SELLING PUTS ON SPY WITH A SMALLER ACCOUNT | TRADING OPTIONS
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- Опубликовано: 10 сен 2024
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𝐋𝐞𝐠𝐚𝐥 𝐃𝐢𝐬𝐜𝐥𝐨𝐬𝐮𝐫𝐞: I’m not a financial advisor. The information contained in this video is for entertainment purposes only. Before investing, please consult a licensed professional. Any stock purchases I show on video should not be considered “investment recommendations”. I shall not be held liable for any losses you may incur for investing and trading in the stock market in an attempt to mirror what I do. Unless investments are FDIC insured, they may decline in value and/or disappear entirely. Please be careful!
The 4% on the long strike isn’t the barometer of success. If spy is above 352 but below your short strike, you lose money, and there’s a better than 4% chance of that happening
Yeah it's 12% like he said before but i think he forgot or got it mixed up with 4%.
I love that your helping so many. For me the difference between your small and my small are vastly different not to mention starting out with level 3 margin account vs level 1 cash account but if I stop trying calls and stay with crap companies selling puts I'll get there.
Tell us more interesting thought
Why can’t you show us how to actually close the position? Do say this a lot in your videos but you never show us. Thank you
Just do the opposite of what you first did. So you would, in this case, buy back the put you sold (which will be more expensive if the underlying stock went down), and sell back the put you bought which may have also gone up in value if the underlying stock went down.
Agreed, I would like to see the close of the position done as well.
Yes if you sell to enter a trade BUY the position back to close it.
11:54
I sell Credit put/call Spread on SPY everyday and has been making consistent income. I just want to know if I should let it expire worthless, or should buy back at 0.01-0.02, what do you recommend?
This information is invaluable! Thank you sooo much!
You're so welcome!
hi Henry, would you suggest beginners in options trading to do iron condors on SPY? What is the average return on such a strategy?
Scary. Risking 1000 to make 70? There is no positive expectancy in that trade so over time you are not going to make money. Let's say you have a 90% win rate...You win 9 trades and make $630 but on the 1 that goes against you, you're down $930. And you're correct if the stock goes down past 352 you are protected, but your protection doesn't start until you hit 352. You talk about delta like its constant, it's not. Have you heard of tail risk? This trade is also going to be impossible to role for a credit. And you obviously don't understand gamma in with a few days go. The only way you will make money if it gets within 1 dollar on expiration is if you let it go and it expires out of the money. Short term options always favor the buyer not the seller because of the gamma risk.
and showing us your million dollar account doesn't tell us anything. It was probably 2 million at the beginning of the year.
Great video. I'm a newbie and haven't even started trading options (yet). Trying to learn more about it first. But one question. If you have an expiration date, like in the video. Why do you close your trade? Isn't going to be closed by itself when it expires?
Yes you can! Checkout my Discord for detailed explaination
Hi Henry. Is there a good reason you don’t buy the put directly lower than the one you sold? You can just open multiple contracts to get the same return vs. buying a put way lower in price
He says he prefers a larger spread vs more contracts because there are more fees and commissions with more contracts. I like a $1 spread because I'm trading in a small account and that's all I'm willing to risk per postion.
Henry, my Robinhood account doesn't allow me to do spreads yet. Are there any tips to get them to upgrade you to level 3 earlier than the one year timeframe they give? I'm stuck with only the basic one leg strategies until then otherwise. Thanks!
Depends on when you got approved for level 2. If you just got approved give it about 6 months before you apply again. Make sure you search on RUclips "how to get approved for level 3". All you have to do is answer their questionare the correct way. The algorithm will approve after that. Took me like 5 minutes to get approved.
Gotta thank you for hooking me up with this strategy
If the stock price ends up between your short and long strike prices wouldn't you get assigned the stock? ~$35,000 risk? The long put only protects you if the stock goes below long put.
Been doing something very similar to this since 2004 but with "standard" monthly options on low-volatility stocks. I had no idea SPY had daily options until I saw this video. Going to give this a try. Thanks!
Excellent video Henry. Clear and precise.
Wouldn't that be a bull credit spread ?
I particularly appreciated the fact that you spoke more slowly than your other videos.
That helped a lot.
Thank you Sir
Precise??
I love this video! Commenting for the algorithm I like it so much 🤗👍
Glad you enjoy it! And thank you for the comment :)
If I had $3000 should I open 1 of theses trades or use the whole 3 grand to open 3 of them? I want to maximize my gains while being safe and staying in the game.
same question
Henry aftermarket is very dangerous for option trading closing your option at $362 can cause a large loss if the after market keeps decreasing you too in the money
That is true
Good example. Spy is one of my favorites to trade.
Did Robinhood changed the way how we buy or sell options? (Im new to this) it wont let me do more than one option at a time?
all of these videos you need to have level 3 options trading but most of us only have level 2 and cant upgrade
2 suggestions; show how to close for a win and how to close early to stop a loss
I have been following your channel open a robinhood account with $100 to start robinhood don't do level 3 options did I miss something in your videos?
Can the close of the position be automated with a tool or bot?
Small minded trades. Buy Puts have less risk and in most cases unlimited gains. Spend $150 only lose $150 and possible make more than $300 rather than selling a call profit of $70 and losing almost 900 or more. Just an example.
Spot on. Made 222% so far this week… QQQ. 🎉
does SELLING PUTS mean Going NAKED?
Aren't these vertical spreads really risky though? Let's say you didn't get fully filled in closing early or got a partial fill leaving you at expiration in the money on the put side. Couldn't you get exercised after market close on your short leg and wake up owing a bunch of money you don't have in your account, without the ability to cover with your expired long leg?
Always make sure to fully close before expiry. You can always close if you're willing to use market rate. For stocks/ETF like SPY, the liquidity should be high enough for you to be able to close at market rate. Just don't let options expire.
The 🎉jujm😢I can’
Robinhood doesn't require the collateral because in that event they will exercise your long leg for you at a loss. So the short put which got in the money will be exercised on you, so the buyer is selling you 100 shares at the strike, which you cannot buy so robinhood exercises the long leg, selling the 100 shares at the strike of the long leg resulting in whatever the max loss was.
You said you started with 2k; how much and how often were you depositing in that account until your investment income outperformed your savings?
Long story and long time. Was not a day or week
Misleading title
Simply say doing credit spreads
This sounds like a risky move. Your risking 10x the money for 1x return... The math don't add up and I think even if you win 8 out of 10 the loses would be so big that you would not recover from it. The odds needs to be better for it to be viable. Math don't lie. People just forget that when they become greedy. If you're gonna gamble then you need to understand the math and your odds of winning and losing. It's like flipping a coin you would think it ends up evenly on both sides you would be wrong if you think that. If on side is slightly off by millimeters it will Hit the heavier side most times.
You aren't "losing" the money if you get assigned the shares. That money is gone but you get the 100 shares in return. This is why generally you should only do this on a stock that you would not mind owning. If you do get assigned, you can turn around and write covered calls against those 100 shares and collect premium from that until you get assigned and those shares are sold away from you. This is the wheel strategy and is a common bullish strategy for options trading.
you can most likely close it around 1 reward to 2 risk if it moves too much against you (3x of credit stop loss so if you open for $30 credit close for $60 loss.) with the probability of profit and the risk reward it works out 90-96% win rate. if you have a few minutes to manage these everyday. if you don't have time to manage weekly positions don't trade weekly trade monthly they move slower.
While it's true you keep the stock you still lost some of the money in a lot of caces so to have a net positive you would need heavy wins to make up the bad calls.
He’s slowly morphed into TechConversations lol love you both though
this sounds great but i use etrade and on there you have to qualify at level 3 options and right now im level 2 but have no experience but hey just started me out at level2 so i can buy and sell puts and call but cant to credit spreads... anybody know how to speed up thp prcoess to get qualified for lever 3 ?
Open a robinhood account. They are way more lax with the approval process. Pretty it's algorithms that approve your application. I got approved for level 3 in like 5 minutes. You just have to answer the questionnaire the correct way. There's plenty of of videos on RUclips that show you how to get approved first time around
@@chiz_o3794 thanks for the info
0:07 October 31st, that is my date of birth
I got to the party, you know I did the Smurf
5 days a week. Time for an updated video.
Higher divorce rates of Americans to Filipinas brought to the US is heresay… there are no facts to prove or disprove it as you demonstrated. I know slightly more Fil-Am couples who are still together than have split up, but this is my opinion not fact. The only reason it is publicized is because the American generally spent a significant amount of money to bring them here and they are angry about it. They were proud and happily bragged about the filipina to their friends and family and their pride was hurt… all those friends and family said “I told you so “. So the American complained about it more. BTW my filipina and I married in Angeles City and she is still married to me after being in the US for over five years.
The last senario $TSLA sell put spread postion you methioned, you don't close the SPS order ,you will be realize the max loss; this is a huge loss.
I’m sorry but this just sounds like an idiots way to trade. Youre risking $1k for $70?? Why not just buy a put straight up then?? Risk/reward will be much better
Yesterday I risked $230 and made a 352% gain. Guy is not prefacing just how risky these spreads are
Buying any option is riskier than selling an option. The risk of selling options is completely dependent on if you own the underlying and the strike price you choose.
If you do options right, you don't care if the stock goes up or down. You profit either way. Think of things more along the lines of an insurance company.
The underlying you own is used as collateral. If you lose the collateral, you get cash back equal to what you paid for the collateral. Or you keep the collateral and you keep up to 100% of the premium.
Buying options without actually owning the underlying is a recipe for disaster. Buying options should only be used for investors hedging their large positions.
The sharks sell insurance to these "investors" scared of losing money.
What if the short put goes in the money and you get assigned while your long put is still out of money? What do you do?
@@rochie5273 Thanks for you response. How can they exercise my long put when it is out of money?
@@starapj Options don’t need to be ITM to be exercised - it just never makes sense to do it since buying/selling the stocks normally would be cheaper - but certain scenarios such as this one force it. Once again though, since assignment is usually random, the brokerage will avoid it in the first place.
@@rochie5273 Thanks for the explanation, appreciate it :)
Usually when I get hit with the assignment of shares it involves ex dividend day.
Coincidently I have used these quick expiring SPY options a few times on the past week and a half. Fortunately they stayed green where as my ADBE not so much. Following your strategies have made me a better trader. Thank you sir.
Happy Birthday!!!
Thank you
Why opening a buy PUT takes off the obligation of having collateral?
Because that put essentially becomes the collateral for the time being since in buying a put, you've purchase the right to sell the stock. The broker knows they're safe - the position can be liquidated through exercising the long put and getting you out the trade with very minimal damage.
the problem is I'm level 2, i can't do spread
Uncle Henry I’d love to do this. But can’t seem to get approved for level 3 on robinhood. Any tricks to get approved?
you have to lied a little on the questions..
I did my first Put Credit Spread yesterday, funny that you dropped this video today. Anyway, I did today's experation, sold the 360 put and bought the 359 put. Collected $2 per spread and I did a total of 20. So I collected $40 with $2000 up for collateral. Just looking to get a "easy" 2% return. Less than 30 minutes until market close SPY bottomed at $360.95. At that moment Robinhood took it upon themselves to close out my position due to being "at risk". Within 2 minutes SPY rallied back up to $363. So instead of my contracts expiring worthless Robinhood closed me out for a $340 loss.
That's why you don't use Robinhood
I've had that happen before. It wasn't on Robinhood. It's something to be mindful
Of. I then employ this strategy the day before the expiration, so you get a lot more they decay into the day of expiration. It allows for a better chance of some profit. Most books will do what Robinhood did starting at about 3 pm. In a bear market. Safer to go with Bear Call Spreads.
Don’t use Robinhood, they will close your position like that. I got absolutely destroyed yesterday during the crash in Tesla and amd. It’s easy to be greedy but you can also avoid this bs risk by closing trades the day before.
its not just RD.. you never sell on same DTE
never use robinhood on same day also try to stop doing same day if you are new to these
this is not the same as selling put, selling put you dont actually lose anything you will just be assigned the stock which is around 36, 000 for the SPY. If you do this spread you will really lose the 900$ you will not own any stock.
Bruh... If the credit u collect for the shorter spread is $10 why dont u just sell 10 of those netting u 100 in credit by risking 1,000 instead of risking 1,000 on a wider spread to only make 70???
That strike in particular has a 4% chance of hitting so he is risking 930 at 4% for 70 versus 900 at a 10% for 100 profit in your example, he also explains he will close the position if it gets close to the strike for a breakeven or a small loss of 10 possibly 100 to 300 if he thinks it will come back up. So he is really only risking 10-300 dollars with good management to make 70 dollars a week which is a great deal
Next thing you know SPY closes at 362 on Friday
That's good. 352 would be bad
you didn't tell us the worst senario and how to fix that.
I like doing the 0DTE SPX spreads and IC's. Easier to chart and don't put on any trades until after 945. Never fight the direction of the market, and stay disciplined in entry and exit points.
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For more guidelines or tips on investment Txt me on the above name 📥📥
Do you mean 15 min after the market opens ? What delta do you choose ?
@@hanaleik Yes, typically 15 min after market opens. I like to do the 16 delta for my trades. Premium may not be as big, but more often than not the higher deltas will be tested.
Thank you for your response ! Do you feel 15 is better vs right at the opening 🤔...do you not lose out on the volatility right out of the gate at the open of the market ??
@@FriskyDingo1983 Thank you for your response !! Do you feel 15 min after the open is better than right out of the gates at the opening if the market ? Do you not lose out on the volatility right at opening ? Also do you ever place OCO orders to take out the emotions out of the trade ??
It requires 10k to do .. I don't understand
1k not 10
1k he just showed you,watch again
Now u lost money after oct 7 market 😢 we are in bear market u should do call credit spread ❤ on green days
Great video but still clueless 🙄
Honestly the only reason I clicked on this video is to figure how he's "SELLING" Puts with a small account... wouldn't he need collateral or equity to even write the contract???
Yes. This is risky
To avoid huge loses you do credit spreads AND use stop losses. The loss is always defined.
With a small account having long put works as collateral.
set an alert at $362
TOY-OH-TUH.
What is the difference when delta shows a -.20 vs a +.20?
Delta is calculated via quantitative finance, aka statistics.
The formula uses two standard deviations, also called sigmas.
Standard deviations range between -1 and 1, with 0 being the most likely outcome.
Simply put: Delta = change in price of asset / ch3age in price of underlying asset.
In this example (options): change in price of contract / change in price of stock.
On a call spread, Delta will be positive (> 0, where 0 is the strike price).
On a put spread, Delta will be negative (
Can you start getting to the point
Robinhood seems to only allow me to select one option at a time. Is doing this a level 3 capability only? Great content btw!
I’ve been wondering the same, will not let me enter in more than 1 type of option and or 1 strike price at a time
Yes Level 3 and margin acct only on RH. 👊🏻
less painful. we can work on your psychology.
Ok the big question is how do we close the position?!
This guy keeps telling people to sell puts on bear market ...
Better than buying puts in a bear market. Also it makes sense if you're not using leverage.
main thing about weeklies is you have to manage and roll and be disciplined
Crazy risky plays in this market
Yup, it's Oct. 11th and SPY is $357, that's $500 of intrinsic value that would have to be paid to close it. If find that the Delta becomes meaningless in strong bear markets, because you are practically living in that 10% range 24/7 in a world like this lol. I sell my puts down a little lower and I'm quick to cut the loss in this environment.
It's 3:24 pm ET and hours after this video was launched SPY crashed under 362 to 361.89 so I guess today is one of those 1 in a 100 times it failed 🙁
Barely have 2 hundred 🤓
Can you do one on bull/bear put credit spread? The differences
Thank you 😊 😊
if you think its bear market, you do call credit spread. and if you think its bull market, you do put credit spread.
👏👏💙💙
Watching this on Oct 7th and SPY hit a low of 363.13...now it is creeping back up.
It's 3:24 pm ET and hours after this video was launched SPY crashed under 362 to 361.89 so I guess today is one of those 1 in a 100 times it failed 🤦
@@cluggyahoo I saw that it actually hit $360 and change as the low. Crazy how bad the market is doing...I think we know the root cause.
tastyworks will let you trade spreads .