Dan talks with Tom on How He Manages & Sells Short Strangles
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- Опубликовано: 4 ноя 2024
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Great questions to unpack Tom's management rationale. Often on TastyTrade videos they talk over the "basic" questions.
Excellent talk; thank you for continuing to educate us!
That was awesome. To see a master at work.
Excellent class. Thanks @Tom Sosnoff
For me - best ever so far -thanks
Great video! More please.
The talk is really excellent - love it!
Thank y'all.
Great content. Regards from Spain. Thanks.
Fun Dan! Thanks
Great questions
Thanks
Tom when you say buy the guts, sell the wings, are you able to do that without a loss ? ie the ATM straddle would be high price options, the OTM puts/calls to replace it would be less expensive - or are you moving it out to further DTE when you re-open the new position ?
I'd almost guarantee that yes, he sets up the new sell for 45DTE, which could still end up as a debit but probably would be a credit.
Why does Tom avoid the weekly exp dates?
Will def be further DTE but could very well be you’re taking a debit on the roll. But it’s about resetting risk so it’s ok, focusing on getting net credit at each roll is pointless, you gotta look at the overall expectancy of the system.
what happens to the tested option? get assigned?
You better take it all. Commissions and fees will kill you
In the example you show, rather than rolling up the untested puts, why not just add another short put to bring your deltas back in line where you want them? Any thoughts?
That is possible obviously and legitimate, you just have to know that you now added capital/Buying Power that can’t be used elsewhere and that you added risk to the trade. It’s not wrong to do that, especially when you stayed small initially. But most of the time you want to roll the untested side first, if it’s very low delta than you made most of your money on that side already and keeping it open and just add to it makes not much sense, its not capital efficient.
If you want to „add“ to the trade, I would rather make and entirely new (recentered) position.
What's 'pm'?
Great video, thank you!
pm = Portfolio Margin (requires a lot less buying power but you need a large account (typically > $125k) to qualify for it)
Pre-Market, Portfolio Management
Thanks!
Tom, for SPX 0DTE selling Iron Condor you showed, what is the right time to open the trade
I put on my trades shortly after 10am EST. This allows the market to calm down AND this allows any news that is released at 10am to be released and absorbed. I then enter the close at 25% of max. profit. This works 4 out of 5 days and it closes 1 to 1.5 hours (before noon). I pull out $1000 per day and then go to lunch.
@thonatim5321 Are these 0DTE trades on SPX?
@@frozenyetimug Yes sir. It will take under one hour to close @25% in most cases. In rare cases, the market will go in one direction straight up or straight down. Nothing you can do but roll to the next day or a few days.
He adjusts when he is "uncomfortable with the delta'? Does he mean position delta? And what does "uncomfortable" mean?.
Honestly i think this is personal preference. There was a video of him talking about this with Bat. Personally I feel uncomfortable when my untested side deltas get too low (less than 15 ish if I started with 25).
Don't short strangles take a massive amount of capital? Also, how do you sell calls without 100 shares of the underlying (covered call) or without a long call (for a spread). My broker always rejects these trades because of "infinite risk". A wide iron condor I can do.
all you need to do is buy a call further OTM to define your risk. Tasty trade will let you sell naked calls
Switch to tasty trade they let you do whatever strategy you want and you can do short strangles for $500 in buying power on cheaper stocks.
do you roll if something is hit on one side at market close or anytime? Do you find with too many adjustments you end up cornering yourself and leaving yourself little room?
I am not convinced that a short strangle is better than an iron condor. The risk is defined with IC.
I'm with Tom on this one. If you can handle the larger BPR, strangles are actually much better in many ways because you can better manage risk and adjust your deltas much easier compared to ICs. I had always both over the past 5 years but now I don't even bother with ICs other than for shits and giggles due to their limitations. I am absolutely convinced that strangles are better than iron condors.
What is the test side and what is the untested side?
tested side means it's the side that is getting breached by the underlying price and untested side is the other side that is getting further and further out of the money
Oh please I wish the interviewer would stop saying yes every five seconds
White Nancy Jackson Sandra Anderson Carol
The interviewer is frustrating. He asks Tom a question and instead of letting Tom answer, he asked three more little tiny questions.
Thanks