Small Account Options Trading (Tips, Strategy & Considerations)
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- Опубликовано: 1 окт 2024
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Trading options in a small account is difficult because of the low amount of capital available.
In smaller trading accounts, there are additional difficulties relative to larger accounts.
In this video, I discuss many things related to trading options in small accounts, such as:
1) The difficulties of trading options with limited capital, including risk, number of positions, and trade management.
2) An options strategy that is great for small accounts and can be adjusted easily to decrease the risk/margin requirement.
3) Things to never do when trading options in a small account.
4) Historical simulation and performance of short Iron Butterfly trade in IWM.
If you have questions related to this video, please leave them in the comments section below!
=== LINKS / RESOURCES ===
OptionNET Explorer Trade Analysis Software: www.optionnete...
Buy a Trial of OptionNET Explorer (w/ Discount): www.optionnete...
If you need a BROKERAGE account and you'd like to trade with tastyworks, get one projectoption course for free when you open and fund your first tastyworks brokerage account with $2,000 or more: www.projectopt...
Learn More About tastyworks: www.projectopt...
=== RECOMMENDED VIDEOS ===
Stock Options Trading 101: • Stock Options Trading ...
Short Iron Butterfly Strategy: • Short Iron Butterfly O...
Iron Condors Explained: • Iron Condor Options St...
Implied Volatility Explained: • Implied Volatility Exp...
Why Early Exercise/Assignment is Rare: • Early Options Assignme...
Options Trading For Beginners (PLAYLIST): • Become an Options Trad... tastytrade, Inc. (“tastytrade”) has entered into a Marketing Agreement with Project Finance(Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade and/or any of its affiliated companies. Neither tastytrade nor any of its affiliated companies is responsible for the privacy practices of Marketing Agent or this website. tastytrade does not warrant the accuracy or content of the products or services offered by Marketing Agent or this website. Marketing Agent is independent and is not an affiliate of tastytrade. 
Хобби
I absolutely LOVE this channel.....and I can't get over how perfectly round your head is...
@@yahoofinance1764 @projectoption - fake account spotted
Bitcoin investment is such a lucrative business. I'd advise anyone who wants to be rich to invest in bitcoin today. You can comfortably make money from your own house so long as you've got a professional broker to help you trade.
I own Bitcoins. It’s a store of value, a distributed ledger. It’s a great place to put assets. Government’s currency does not hold value. It’s also a good investment vehicle.
@@garbamustapha8742 Bitcoin is the highly lucrative currency for investment and favorites of all the traders and businessmen.
@@giovannilarenzo8684 I tried to invest in bitcoin earlier this year but i failed to do so because of the pandemic challenges, can someone give me a suggestion of a broker and how to invest
@@filipcaputo8749 Its a pity that Many people out there who are struggling through intense hardship has ignored bitcoin whereas bitcoin can uplift their financial status
Trading in crypto currency is still much more one of my favorite digital investment mostly when it comes to Bitcoin and I totally love the technology behind it
this is the goat options channel
seriously lol
@@projectoption7596 hi Chris!
@@-_-_-_-_-_-_-_-_-_-_-_-... most def the G.O.A.T. Chris, you are the man. I appreciate your videos very much.
Tom Brady’s option channel? 🏈
Every time I watch options, I fall sleep😁. I guess this is effective for those who has sleeping problem😉. But I will keep on listening I won't quit until I get it😃. Thanks.
Good brokers will encourage you to make higher investment on trading
Most at time you seek for a professional broker to assist you totally
Seeking for a good broker was the hardest thing I have ever faced on life, because I have lost my many to scammers
My sister lost alot of funds trading on her own
Before you start trading with someone, First of all ☑️ check his/her recommendation on youtube
My first time as a beginner I lost severally until I got recommendation to Logan, his assistant changed my trading experience
I did one option Everytime he said "small options trading account " let's see how this pans out .
How is it going?
As long as they were $SRNE Call Options, you're GOLDEN.
lol ! he could have just said "small account"... we would have figured out what it means
there is a gaining key on how to invest into crypto and earn huge....Are you interested?
I started with a small account with as little as $100 on few assets, i continued trading with my broker till i had an upgrade. Right now i'm earning about $6k weekly on different assets like dividend stocks, metals and indices.
What do you think is responsible for this increase?
@@gustafonrebecca4311 from my little stay in the market, i think having a diversified investment results to various income streams. So i believe the major factor is having a diversified investment portfolio.
@@jamespowell4594 which of the brokers do you use?
A PROPERLY diversified account would always win.
@@jamespowell4594 Hello i'm Filipino, getting a broker is very difficult here in my country because we are not so exposed to that. I've heard about foreign brokers and i would love to know more about yours or how i can get started.
I disagree though as far as small accounts .. just practice paper trading till you can save enough money to enter without going out on a limb with margin .. especially just getting into it using hard earned cash will make you more careful and vigilant about protecting your bottom line
Wow! Great timing! I watched this video just before getting ready to fund a margin account with a measly $1K that I opened with my current broker to keep things separate from my short and long term and retirement buckets. Based on what you're telling me - and it makes perfect sense - I might as well start with a $2K bucket, so... tastyworks here I come!
Learned so much from you man. I've only been doing it for a month, and it's been the biggest highs and biggest lows for sure. I'm also building up my experience and documenting my experience.
Great video Chris. This is very useful information and much needed as I'm being very cautious before committing to option trading. Nice to know once I've back tested things, I'll be able to trade options that have better volume and open interest.
Wonderful video! Quick question: You'd discussed avoiding penny stocks as most are volatile and obscure - What about globally recognized (cheaper) companies that tend to be more predictable, yet still trade under $10??
Thanks! Those kinds of stocks would be better than hardcore penny stocks. What I really meant was avoiding trading options on little-known companies that don't have much option activity.
@@projectfinance thanks Chris. Would it be accurate to say that a critical criteria is actually the liquidity of the options you're trading (i.e trade options that are liquid so that you can get out if you need to)? If this is the case, what would be "liquid" be... 10000 trades per day?
Do you have a trading group for options or live demo trades
I just started trading options. i have watched only a few of your videos and find them very helpful.
easy to understand. thank you.
there is a gaining key on how to invest into crypto and earn huge....Are you interested?
Thank you, Chris! I've been watching your videos on options trading for beginners and they're all great! I am planning to open an option account soon... maybe with tasty works.
Not certain about the points made but ,if anyone else needs to find out about is trading options profitable try Saankramer Increasing Budget System (do a google search )?
It is a smashing one of a kind guide for learning this simple proven ten step trading system to make money quickly minus the hard work. Ive heard some extraordinary things about it and my m8 at last got cool results with it.
I think margin account under 25k is bs. Just use cash account. No pdt rule. Gives you much more flexibility. $5k is plenty to start trading options in a cash account.
That’s a really great take and agreed 👍🏼
How do you know what date to choose from the options chain? I'm trying to learn. Lol
✅ New to options trading? Master the essential options trading concepts with the FREE Options Trading for Beginners PDF and email course: geni.us/options-trading-pdf
I hope you enjoyed this video!
-Chris
I have watched several of your videos and have found them to be the best on RUclips. Keep up the great work
I find him to be the best I ran across as well
Alvin Stephens II I agree
Hi Chris, a short question. You've mentioned you would close the trade when the profit is acceptable or when loosing. How would you set that trigger in Tastyworks without having to contantly monitor the trade. Thanks a lot.
I'm new to trading and I love they way you are so calm and precise in the way you explain. You are amazing!!
Love your videos. I'm very serious about trading, doing it right in a tight, disciplined manor for the long haul. Your videos and integrity are essential components to my overall plan. You're the best!
Frankincensed mind sharing positions?
Thank you for the comment! I'm glad the videos are helping!
Not certain about the points made but ,if anyone else wants to uncover signal trading try Saankramer Increasing Budget System (just google it )?
Ive heard some great things about it and my colleague got cool success with it.
how's went man ?
Your videos are very detailed and helpful for beginners. I have a account with tastyworks and was trying to set up a red trade (PUT), for the same strike price, open and closing on the same date. I found it difficult to set up the strategy. I didn't want to submit two separate trades and pay more money. Is there a way to set the trade without paying double? I have watched a lot of other videos on how to set up trades. Most are not as informative as yours. Thanks for instructional video they are really helpful?
I'm wording if You ever figured this concern out?
Great question for beginners , Thanks in advance
I have been trying to buy aapl options all week but cant get one. Im not sure why. I have been setting the strike price and picking how long and serting a limit around the ask. But still cant get one.
Excellent Chris - Thank You. Especially regarding trade management and gamma risk
Thanks Gary!
Thanks Chris. I enjoyed your video. A few questions (apologies if someone already asked and I missed it):
What if I don't mind being assigned when I sell a put and decide that I'll sell calls after? Would that work for a small account?
Also, I'd rather not use margin. Can I still trade options with a small account?
As far as getting assigned the shares from a put it would depend on your margin, you take the number of contracts times number shares times the price
As far as selling calls usually they charge you a percent of a stock value to hold it but once you sell the calls you are required to carry the margin for the entire amount
@projectoption I just have a few questions for you (they're brief):
1. Do you do chart technical analysis when selecting your contracts?
2. Do you have Discord?
Chris, Really great video on the small account and trading options. I agree that the products you mentioned, the ETFs SPY, IWM, and QQQ are great places to start due to their high liquidity. Perhaps there is another video you have on this question but was wondering what are your recommended stop loss targets, if you use them. Or do you manage the trade by other means? Thanks
thanks for the comment, Bruce! As for stop loss targets it depends on the strategy. I don't really sell strangles/straddles anymore, but if I do I prefer 150-200% stop loss on the short strangle and a 50-100% stop loss on the short straddle. Arbitrary numbers but for single naked options (short puts/calls) or strangles, I like giving the trade a little more room to move (a stop loss above 100%).
In general, good advice, but there are some low priced good stocks which might be exceptions. I've recently had some recent success with GE, although I probably got lucky with the timing. The key might be, in part, following the news and choosing a stock will good fundamentals.
This is the second video I have viewed on your channel. You provide great content and thorough explanation of each subject you discussed. Even a novice layperson like me can ride or die with this information so I thank you sincerely for that....
How can a person with a small account (therefore a beginner option trader) be allowed to perform an iron butterfly trade? Is this kind of sophisticated trade allowed for beginners in TastyTrade?
It is only sophisticated in that there are 4 components to the trade. But risk-wise, it is much safer than many other options strategies. You can trade any strategy you want to on tastyworks if you have their "Works" margin account.
All of you guys talk about those funny name, fancy strategies ... why not explain selling covered calls, pocketing the premiums with a fairly deep ITM strike prices ... wouldn`t it be a simpler way to make consistent profits ? What would be the downside of it ?
Is it still considered Selling a Covered Call, if you just own the equivalent call option? (rather than the actual shares). If the sold call was assigned, couldn't you just exercise your own call option in order to deliver the shares?
It's called a poor man's covered call or diagonal spread, you take a longer time frame deep in the money call option and you sell a shorter timeframe call at a higher strike, that way you nearly replicate the deltas of a covered call.
I know this is am older video, but just want to let everyone know that you DO NOT need $2000 to open a margin account. But you cannot utilize the margin until you have $2000
Thank you very much. Your explanation is very clear and easy to follow. I learned a lot.
i have a question, when you say we must have 2000$ in our account (minimum) does that mean cash or can i already have 2000$ invested in stocks and ETFs?
$2000 invested + cash is requirement for options trading.
I must have missed in the video you reason for 15 delta strikes?
It’s close to one standard deviation. The 16 delta strikes are at “one standard deviation.” I will need to make a video to explain
@@projectfinance I have been wondering the same
Welcome back man. You explain complex chunks of information effortlessly. All of your videos have helped. If you like a call and you know the stock is running up, would you only buy the call and no fail-safe?
Thank you, Scott! If you are bullish on a stock, you can definitely buy a call option. Personally, when implementing this strategy I like to buy OTM calls in long-term expirations (1+ years out). This way, there's very little decay and you will essentially own the stock with lots of leverage and limited downside risk.
What you can do if the stock price surges is turn your long call into a risk-free call spread, if you are able to sell a call at a higher strike price for the same amount you paid initially for your long call.
Or, you can simply ride the long call. At some point, I'd personally sell the call and convert a portion of the proceeds into actual stock, as the long call is still a decaying asset and does not represent ownership in the company.
@@projectfinance thanks, your channel is amazing. If buying an OTM call, how many strikes OTM would you typically go? Also, would you take OI into account for that strike? Thanks.
Thanks Chris. Question, wouldn't the straddle call/put be assigned with the underlying movement? If so how would the small account handle this?
Good question and I’m upset I forgot to bring this up. You don’t need to worry about assignment. Even though the short put or call will be in the money, assignment likelihood will be virtually 0% because the options will have significant amounts of extrinsic value. The options would need to have no extrinsic value for assignment to be likely. I have a video about this on my channel. It should be linked on this video in the description! “Early assignment risk”
@@projectfinance Will watch it, thanks again!
Are you BRYCE WALKER fromm 13 reasons why?
i recommend trading options on etfs like qqq and spy with a small account, even if you are buying otm calls and puts. very beginner friendly and u make more than u would think with a very small position
Can you do a video on how to do a diagonal debit spread (including pro's cons) and selling weekly calls against the long call that you bought?
Thank you very much. Really appreciate all your contents and vids.
Excellent video, sir! It was never really clear to me which strategies were better to exit before expiration, and which to carry through until exercise. This clearly shows a butterfly (or it's variations) are better to quit before, but close to expiration.
Also, what about naked options? I tend to speculate to both sides of the same asset, buying puts and calls, but at different days and different underlying prices, and managing them individually. I kinda do asymmetrical straddles, but it's hard to keep track of everything. So I normally trade two or three stocks, with for or five positions in each (different expiration also, normally the closest ones are closer to the money, longer ones are a little bit farther on the money). That's certainly not recommended for a small account, but have your heard about someone using that kind of strategy?
Hello Guilherme Mauricio, and do you have a good resulst with your strategy? I was thinking about it too. How long time do you practice this? thanks Lukas
You just earned a sub, very well explained.
GOAT 🐐
This is an excellent video for beginners with limited money. The exact thing I was looking for. Thanks for sharing this.
I just have one question, if you could put on a video on how we can close a position.
Is it simply doing the exact opposite with what we did when buying an option strategy?
@@charleewayne5164 That is not the answer to the question. Dont spoil your reputation man!
I noticed the POP was very low. Is there a reason to open a position that has a 38% chance of winning?
Why would I buy a call and put at the same strike price. How do you make money
Big movement in the stock price in either direction.
Would it make sense to buy an OTM put calendar spread and buy an OTM call calendar spread on the same stock with the same expirations? Then manage both so you close the winning calendar spread and roll the losing one until it becomes profitable or a less significant loss?
First Name Last Name yes
do you know company that offer funded account for options trading? thank you
I've been watching so many of your video's I feel like I'm hearing ya ya while watching them again but I still don't feel ready to pull the trigger. Am I over thinking things or is this normal? Thank you for these video's I am learning a lot guess I just need confidence
Go with your gut and just do it!
What is naked option? If I have 100 shares of spy, I sell 1 contract call, is it a naked sell call option?
“Naked” means you don’t own the shares, “covered” means you do. You should NEVER sell naked calls that’s how you end up with -$750,000.00
It's people who trade naked (no clothes on) like Josh....
i didnt think penny stocks had options, needs to be at least $5 and meet some other requirements
Thanks!!
Can you teach about how to identify good, bad greeks using examples of Iron condor/ Short Iron butterfly strategies? I know Delta means underlying of prices..? It would be great if you can go in depth with the whole thing for small account. By the way your info is very detailed, simple yet brilliant. Thanks so much for covering topics for beginners.
I just started trading options. i have watched only a few of your videos and find them very helpful.
easy to understand. thank you.
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So for a small account neutral strategies are better than sell credit spreads?
Probably a little strange to initiate options trading with small accounts by going for the most elaborate trading set-ups. Why not dabble in covered calls on highly reliable stocks? Works well in the current market condition of a potential incoming collapse but with current stocks and ETFs continuing to do well. If the economy breaks down then there's a bit of money to be made with holding these stock continuously until the calls get them sent away.
Robinhood has no option fees or minimum.
Hi, hoping someone can help me here as i am getting a little disheartened, love this video, it is exactly what i have been looking for, i have been learning options for about 2 months, done the tastyworks course and option alpha, the problem that is stopping me moving forward is the BP effect, i have just copied the iron butterfly in IWM and it is almost identical POP, Delta etc but the BP in my tastywork account is $62,500K and i cannot work out why, in the video it shows under $1K.....can anyone help me make sense of this
If you have not applied for a margin account, creating an identical trade to that of an account with margin privileges will have different buying power requirements. Are you sure your account has margin privileges? 🤔
@@Mr-is8to i did apply for margin account, which i was approved for, i also have a cash account, maybe they have credited the incorrect account and that is where the issue lies, i am waiting to hear back from tasty works, thanks for the reply
Hi Chris,
Is there a reason why you don’t use the simulation provided by tastyworks in their p50 calculations or use the analysis in their desktop platform?
Every trader has a different style and an opinion of what they think is useful for their own trading. For instance, some traders are heavy technical traders and love to look at chart patterns to make trades. Others rely mostly on company fundamentals. Personally, I don't need the P50 for my trading and I also don't look to manage trades at 50% of the maximum profit most of the time. Nothing against using it, but I don't think it's a make-or-break number to look at when assessing trades.
projectoption : Thank you for the quick response. I completely agree with you Chris. Was just curious if there was something wrong with using it compared to this one. 😊
Awesome videos Chris. I think you could do a naked strangle in SLV for a small account but generally I agree to defined risk. Low trades. Perhaps trying weeklies if the volume is there like IWM, SPY, etc
I would love it if you would answer my question since I am liking the video! ....What about the number of positions with a 10K cash account?
Thanks for the video Chris, can I trade naked options using stop loss to avoid large losses when using a small account?
Yes you can! You could use stops or simply size the trades smaller and use no stop.
Thank you Chris. I have a query in case I want to limit the number of transactions I need to monitor, as a beginner. For example- I buy a Spy iron butterfly expiring on Jan 15th. If I want to put in more money at a later date in Spy, should I buy with the same expiry date (well they get cheaper but maybe avoid the last week prior to expiry due to volatility). What would be the best?
I have a small cash account $800 and I was approved at TD Ameritrade for options trading. What do you guys recommend to start? TY.
First of all, can't thank you enough for making excellent videos and taking the time to respond to comments. You are helping so many people with your clear exposition. As a beginner, it seems my safest options are long calls, long puts, and credit spreads. Long calls if I'm confident it will move above strike + debit, long puts for confidence in below strike - debit, and spreads for staying either above or below a steady stock. It seems that would cover my bases without exposing myself to any huge potential losses. I'm also interested in long straddles for highly volatile stocks, which also seems safe. My option strategy will be for longer term contracts at the moment: ~5 months. Would you recommend against any of these, or do you think those four would lay a solid foundation to get started? Thanks again for what you do!
Thx! I learn a lot. Which video tells me about risk management, max profit / loss management, how to close a spread in a controlled manner, with a logical price, by means of limit order, stop limit order, etc.
Tasty works or tasty trade for your broker? Is webull good? Thanks so much!!
I have used tastytrade for years and love them! Great commissions for active options traders and easy-to-use software (though all software will require learning).
If interested, you can secure their funding bonus and access to my course if you support projectfinance through our referral link:
info.tastytrade.com/tasty-offer?
Bro, what are you using to speak on so much information? A teleprompter? 😂
You give us so much info and never mess up
Is tasty Works available in Canada?
hey hold up I bought a 160c at ab .79 and profited 55… over the course of three hours
For options only traders it's not relevant but selling covered calls also has limited risk as long as you are okay with selling the stock and possibly waiting to buy back in.
Thanks for this video, Kris. Very usefull, straight forward and generous! *Thumbs up*
I wiped out my small account so many times now it's so difficult. just a few bad trades and you're done
The spooky option uniquely wipe because europe seasonally rule with a three straw. premium, possible steel
what is optionNet Explorer (the software you show at 17:00 onward) what broker did you get it from or is it independant of a broker? What is the software good for beyond what Think or Swim can do? Thanks.
It’s an options analysis / backtesting software. It’s very good for modeling your trades and seeing theoretical P/L curves at various stock prices and multiple points in time going forward. It’s also great for modeling adjustments because you can see your theoretical P/L curve with and without the proposed adjustment.
@@projectfinance ok. yea it looks like a clearer more zoomed out view of the risk profile payout chart tab in ToS which feels a bit cramped since you have to side scroll left or right to see the options' price action around your contract's strike price. Is there an american version of optionNet? I see it is priced in GBP.
@@evadesc Don't buy that for $650... please... ToS can do everything that you need, believe me. Play with it, watch some vidoes. Fancy, WAAAAAAY overpriced software won't make you a better options trader. Stick with ToS, put the $650 in your trading account and go from there.
Thank you!
Honestly you have your head in the right place with the type of content you're trying to create and the audience you're trying to reach, but from the videos I've seen you're either glossing over really complex software and not fully explaining the graph lines and their implications (Options Net Explorer), or repeating the same concept in different words for 5 minutes. Looking forward to seeing channel mature into somewhere in between.
I do hit the like buttons a lot whenever i watch ur video i am a newbie and i am interested in options (Many would say too risky for newbie) anyway i want to do those spreads technique but can i use cash acct to do so with small investing at a time without margin acct which i am hesitant to tie up 25000 instead of utilizing actual my money efficiently. Futures trading has some ways to get around PDT. Ur brief advice or teaching would be very hwlpful for this old mab who is just started to learn. Mahalo. From Hawaii
Ive never watched your videos but they always recommended to me im not watching though. yet.
Hi, thank your informative videos. Is the BP Eff showed in Tastyworks considering the discount offered by the broker? If so, the actual BP should be quite high and in case if the stocks get assigned, shouldn't the account end up in a Margin Call? Could you please clarify. Thank you.
Is there any other free software similar to option net that is free? Would love to have a play around with something similar before I commit to purchasing anything.
Serious question, who has options that gives margin on only 2k?
Hey Chris! I have tryed reproducing the iron butterfly strategys for IWM and SPY in tasty but for some reason for me the BP Eff shows a really high margin, like over 50k. Could u tell me what am I doing wrong? :D
Which strikes and expiration?
@@projectfinance Hey Chris! So the one I tryed know is the IWM for the shorts 175 strike price as that is the daily price and for the Buys I went for the 0.15 deltas so on IWM 191 for the CALL and 160 for the PUT. this is on the 43d expiration 17th feb
@@C013ain The 160/175/191 iron fly has a max strike width of $16 (191 - 175) which means the maximum value of the position is $1,600 at expiration. Since you collect credit the max loss will be less than $1,600 per fly and therefore the margin requirement/BP should be less than $1,600 per fly. It might be $50K if your default position size is like 30 contracts, or if you're trading with a brokerage that requires more for no good reason.
and BTW u are amazing having 405k subs and answering the questions, I promise I wont bother u anymore. Going through ur videos quick, hope new content comes out soon!!
You can beta weigh the deltas against spy and reduce your market risk
how much is each option trade on tastyworks?
Google is your friend... or do you need him to wipe your arse for you as well ? Why is today's generation so fucking lazy and want EVERYTHING done for them ? Type (if it's not too much trouble and won't make you faint from the exertion, you delicate little flower) "tastyworks commissions" in your search engine of choice.
505$ down the drain 😂
My head hurts
A quick question, say if you hold option in money as it expires (I understand that sell the spread is probably the most convenient ending if it has value, just say if you didn't get to login on that day for some reason). How is the exercise price determined? closing price of the day? (options seem must be settles within the regular hours correct?) Mid price of the day? Avg price per volume of the day? In case of a vertical spread, say a 200/300 bull call spread, is the price for both are guaranteed to be the same? or would it be possible that say the 200 call is exercised at $280 while the 300 call is exercise at $310? Do you get a special button as "exercise" on the expiring date?
Can you list all the indexes for small accounts..
I only option trade Nokia lately 🤣🤣
What does it mean when TastyWorks shows Max Loss of 0? For a butterfly trade that I set up, I managed to have a theoretical max profit of 50 and a max loss of 0. That seems wrong? Or is it?
It is if it is a brand new trade that you're setting up. You won't get filled on a trade with no loss potential from the outset. You can only get a risk-free position by adjusting your way into a risk-free position from an already profitable position.
Thanks for the video! I understand what you mean by avoiding selling Naked options, in particular selling naked calls, however, I dont understand selling naked puts. How do you sell covered puts? If you are new and really want to own stock xyz, dont you want to sell puts against xyz in which you will either get the premium, or get to be xyz at a cheaper price? Finally, do you have video about selling/buying spreads? Thanks!
You probably already found your answer to this question, but an investor could sell a cash secured put. Not a bad way to make a wee bit of extra cash if, as you say, the put seller would like to own the underlying stock anyway.
Chris you mentioned buying options before companies report earnings. In your example you indicate a Monday buy with a Thurs afternoon sell; same day as the earnings report. In general; how many days before earnings report will the volatility changes? Or before you make your buy? Thanks
Option implied volatility (IV) generally increases as the earnings date approaches, and typically you can start to see the increase 2-3 weeks before the earnings release date. Up until the actual earnings report, IV will increase or begin to flatten, and the volatility collapse (also known as the vol crush) happens as soon as earnings are announced. The vol crush occurs because the unknown (the earnings per share) becomes the known, so market makers no longer need to discount the unknown. Unless you want your trade to be a lotto ticket and you are willing to lose it all, get out of pre-earnings trades no later than the last trading session before the earnings announcement.
This is Gold mine.🔥🎉. Thanks.
Penny stocks do not have tradable options.
Good lesson!. I love your honest approach to teaching options.
I have a $2500usd with TDAmeritrade...It's difficult.
I hear you!