wrong, Im not disagreeing with you.
Yeah OTM’s are risky, but so is everything else. Ive watched charts with multiple time frames crossing the 200 ma blow up in people’s faces in less than 24 hours. Nothing is guaranteed in trading or in life. Take what you can get when you can get it because if you hesitate it may no longer be available.
@@floydsmithjr7999 Yea, but if you buy an OTM Leap Option you have a much longer time for that stock to hit its price especially in a new bull market.
@@davidg11235 If that was the rule of thumb dude then there'd be no existing ODTE Options Wealth Opportunity !! End Of Story 🤨
Say your option goes from 100 to 110 and you have broker fees 5$ buy and 5$ sell you are at 0. If volatility falls it stays flat then you -20% constantly
Can still profit if you buy an option contract when it's Out of the Money and sell it before expiry when it's still Out of the Money, just less Out of the Money. Buy Low Sell High works for options too, regardless of being in the money, right?
Still a bad bet because the option premium can decay faster than the increase in the stock price. A far out of the money option has very low delta, the stock has to move A LOT and very fast before the option appreciates in value. You have much better odds with near or at the money options, albeit with higher capital commitment.
#1 issue with this video is this ALL based on the fact you let it expire at expiration which you definitely would NEVER do with OTM options
You mean as the buyer you wouldnt?
Id NEVER let it expire. Ever
You could, but you’d want to at least take enough profits to cover the initial trade IMO. It is possible the stock keeps rising fast enough that it expires in the money.
Starts at 1:53
Every on of their videos have the same shill at the beginning
The guy selling covered calls: I think it is a fantastic strategy. Please keep buying.
Im up 869% today on a call i paid $30 for im so confused why the price sky rocketed but the stocks not really moving
Check the Implied Volatility. It probably increased. The "extrinsic" value of the option heavily depends on it.
Hello Sir, thank you for this valuable video. However, isn't delta suppose to mean the percent you get per $1 increase in the share price? For example, if the delta is 0.8 in a call option that means you will get $0.8 for each $1 that the share price increases? Thank you.
Delta can also be correlated to standard deviation.. a 16 delta which is one standard deviation away from the current value.. understanding delta, stand deviation takes understanding beyond what the underlying meaning of the greeks
Delta and Gamma changes with the every $1 change in price of share. Theta time dependent (decay/changes every day). Theta depends on Implied Volatility. Roho interest rate (doesn’t have that much impact on it)
@@Mellowyellow8888 is there formula to calculate it?
@@Mellowyellow8888 is there somewhere i can read about delta and standard deviation? meaning is the ratio always correlated that 16 delta = 1 standard devaition on all underlyings?
I have so much respect for your time sir. Thank You. Your the head, and you take time out for people trying to improve. Thank You
We appreciate that
hmmmm OTM seems to work for me.....
Im in a trade right now where im up 2,000% on a OTM call. 50%+ to breakeven. How in the world do you consider that a blunder. It's all about timing and execution.
But you could sell your call option at a higher price, if the price did rise a decent way better than the theta. It can be a profit if you sell it at a good time before expiration
You could, but will you? Many people don't because they hold out for bigger gains. It's easy to say "I'll just sell for gains" now, but when you're seeing that green number shoot up rapidly, are you absolutely positive you won't let greed get to you by holding for more?
@@ZhangtheGreat that's fair analysis, there's a similar but slightly lower risk with stocks as well.
Why in the world would I wait until expiration??
Yup. literally take Elliot Wave theory and find a stock with long term upside on the horizon, preferably one that is at the end of the final wave and buy any cheap out of the money call . with no intention but to 2x your looking at multiple long term 2x 5x even 10x on long term options and absolutely no intention of exercising . but still this strat helped me 5000% on wkhs options and held a single contract and completely financed my excercise at 19. so tell me otm is stupid, theres more to it.
Can you list some stocks lol
@@jaynova3905 it was MARA and Riot when they were 2 and 3 dollars respectively in november last year before btc broke above 20k. once in a lifetime play right there lol
well done! i think it is smart to keep an open mind: saying, like Seth says, "never buy otm calls" is like denying that in your toolbox you have screwdrivers as well as many other tools that, at the right time, are of GREAT value. It boils down to MINDSET. It is never "either this strategy or that other one". In my world it is always "both strategies", if understood and played at the right time. So, well done to you licensetocole
I don’t understand why in these kinds of videos the guy always assumes you’re a total idiot who buys the contract and then lets it expire, thereby “proving” 9/10 times it’s a bad trade. You should be managing the option the entire way. I’ve made plenty off of buying OTM options when an asset is at the top or bottom of a trend, and then selling the contract within a week or so. They’re cheap and require a lot less capitol for similar profits as compared to buying the equivalent multiple of 100 shares of the same asset. They’re also great for hedging when using married puts and the such.
Well if you've never had an option lose money immediately or a few days after buying it than I do not know what reality you're a part of but I want to go there.
Juliao Martin okay and? It all fluctuates. Until you close it out it didn’t lose anything. I’ve had options drop after purchasing and then made profit after closing them out a month in prior to expiration. That’s called management.
Have to agree... I understand why a prop desk trader wouldn’t swing trade or scalp options because of scaling issues and the need for intense monitoring, but the video doesn’t acknowledge that you can sell before expiration at all.
Is there a demo platform for options ? Not binary
He speaks from his heart. + he is knowledgeable.
10:16 i did not understand, if the stock raillied $4 everyday for 36 days. At this point wouldn't it be well above your strike price after the first day. $18.10 buy in price $19.50 SP?
Just to make everyone smile, I did actually made 4000% profit on an OTM put of Priceline. And I did sit there week after week trying to do it again (and lost of lot !) but had I only had the patience to strictly stick to this strategy, I might not have lost that much due to this rare but timely return. You're welcome to come and shake my hand anytime ! 😂 Meanwhile, I'll be watching your vids on "how to lose less money" ...and time !
@Lalchhanchhuaha Hmar For that one, I probably bought an option expiring the following day (expecting a huge drop per technical analysis which happened). Options are super cheap when expiring 1-2 day later, even more on low volatility. I have made awesome returns few times but overall lost way more trying to replicate with higher bets. Buying both side (calls and puts) would probably have prevented those losses and offer great return 70-80% of the time but never did. Playing a tiny portion of port (1% or less) both ways when stock consolidation is due for breakout (or once confirmed) should pay off over time (with TA skills)
Sir, i am very much new to options trading.
I have a doubt sir. Please guide me.
Sir, i brought a call option of otm....the question is if the price of the otm share decreased and it didn't increase from the strike price so what will happen in the expiry day. Will i loose my money?
Hi, What happens when I sell a put and obtain say $1.00 premium. At expiration date/time there is still premium amount left ? thanks,
"I'd like to meet the person who's going to sit through that"
...I'd like to meet the person who expects to profit holding to expiration
@Lalchhanchhuaha Hmar yeah, day trading weeklies is a bit different than what he's suggesting haha
Some brokerages have current percentages for sellers of probability of profit, if you reverse for purchase that percentage. You have purchase percentage of win
@terry k that would be called the Delta.
@@YS-zk4wz Right YS.
Yes, but there are more nuances than just the probabilities.
For every option strike in the option chain, alongside things like bid, offer, volume and open interest, you should be able to see a Probability of Expiring ITM or a Probability of Expiring OTM. P(ITM) is a roughly similar number to Delta. Buying a 10% P(ITM) or 0.1 Delta option is indeed a longshot. Strictly a "Probability of Profit" on any proposed trade is a more complicated concept.
Thank you Mr Seth!
I love you guys!
=]
Thanks Daniel
I think this guy is in reference to the /wallstreetbets degenerates that drop their entire savings into OTM weekly contracts. Haha
Question about OTM LEAPS
I would like to understand the case where i buy cheep OTM options for specific Stock i believe it can reach my target price.
I know that time decay will work against me all the way until the stock will be ITM.
My question is that i don't care about the value of the option since i will exercice the option and get it cheeper then the market value at X time.
example,
I buy OTM option for 2025 - Strike $20, current price $10 - premium $0.5
i assume the price in 2025 will be for example $50, i still making money even if my LEAPS lost value due to time decay, so when i exercie i will make $30 profit - premium.
Is my logic correct ? or am i missing something here ?
So letd say your holding an options contract and after hours your not allowed to hold does the options price adjust after hours when market starts at 930... 630 for me and traders flud the price?? Up or down if you buy a call and the after market drops 5 percent will you lose on the options trade when market opens? Automaticly or just as the traders / options traders buy or sell the option the opening market
Thank you for the awesome advice!
Does it mean SELL 10 Delta call will be 90%-win rate?
Very valid advice.. thnk u for puting ths out.. keep Rocking. LOve and Respect frm India
anybody else notice this guy didn't blink hardly at all during the video?
Or are u blinking at the exact same time🤔
You still made money. No way anyone hold it till expiration. This video a bit misleading. That being said I think still better to not buy otm option as theta and delta are not in your favor.
Exactly if the premium doubles or triples, you can close the trade with a 2-3x profit. I’m doing that right now on Riot blockchain
so basically if you hit your call and your option expires you make money?? cause I did hit the call but I also sold it at that moment lol because I saw profit and I was like sweet I put 125$ and made about 68$ or something if I was holding it would the rewards be greater after it expired???
Bill Khan 👆🏼
@@Ukacip I dont really know the answer to this question for im still knew to trading but one thing i do know is its never wrong to take profits haha so God bless and LETS MAKE THIS MONEY!!
What if you go long 60-90 days and stock moves up significantly?
Just sell 1 month before expiration and wont you still make money from premiums?
uhhh....so no mention of technical analysis???? THIS IS WHY I BUY OTM CALLS!!!!!
as of today i have 50 calls on XOM with a strike price of 47.50....exp nov 20, 2020.
at the time the stock is currently trading at 36.75. Based off of technicals...i expect to sell around 42.20😎....NEVER HOLD!!!!!!!
Ouch
@@ramiq7932 look at the date i posted it...i sold a few days later when we hit 38 a share =) i still have 100 leap calls on XOM exp dec 2022
i murdered XOM....flex time!!!!
I understood "Delta" to represent the amount the price of the option changes relative to a $1 change in the price of the underlying, which is different from "probability expiring of ITM". Am I wrong?
No, not wrong. But.....Delta is also a close approximation to the probability of the underlying reaching that strike price. eg. a delta = 0.1 (or -0.1) has a roughly 10% chance of reaching that strike at or before expiry.
@@shadmo8629 OK, thanks.
Who keeps otm calls till exp?
Robinhood doesn't provide the greeks until after I buy the call or put
Not true. You click on the option and act as if you’re going to buy the contract. When they ask how many contracts you want to purchase, you can then click on highlighted bid price and scroll down. There, you’ll find the Greeks. You aren’t obligated to buy the contract to see the greeks. Hopes this helps you. HNY
@@edadedeji6490 thank you
Who's holding these calls all 30 days?
I don’t hold out the money options to it expires that’s crazy. And I use a stop loss alarm that tells me if my setup fails. So I’m out before I lose all money on the option. In other words I know if my setup fails way before the contract expires. I use break out strategies on out the money options, to get value in the option quickly . I’m a directional leverage trader.
An almost exact analogy is scratch off lottery tickets. People post their $500 winner and everyone gets jealous. They don’t disclose the hundreds or thousands of tickets they bought prior to getting a “big” winner. Then a really big winner comes along. You know the Mega jackpot winner. Extremely extremely rare but of course happens. That is the GME scenario with the redddit user holding for 17 months.
How trustworthy are these probability calculations?
They are pretty close over time if you do a backtest Dimitri. They are statistically based.
Makes sense, thanks.
What I'm struggling with is that calling them (those delta calculations) "probabilities" seems wrong. The future probabilities are unknowable, they cannot be inferred from prior knowledge or observations. It's not like rolling a die where you know there is a 1/6 probability to roll a 6. These are a different animal, they come with a very shaky assumption that some quantity observed in the past (whatever statistic is being observed) will remain unaltered in the future. But that's mere speculation, nobody can know if this will hold true or not.
You have a point. Delta is not a prediction. It's only a statistical probability based on today's stock prices and volatility levels and the time remaining to expiry. As soon as you introduce an underlying trend that you believe can persist non-randomly or a strong conviction that prices or vols will deviate, then your prediction will not match delta. However, a 10% statistical estimate of something coming in-the-money is probably still a huge longshot unless you know something wild that the market does not.
Well an example would be seeing every FAANG stock hit ATH during a global pandemic, massive civil unrest, and financial instability.
At that precise timing, it would be reasonable to assume the 90% statistic may not hold true.
And last week on 10-12 June. It wasn't 90% chance in reality.
I certainty won't question the accumulated experience held by this trader. But the exception to the rule is worth mentioning.
@@sethfreudberg4750 Yeah it’s maddening how close they are. I’m working on a theory right now that seems to work for the past year but I need to work through the previous 10 years’ data because I trust the algorithm over my own judgment. Given that math/engineering PhDs developed/maintain it that’s the best default position to have.
Hi Seth, what about buying reasonably out of the money calls very far out so time decay isn't as much as a factor, and selling them before time decay becomes too great? Does this work for swing trading and managing risk? Thank you in advance.
yes, that's what I do for cheap otm options. Theta decay ramps up exponentially in the last month of the options life, so if you're playing an otm option on a binary event (like earnings) it's better to buy the option a month past the earnings date. it's also a great reason to sell weekly otm options because the theta decay is immense
Or buying an otm call with the iv run up into earnings...
Levi Messner buying an OTM call up to earnings thinking you will make money is a myth. There is no free lunch in the option market.
Pascal Houde so I’m assuming that selling premium right before earnings is a myth too?
@@Deucenheimer Many retail traders do it so this concept is not a myth :) You can be successful selling naked put or call until you are struck by lightning with a 2+ SD move. You can cap your risk by buying protection wings. Are you selling premium around earnings? If so what is your strategy? Have you done back testing? Just curious... Cheers
Fantastic video.
Great series. Hope there's a video in it about placing stops.
You have to live to trade another day.
People trying to talk down about out the money options and everything of the like, it dosent matter what you trade, it matters where there's opportunity good traders, scalp swing hold, sell options and buy options. Claiming there's no point in buying out the money options is a joke, so instead of doing that we could risk 100,000$ of collateral to sell calls for a 1% return each week, ye it's all better trading until it fails which again happens because let's be honest your not the only trader out there, Find opportunity and take it
LETS GOOOOOOO!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Beautiful Love it!
thanks Razzy
Come on, you know you’re not gonna hold long calls to expiration, nobody does. And I’m not saying buying cheap out of the money calls should be a primary strategy, however if you understand how convexity works in options it’s not a bad trade if you have the right set up. Options with different strike prices do not take a similar linear path once they’re in the money. I know many people that will buy cheap out of the money puts about 60 to 90 days out… and yes, most of the time they’re going to lose that money but they’re hedging for a 3+ Sigma move. If they get that you’d be surprised at the enormous returns.
The info you provided is flawed because your logic assumes holding the option till expiration; however, if you buy a very far OTM Call and then the stock moves up immediately, you WILL make a profit even if it hasn't crossed your break-even point yet.
So maybe instead of buying these types of calls with that 10 delta you should sell them
That's a conclusion that most options income traders were reach Simon :)
@@sethfreudberg4750 Isn't that the picking up pennies/dimes/quarters in front of a steam roller trade?
Sixter selling a 10 delta naked calls without any kind of hedging is a sure way to destroy one account on a 2+ SD move
Pascal Houde if you sold puts then you could at least buy the underlying a lot cheaper to cover
@@simonjohnson1381 Selling puts has a different outcome if you get assigned. If you intend to own the underlying then it is a good way to get it cheaper. If your intention is only to get the premium then the risk of getting assigned should be evaluated at the time the put is sold.
Seth, While I totally agree with what you are saying, if PCLN, now of course BKNG rallies right after you bought the call for 1.00 it could be at 2.00 or 3.00 or more in a day or two without getting to the strike price and you could make money. Not a strategy I would use, but you should mention that it is possible but not likely. Thanks these are great videos
Possible during these times
Thank you for the great content; I subscribed to the myth of the 1000% for some time and blew up some accounts before. It’s a blunder. I was wondering if you can talk someday about scalping options. I watched all your videos including the one on directional options trading and the one with Bella where you discussed why equities traders are also successful in options trading ... I would appreciate if you could talk some day about options scalping. I found some success doing this with scalping SPY and TSLA options. Thank you for ur great contributions!
Cheap is cheap when it comes to options trading, and most other things....
I’ve made stupid mistakes …. I once bought options an I just forgot I had them … like how does someone forget .,, I did … last week I was up 300% on my account an decided to buy put options an I accidentally got calls… smh an my account was below the 25k so when I tried selling I got hit with daytrading violation…. I would’ve been up 400-500% …
I wonder if people have done this with Tesla or Apple, killed it, tried again, and lost it all
The answer is yes
Moderna IBM AMC GME yes
In short doing the opposite is a better trade. Selling out of the money call will give you 90% chance of keeping the premium you collect.
Why would you let it expire without just selling to cover?
Way OTM Tesla calls would’ve been sweet one year ago
premium goes from .05 to 2.50. a very nice feeling
5000% is like 100grams of coke
Just easier to sell deep out of the money 45 DTE puts and buy deep in the money LEAP calls. It's not a lot of money but I've never lost a trade selling puts.
Hope to head to Florida to get an autograph from the real, true Trader Educators, SMB|U- these folks are the real deal in Public Trader Education. You have been warned, and notified, if you want knowledge, training, you best get it here! You have been warned, twice!
The good guys :)
Sell calls and puts around your core positions guys! Collect monthly premium, THAT’S the secret.
we do it all the time
Yep - long LEAPs and short strangles or iron condors around the core position. Rinse and repeat every 20 days or so. Hold the long LEAPs for long term capital gains treatment - DONE - millions.
@@WheatBread006I’m confused do you buy the actual stock then bet against it?
Yeah, so the way you fight theta is going out like 300 days in the contract…and buying puts otm is a way better bet especially if you believe a big move to the down side is coming. The premiums are deflated and your delta gradually goes up. Buying calls otm on the other hand can be harder because premiums are inflated and theta is also working against you.
OTM is out of the market :)
There is another way to make money. Don't wait for the option expiry day. If you BUY the option and if the premium increases to a reasonable level, just SELL the damn thing. That is profit !! I guess most people don't wait to exercise an option. Option selling is a better idea, but margin is needed for that.
thx Raf!
This is what Havebeen doing during the recent bull run and been very profitable tho with a big drawdown yesterday due to selloff, you still dont have to assign the put sold and take loss buy it back. also only trade it on stocks or etfs you are willing to own in thelong term, how about that?
I meant risk reversal
buying deep itm long expiration calls or puts makes more sense. if you get the direction and timing right ;) it is cheaper than buying / shorting the underlying. but anyway go with rtt, rhino, kevlar, cib, m3, m3u, etc. butterflies for the win with management.
there is a big flaw in your reasoning: buying a 10 delta call could give great profits at earnings on stocks with potential and much talked about. Play it 4 times a year and maybe you will be in profit. It is obviously a very aggressive strategy to which one can allocate 5% of its trading capital. If you hit jackpot, that's great. If not, that's sustainable too. So i would not discount this strategy as easily as you did in this video. ciao!
One big commercial to your trading class
What about buying LEAP options, where the situation is reversed and time is on your side? Or is option buying a sucker's bet all around?
With leap options time is not on your side. Any option with a time premium eventually sheds all of that time premium.
@@sethfreudberg4750 what about the Zero Extrinsic Back Ratio spread? Extrinsic Value is close to 0 and the delta is close to 100
Can you do a video with deltas of 20, 30,50, 70, 90 etc. ? Thx
Interesting idea Java, we can take a look at that.
@@sethfreudberg4750 Again, the further out the call, the likelihood that the deltas are accurate, seems much lower.
That's wrong. It wouldn't have to get anywhere near that price for you to make profit. Your example assumes 1) that you hold until expiration and 2) that you are planning to exercise the option at or very close to expiration. 99% of people do not exercise options nor hold them until expiration. You could have a very far out of the money call and make great gains if a stock went up only 15% or so in a given day. Then you could just close it out long before expiration and pocket the gain from the premium increase without exercising.
is there people who become rich trading options? Or trading stock? Besides the money managers, well i know Edward Thorp did it and James Simons but the use other people money to do it like a headfunge do, but let say someone with an small account, cuz i think most people have at least 30 to 50k account but some even less than 10k. Lets say a pro trader with 1k can make a million?
It's called setting a stop loss!!😂
Always have theta on your side!
Lottery ticket!
It's very easy man 😅
This guy is right on the merits but also a salesman hater.
Why keep till expiration to lose all money. Why you are talking as if one cant sell early and limit the loss. Why buy at 10 delta, i buy at 35-40 delta and i make money by selling at profit. I dont buy one month option though, i would choose expiration to cover two earning announcements.
Live active trading video or it didnt happen.
It depends what you trade as options
Most of the tech options are data driven tech giants
I swing trade tech options which are usually calls on a 3 week ish swing trade which suits me at the moment
But i can day if need be etc
lol i totally made this mistake a bunch of times
Hi
pitfalls are real, stories are real, orders are final. this is judge ... oops wrong show
Wow!
Honestly. My contracts don’t have to be in the money. I just want to sell it more than what I paid for it. That’s a profit. You can buy ten $10 contracts. That’s $100 dollars and if that contracts goes up another $5 $10 dollars. That’s a profit. Like Tesla goes up $10 dollars everyday. Up or down. Delta of 10 is $10 dollars. Tesla goes up or down $10. That’s money. If you buy more contracts. More money. Buy a contract for months out and only trade your MAX LOSS per trade. You’re be fine. People like this guy doesn’t tell the whole truth. I watch a contract go from $1 to $18. If you brought 50 $1 contracts 😮. For months out. The IV will eventually spike up and the delta will also go up.
People need to be told this?...
I only buy OTM options for .01 This guy doesn't know anything about 🚀🚀🚀
Amc
Summary of the video - out of the money calls are bad. They have a low delta so it's like playing the lottery. You will lose 9/10 times but might win once. Not a good strategy.
TESLA diff tho
This guy lost my attention / respect by only talking about holding an option to expiration. Yeah, in the example given you lose 9/10 times - IF YOU HOLD TO EXPIRY. Ever consider selling the option for a gain BEFORE it expires worthless??? Or setting a stop loss to sell the option if it decreases in value by a certain percentage?
Didn't like this one । Way OTM are never meant to be held like that । Take your profit and run away like crazy
So much misinformation in this video smh
Please use subtitles
Use the CC (closed caption) feature that RUclips has, they translate all the videos!
Repeating the same thing 20 times boring and p pointless waste of time. But my course. But my course blah blah blah