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@@projectfinance hi Chris, no I'm not the famous one hahahaha. Thanks for quick reply. I watched your 2:53 long video and it came with PDF file so I thought this one might be similar. Thank you very much for your great content ☺️
Thank you for the well planned course, have been trying to understand how to options for 2 weeks now, this is the first time i understood how do you pick strike price...Nice job Sir!...going to look for more videos...
I’ve watched a LOT of options videos while trying to educate myself on these concepts and strategies. This is BY FAR the best I’ve seen. You not only explain the concepts, you show theoretical AND real-life examples, which solidifies the information. My only suggestion, if I had one, is not only explain the $197 premium gain on the put profit potential on the iron condor, but explain the profit potential on the call side. That would have helped fill a void in my brain. Either way, very well done. Thank you. I’ll be checking out all videos.
Wow! Thanks so much for the awesome comment. Your comment is exactly what I was going for (explain concepts, show real examples, visualize everything, etc.). Stay tuned for more content! -Chris
projectoption please could you tell me the main strategies for beginners with a small account and resources to use to get comfortable with trading with those strategies. And which do u advise I start with first.
So the short & sweet version of number 1 (bullish put spread) is just selling an ITM put and buying an OTM put, both with the same exp. dates on a stock you predict is rising and simply letting them expire?
You don't have to let the spread expire as it's price will change every minute of the day. If you are right and the stock price goes up, the spread will lose value, and you can buy it back (close it) for a profit (the difference between your sale price and closing price).
Many thanks, I've been looking for "how to do options trading" for a while now, and I think this has helped. You ever tried - Jenameron Penny Smackdown - (Have a quick look on google cant remember the place now ) ? It is an awesome exclusive guide for learning an automated forex trading system without the normal expense. Ive heard some pretty good things about it and my cousin after a lifetime of fighting got great success with it.
Many thanks, I've been looking for "how to do options trading" for a while now, and I think this has helped. You ever tried - Jenameron Penny Smackdown - (Have a quick look on google cant remember the place now ) ? It is an awesome exclusive guide for learning an automated forex trading system without the normal expense. Ive heard some pretty good things about it and my cousin after a lifetime of fighting got great success with it.
recently got into trading options and trying to learn these strategies gets me a little lost since I'm still learning but hopefully when i come back to this video in a few days after learning more about options i understand these strategies
Yes I agree with what a couple of others have written - definately more risky than it sounds to make money with forex and you can be likely to lose more than you make. You should be aware of this and take advice from other people who've made cash. I looked round many websites and discovered plenty of great advice by searching google on websites like Trevs Exchange Tactics. Good luck and hope you make some cash!
I thik I did fairly well until you wet to the platform. the I lost everything I thought I had uderstood wow you are really fast like a magician, I do't mean to be critical but I can't learn that fast.@@projectfinance
Cheers for this, I have been researching "trading weekly options for a living" for a while now, and I think this has helped. Have you ever come across - Eeyarah Mysterious Eradicator - (do a search on google ) ? It is a good one off guide for discovering how to unlock an effective options trading method to win fast minus the normal expense. Ive heard some great things about it and my mate got amazing results with it.
So for the iron condor strategy, after you bought and sold the calls and puts, you don't need to touch it for the next 60 days? Or, should you sell your calls and buy the puts back?
Big ups for putting out such an incredible content, options strategy are the foundation to a good option income trade investment. Been doing a bit of Investing myself which has been turning out great and am happy there are great people like you sharing such amazing knowledge.
With a well structured trading system and strategy success is 💯 percent achievable. If you looking for a reliable body and brokerage, write to advance capital trade centre.
When doing an iron condor or any of the other strategies. Do I HAVE to wait for the contract to expire so I can get the profit? or can I close out all the positions and take the profits sooner?
Take the profits at any time, if the price for the options drops a lot and there is still a long time to expiration then calculate how much more you will make if you wait till expiration. If the remaining profit is more than you will make by closing out and starting a new position then don't close yet. But if you will be able to make more in a new position than you will give up by closing the current position before expiration then do that.
In the first strategy you say: "...as the stock price is above the short put spread as time passes, that short put spread is going to continually lose value and that's going to create profits as a put spread seller." Isn't it the other way around? Isn't it the long put that loses value and expires worthless? I am new to learning options. Thanks
Great video guys. Hopefully vol picks up a bit in 2017 so my iron condors can be wider. I find myself selling more put credit spreads these days than full on iron condors. At least on the indexes. Thank you. Eric
Thank you for your video. A lot of insights and good info., I have a question. It may sound stupid, and I apologize. I just started getting options. In the example one, I know if an option goes worthless and out of the money you lose everything. Did you lose anything in the first one? I know you said you had a profit of $100, but how much money did you invest to get a return of $100? Or that $100 plus money for selling the long put? My apologies again for the question
Hi Israel, Great question! It's confusing at first, but option prices change over time based on the amount of time they have left until they expire, and where the stock price is relative to the strike prices. If you buy an in-the-money option and it becomes out-of-the-money, you don't instantly lose everything you invested in the option. The option's price will slowly decrease if the option becomes further out-of-the-money, or if time passes while the option's value is mostly extrinsic. With a short put spread (sell a put, buy another put at a lower strike price), the put options will lose value as time passes when the stock price is above the short put's strike price. In the video example, the 210/205 put spread was sold for $1.00 ($100), which means the risk was $4.00 ($400) because the spread's value can only reach $5.00 (the width of the strikes). Since the spread was sold for $1.00, an increase to $5.00 represents a loss of $4.00 ($400). With a maximum loss potential of $400, a trader would need $400 to put the trade on. A $100 profit on a $400 margin requirement is a 25% return on risk/margin. In the example, the stock price is well above the 210/205 put spread at expiration, and both puts expire worthless because they're out-of-the-money. Since the spread was sold for $1.00 and both options expired worthless, the profit on the trade is $100 per spread that was sold. Does this help? Please let me know if you have follow-up questions. I'm happy to help! -Chris
projectoption thank you for your explanation. Sounds so clear when you put it that way. I'll try these strategies and I apprexiate your vid and the help!
@@projectfinance I had the same question, but still dont' quite understand. Trying to put in my words, if I bought the long put for $1000 and I sold the short put for $500, my total premium is $500. If it expires OTM, doesn't this mean I lost $500 since I had to pay the $1000 for the long put when it expired worthless?
I might be wrong but I believe you explained the Covered Calls upside down. In another video, you said that shorting calls is a bearish strategy. In other words, selling calls means you enter into the obligation to sell your stocks at a target price. So, if the price rises beyond the premium, you lose, because it will be cheaper to get shares from you than from the market. On the other hand, if the price decreases, then you keep the premium because it will be cheaper to get shares from the market, than taking them from you. Not the other way around. Or am I wrong?
The only thing I’m confused about is whether you need to actually have 100ct of any stock you’re doing an option strategy against. I only have a few positions of any given stocks in my portfolio. Do I need to have the multiplier equivalent to start trading options?
No. You don’t need 100 shares to buy an option. You need 100 shares for some strategies but there are plenty where u don’t. That’s a benefit of options
Hi Chris thanks for these great videos, they have been my company while washing the dishes after dinner...(LOL). May I ask if you have any recommendation for an Options Simulator? Thanks! Cheers!
With iron condor. what if during the 60 days i see the stock price get closer too much to one side. Can i create new iron condor to adjust the stock price as in the middle again?and what is the impact of this move on the total revenue?and close the previous iron condor within the range so i might make some proft there but i lower my risk by placing new iron condor(as if i am chessing the stock price to keep it in the middle range) and i might do it several times until expiration
Your max loss is the width of your strikes (E.G. sold the 100 Strike put & bought the 95 strike put. 100 strike - 95 strike = $5 5 dollars x 100 options = $500.00). However, before your spread gets a positional delta over -30. (which means your position has a 30% likelihood of trading in the money), you want to either adjust your position or roll it out to make money on your "losing trade." If you do NOT wish to... A. adjust it (close your spread and open it at a further strike price away from where the security is trading), or B. roll it out (close the position and open the same position again but this time with the next expiration month - thus allowing more time for the position to correct itself to your benefit), ...because your assumption of the direction of the stock has changed - then simply exit it early at a slight loss and not the maximum loss of $500.00
This is just superb, been searching for "equity options in india" for a while now, and I think this has helped. Ever heard of - Jenameron Penny Smackdown - (search on google ) ? Ive heard some unbelievable things about it and my friend got excellent results with it.
Jesus, all these get-rich-quick ads that one gets once you start watching investment videos. There's some serious douches out there. Oh and all the robo scammers in the comments too! Nice video though. Thank you for the information!
Hi. I think your P/L graph for the covered call example trade (the graph appearing from 16:25 onwards) is incorrect. The covered call P/L should track the stock price movements inversely. For example, when the stock price moved up above the 120 strike price at 48 days to expiration, the 120 call you sold should have increased in value and this should result in a floating loss (but your graph shows a profit for the covered call option even though the option is in the money at 48 days to expiration). Am i getting this entirely wrong?
Love your videos in general, and have learned a lot. But this one seems like a rare misfire, at least in its declaration as “for beginners”. I’ve been studying options intensively now for a few weeks, and it’s not easy material. I’ve been taking the last week or two to wrap my head around simple bull put spreads vs bear call spreads. So jumping right to Iron Condor, with four legs to the trade, seems way beyond “for beginners”. I’ll probably start wrestling with the iron condor concept in another month or two, maybe more. So I’ll be back here then. :)
Winner of a video, I have been researching "day trading uk tips" for a while now, and I think this has helped. Ever heard of - Annahiy Stockify Sabinianus - (Have a quick look on google cant remember the place now ) ? Ive heard some decent things about it and my mate got amazing results with it.
This was great, I have been researching "stock option trading journal software" for a while now, and I think this has helped. Ever heard of - Winoorfa Option Olegroson - (Have a quick look on google cant remember the place now ) ? Ive heard some extraordinary things about it and my partner got cool results with it.
I am a regular viewer with like buttons. Are these doable for a small cash acct newbie ? I want to start with small amt with options til i get more experienced. Thank u for ur good contents. Mahalo. From. Hawaii.....😁
Limited risk strategies such as buying/selling spreads (or combining them into iron condors or butterflies) can be implemented in small accounts, but you will need the privileges to trade spreads. I'm not sure you will be able to trade option spreads with a cash account.
@@projectfinance so i guess i need to talk to different brokers who is willing to do business cause they make commissions i do enjoy ur intelligent channel. Mahalo from Hawaii.
Strategies that make money when the stock falls: 1) Buying puts/put spreads 2) Selling call spreads 3) Buying calls on volatility products (VIX, VXX, UVXY)
ONe thing I don't understand about the Iron Condor is you say "Selling Iron Condors". I are you selling the long call and long put before expiration or holding on? Or is it more context dependent?
Thanks! I have a bunch of historical options data stored in a database. I use Python to analyze/simulate trading strategies and also create data visualizations.
On your first two examples. You need to address what 's your potential maximum loss against your potential maximum gain. If the risk reward is not conducive in your favor. The reward ratio wouldn't make sense. Example: To make $150.00 for max gain versus to $600.00 of possible loss.
Hi Kerry, That's a good point. With that said, everything in options trading ties into probabilities. With $150 max gain and $600 max loss, the probability of the trade making money is higher than 50%, in theory, because the loss potential is greater than the profit potential. Such risk/reward ratios are common when selling options/spreads. On the other hand, if a trader bought an option and had $500 of max loss but unlimited profit potential, that trade would have a less than 50% probability of making money, in theory. In my opinion, the strategy being traded doesn't matter as much as the trading plan the trader is following (how they manage and size the position, etc). I hope this helps! -Chris
Hi Jay K! To sell something before owning it is called "shorting." With options, you can short an option with the intention of buying it back (closing it) at a lower price in the future (sell high, buy low). It's the opposite approach as buying an option hoping to sell it (close it) at a higher price in the future (buy low, sell high). It's a new concept to be introduced to, but you can sell options/stocks without owning them first. Keep in mind that shorting options/stocks are highly risky strategies and should not be done without a full understanding of the inherent risks. Feel free to drop a comment on any of my videos if you ever have a question about the risk of a position/trade. -Chris
All three of these strategies are for seasoned traders not BEGINNERS!!! Grow up buddy. Dont mislead people , I've traded for years and this kind of videos just keeps hopefuls out of the market. Beginners to single leg trades and covered calls.
How do you know how many strikes to have in between the spreads? Like how do you know when to sell 140 strike and buy 135? Why not sell 140 and buy 120? Based on what should we make that decision?
What technical indicators do you use to determine direction with 70% confidence? Implied volatility is low as a result risk/reward ratio is 3:1. Why not buy ITM call if you are bullish?
Hi Leo! Great question. It can be confusing because there are many correct ways to describe the spread strategies: Bull Call Spread = Long Call Spread = Call Debit Spread = Buying a Call Spread Bear Call Spread = Short Call Spread = Call Credit Spread = Selling a Call Spread Bull Put Spread = Short Put Spread = Put Credit Spread = Selling a Put Spread Bear Put Spread = Long Put Spread = Put Debit Spread = Buying a Put Spread To answer your question, a put spread is a vertical spread, and selling a put spread can be referred to as "selling a put vertical spread." It can also be referred to the other names listed above. I know it's confusing, but unfortunately, every trader prefers one of the different names and we just have to learn all the nicknames.
Thank you very much, Chris. It was a great explanation. Your channel is really the best. I'm watching all your vídeos and reading all your guides. I will use your referral link in Tastyworks, but it's going to take some weeks because before I want to watch all your videos. God bless you. Bye.
@@leocarmona4760 Thank you for the kind words, Leo! I really appreciate it. Be sure to send me an email (www.projectoption.com/contact-us/) when you sign up/use the tastyworks referral code so I can send you access to one of the courses!
Hi so ihave 80% win rate on my options but i usually break even or small loss. What could i be doing wrong. Right now i bundle two to three OTM options in either direction. I do have a small acct im playing with 600 bucks. And i consider myself an options scalper. Most time the fees are more than my profit!
I new so forgive me. But in layman’s term, you essentially BUY those positions (above or below) your SELL positions as an ‘insurance’ policy to mitigate your risk and exposure potential to massive substantial loss correct?!?!?!
@@keshav567 The P/L of any options trade is equal to the difference between your sale price and purchase price, multiplied by the number of contracts and then 100. If you sold 5x puts for $7.50 and bought back (closed) the puts for $3.00, your profit would be: ($7.50 Sale Price - $3.00 Purchase Price) x 5 Contracts x 100 = $3.50 x 500 = $1,750.
@@satoshiorange Thank you for the nice video first, now, $7.5 - $3.00 = $4.5, in the calculation is the other $1 for commission or something else. And also what is typically the strategy to close before expiration, reading in some forums people use the option like day trading does it make sense
your arrow on the 1st example points towards a price increase, but mentions the stock price has fallen, when infact, it has risen from 210$ to 215$. Confusing as fuck!!!
I want to implement these strategies but I don't have the necessary option levels to trade spreads. What do I do? Is there a broker who allows these levels for anybody or do I really have to buy naked calls/puts for a period of time before I can trade these strategies that involve spreads?
You'll have to wait until you get approved for the higher tiers. If you don't want to wait, you'll have to consider switching brokerage firms. I personally trade with tastyworks, which gives you full options trading privileges if you apply for "The Works" margin account. tastyworks.com/accounts No hard sell here. You should do your own research if you are considering switching brokerages, but I trade with tastyworks because of the ease of platform use and their commission/fee structure for options traders. If you do sign up with them and you want to get access to one of the projectoption courses/strategy research products, you can use the "projectoption" code when signing up. Again, no hard sell, just informing you of the standing offer we have in case you do go that route. Let me know if you have any questions! -Chris
You will have to get approved for higher tiers or switch brokerages. I trade with tastyworks and they approve traders for full privileges if you apply for "the works" margin account. If you get approved for a margin account, you'll likely be able to get the fully-privileged account: tastyworks.com/accounts/ No hard sell here. I think it's good for everyone to do their own brokerage research. Just letting you know who I trade with and what they offer.
This was hard to follow for me (a beginner). You moved a little too fast and didn't explain the why's. You put out great content, but I couldn't follow this.
I know this is a good video. I'm still confused, though. 😆 Edit: Every time I watch it, it sinks in more. Thank you for this video. It's exactly what I need!
This might sound dumb, but how can you sell a contract that you never had then buy another one? It doesnt make sense to me, im very new into this. Thanks
Hi Chris, Great question. In options/stock trading, selling something without owning it is called 'shorting.' In the context of stock, 'shorting' is essentially borrowing shares that you plan on returning (buying back) at a lower price. When shorting stocks/options, you want the price of whatever you're selling to decrease. The idea is to sell high and buy low instead of buy low and sell high. Be careful shorting stocks/options, as the risk is typically significantly more when compared to buying stocks/options. If you do sell options, it's a good idea to limit the risk by purchasing another option against the option you've sold. It's confusing, I know, but you'll get the hang of it as you're exposed to various options strategies and begin trading them. I hope this helps. -Chris
projectoption hey i would just like to say that since i have left this comment i really took the time to try to understand options and now im even confident in understanding strategies. Im very grateful for your channel and the others here on youtube for helping me and opening new doors for me to supplement my income in the future. I just wanna say thanks!!
Glad I read through the comments. This was exactly my confusion. I knew what shorting a stock was, but didn't quite understand what selling an option was. Now I know it's the same concept. Thanks to Chris for the question I also had, and a strong thanks to Chris at projectoption for all the effort you put into this channel to help all us newbs. Projectoption is by far leaps and bounds above the rest of the options guys on YT, you are greatly appreciated by so many.
These might seem like dumb questions but with the short put spread, you're actually opening two different positions and placing 2 separate orders correct?? Also if the share price rises significantly wouldn't the gains be offset by the put you bought at the lower strike price??
Hey Cashmere! You are combining two transactions into one order/position. You are simultaneously selling a put and buying a put at a lower strike price, but you complete both of those transactions in one order. The put you sell will be more expensive than the put you buy, which means the losses on the put you buy will not exceed the profits from the put you sell if things go well (the stock price remains above the spread over time). I just redid my bull put spread video and it should be very helpful for you: ruclips.net/video/fSMCL5U9M-I/видео.html Check it out! -Chris
projectoption thanks so much for the quick reply!! About the combining it into one order is this what the “add a leg” means when I’m placing the order. Like is that how it’s done lol
Unfortunately, I have no idea. I've never used Fidelity's platform/website. You'll have to contact them to see how to do spread orders. Wish I could help more! -Chris
Trading is the best option for accumulating but if done wrong can be disastrous so be careful or follow an expert with a known success rate+1 469 409 6480 Waht✓-- sApp✓ Ayla Brooke and earn huge in the trading market like I do with her strategies 💯
How much was a leaps options for Netflix then? Two years out would have got you over $20k and if you did it again 2 years later it would have been $20k+ again.... I’m starting to see why there are so many zillionaires
How nice it would be to time travel. If I could go back to being a little kid I would’ve said to my mom “hey!..... invest in Apple..... please don’t put anymore cigarettes out on me.”
Hi I've been watching your videos for a few days and subscribed to your channel great info...but I still cant decide on what to do on my acct... I own 100 shares of a stock, my cost basis is $42 after covid19 and the shutdown the stock fell to $24 per share... I'm still holding and dont want to sell.... the covered call option that's going to pay the highest premiums are in the money... but if I write one of those doesn't it mean that someone can just ex excersise it from me? I'm confused on what to do?
I have another question. Btw, thanks for your first answer. Do you have to stick with thr minimun of 60 days for your strategies to work or it can work with expiration dates earlier than 60 days? And thanks again
Hi Israel! I typically trade with around 60 days to expiration when entering trades, but traders can trade whatever time frame they like. Unfortunately, I can't just go out and say that trading shorter-term expiration cycles will be more or less successful than trading ~60 days to expiration. The historical results will be different when analyzing different trade time frames. tastytrade did a study a few years back on this topic: ruclips.net/video/TCg1EX6vc2Y/видео.html They may have done updates of this study but I couldn't find one. I hope this helps! -Chris
I have FB bull put position right now and the the price is close to sell Put price ($5 to sell Put price) what should I do? close position? eventhough I already put Bear Call spread to off set the floating loss
Hi Harry, Could you give me more information on your position? 1) Strike prices / expiration 2) Your entry price(s) on the spread(s) With more information, I can be more specific with my response. -Chris
I have FB Bull Put Nov155/135 (floatins loss 214%) and FB Bear Call Nov200/205 (floating profit 46%), I was going to add more Bear Call to off set the loss.What do you think ?
I have FB Nov Bull Put 155/135 (floating loss 214%) and FB Bear Call Nov 200/205 (floating profit 46%). I was going to add more Bear Call to offsett the loss.What do you think?
In Brazil we have both American and European options, which can be executed anytime or only on expiration day respectively. Do these strategies work on both kinds or only on American options?
Nothing beats knowing your profit is on the increase. Don't be a victim to gamblers out there, ask the right questions, if you get a reliable pro-trader to assist please treasure it. Trade wisely and stay safe.
I'm trying to wrap my not-at-all financial head around options trading and your complete, clear explanations are extremely helpful. I've taken notes on everything and will try all three of these with Paper Money.
Nice video! My only question with these strategies is that they are all related to a long period of time. You can’t predict for how long a price will remain in a sideways… As a beginner I would like to see a pattern which I have confidence that in a matter of hours it will remain. Or at least for a few minute. Does it makes sense ?
This is probably a silly question, but in the spreads and iron condor, why not just buy the strikes that are severely OTM since we can almost guarantee the stock will remain in a certain range? For the iron condor example in the video, why not buy a the 170 and strikes for the 165 call spread and the 110 and 105 strikes for the put spread? I guess I don’t understand the downside to this
Hi Zach, Great question. The answer is that options with strike prices further from the stock price are cheaper because there's a lower probability of the options having any value at expiration compared to options with strike prices closer to the stock price. Because of this, selling iron condors with strike prices extremely far from the stock price will not yield much premium, which means you won't have much profit potential and you'll still have plenty of risk. Using just a short call spread as an example, if the stock is at $100, the 110/115 call spread will collect far more premium than the 125/130 call spread, as there's a much higher chance that the stock price is above $110 at expiration compared to $125. The same concept holds true for selling put spreads. The further the put spread is from the stock price, the less the profit potential will be. Also, since less premium is collected overall, the loss potential increases. Does this help clear things up? Let me know if you need more clarification. Best regards, Chris
I’m new to this! So when you buy a lower put from the put you sold it off sets it. But is that also for protection in case the strategy doesn’t work in your favor? Or is it just because you have to buy the 100 shares back?
clicked off this video as soon as I heard him promoting his paid course. Never trust someone who is promoting their own thing inside a beginners guide.
Couldn't you sell naked puts? If you have enough money in your account and you lose/get exercised you have to buy 100 shares. Then you could do the opposite and sell covered calls? Am I missing the something? Is this generally safe? @projectoption @chris butler
You could do that, yes. You can take assignment on the short put and then sell calls against the stock. But, you'll need enough money in your account to actually buy 100 shares and hold it. The margin requirement for selling a naked put is not the same as the margin requirement for buying 100 shares at the strike price. But assuming you have the appropriate amount available to buy 100 shares at the put's strike price (strike price x 50 if you are in a margin account), then you can do what you're suggesting.
@@projectfinance Thank you so much! Was using robinhood for the longest time lol, just got a tastyworks account under you 2 weeks ago and love everything about it except the charts lol. I use ToS for charts. This market is crazy rn, and wanted to do a more safe approach! Thanks for all your help and educational videos!
Are there any adverse effects to closing an iron condor before expiration? Even if the stock price is within the two spreads? (i.e paying commissions on manually closing the trade, getting debited for the premium that I collected at the open of the trade?) ... BTW I have TD Ameritrade
Closing an iron condor before expiration costs commissions but you will guarantee profits if you buy back the iron condor for a price cheaper than you initially sold it for. Of course, by closing the trade you remove the potential for earning the maximum profit potential when the stock price is in-between the short call and short put strike prices at expiration. If you trade a lot of iron condors, I'd check out the tastyworks commission structure to see if it makes sense for you: www.projectoption.com/tastyworks/. I hope this helps! Let me know if you have any other questions. -Chris
Awesome Chris, I appreciate it. I indeed have an account with tastyworks and I am a current user. They have a great commission structure but their software (both mobile and desktop) is still in its infancy and I feel isn't up to par with thinkorswim. Which I've been a long time user of...
Hey, I am new to this and the option premium in my country, is so high that its pushing break- even point far away from the strike price so much so that, even the if the stock value is-in-the money at expiration, I would still be suffering loss. This kind of market setup forces me to trade on premium prices based on extrinsic value rather than realizing the true intent of option markets. How to tackle "over inflated premium" problem? For eg: Spot of a particular index BankNifty is 28000. The premium of 28300 call is 500 with 30 days to expiry. So even if the stock expires in-the-money at 28600 according to my guess, I would still be suffering 200 loss. So the only way for me is to some how sell the option when its premium is greater that 500. So I will either end up trading premium prices or lose it to time decay. What to do?
There's no over inflated premium problem. What you are doing is buying options that are already in the money. Therefore paying huge premiums and making break even seem far away. That's the stuff you should be "selling" not "buying." Make sure you aren't buying calls and puts that are already in the money. Buy them when they are just out of the money so you aren't paying huge premiums. Because if you purchase something deep in the money. The premium that you have to "pay" is what causes the break even to be so far. A lot of people make profits just trading the premiums. Remember big premiums are what you want to sell. Not what you want to buy. Buy low sell high. Not the other way around. Hope I answered it correctly or helped you
@@brandonvillatuya9539 exactly, But what to do when out of the money premium is very high. That's what I said in the example. The spot is 28000. And 28300 call is 500 with 30 days. Out of money premiums are also very high.
@@varunnrao3276 Extrinsic value of an option is based on two things. Time(Theta) and Volatility(Vega). If you think the premium of a 28300 call that's 30 days until expiry is too "pricey." Pick one with a closer expiry date, it will be cheaper, but more risky. Also if you think it's overinflated, check the price action and volume of the underlying stock. It might seem high because you just missed a rally in the stock. If you are saying 500 is high, you imply that you are sure the underlying stock is overbought. Maybe wait for the price of the stock to pull back so the premium gets cheaper
@@brandonvillatuya9539 thank you, I learnt there's one more thing you can do if the option is too pricey, instead of buying a call option, we can buy call spread at the same price, this reduces both potential loss and and potential profit, but becomes very cheap.
For a first timer trying to learn something new yes it gave me a headache.. I understand how the stock market works because I have been investing in the stock market for over 3 years now. But Option is new to me and I would to fully understand it...Help plz
Interested in getting first access to my options strategy data library where I analyze the performance of popular options strategies with various trade management rules? Sign up for my newsletter and see the welcome email for more information: pfnews.substack.com/subscribe
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Wtf is up with these comments?
Hi Chris
Could you please link the PDF file of the strategies to this video, thanks for another great video
@@onlyentertainmentandfun Hi James,
I don't have a PDF file that goes along with this video. Are you the James Hetfield from Metallica?
@@projectfinance hi Chris, no I'm not the famous one hahahaha. Thanks for quick reply. I watched your 2:53 long video and it came with PDF file so I thought this one might be similar. Thank you very much for your great content ☺️
Looks like is not for free to access anymore..
Man..I am your big fan... it’s an understatement that how much I liked you.. but I don’t have any better words to express it
Thank you for the well planned course, have been trying to understand how to options for 2 weeks now, this is the first time i understood how do you pick strike price...Nice job Sir!...going to look for more videos...
Lemme know when you find out 😂
I believe covered call is not for beginners.. that is for wealthy who owns the stock quantity equal to options 1 contract lot size.. Nice video
Finally a vid that makes the complex understandable
!!!
I’ve watched a LOT of options videos while trying to educate myself on these concepts and strategies. This is BY FAR the best I’ve seen. You not only explain the concepts, you show theoretical AND real-life examples, which solidifies the information. My only suggestion, if I had one, is not only explain the $197 premium gain on the put profit potential on the iron condor, but explain the profit potential on the call side. That would have helped fill a void in my brain. Either way, very well done. Thank you. I’ll be checking out all videos.
Wow! Thanks so much for the awesome comment. Your comment is exactly what I was going for (explain concepts, show real examples, visualize everything, etc.).
Stay tuned for more content!
-Chris
What was your first options trading strategy? Which strategies do you think new options traders should start with? Comment below!
projectoption please could you tell me the main strategies for beginners with a small account and resources to use to get comfortable with trading with those strategies. And which do u advise I start with first.
So the short & sweet version of number 1 (bullish put spread) is just selling an ITM put and buying an OTM put, both with the same exp. dates on a stock you predict is rising and simply letting them expire?
You don't have to let the spread expire as it's price will change every minute of the day. If you are right and the stock price goes up, the spread will lose value, and you can buy it back (close it) for a profit (the difference between your sale price and closing price).
Many thanks, I've been looking for "how to do options trading" for a while now, and I think this has helped. You ever tried - Jenameron Penny Smackdown - (Have a quick look on google cant remember the place now ) ? It is an awesome exclusive guide for learning an automated forex trading system without the normal expense. Ive heard some pretty good things about it and my cousin after a lifetime of fighting got great success with it.
Many thanks, I've been looking for "how to do options trading" for a while now, and I think this has helped. You ever tried - Jenameron Penny Smackdown - (Have a quick look on google cant remember the place now ) ? It is an awesome exclusive guide for learning an automated forex trading system without the normal expense. Ive heard some pretty good things about it and my cousin after a lifetime of fighting got great success with it.
recently got into trading options and trying to learn these strategies gets me a little lost since I'm still learning but hopefully when i come back to this video in a few days after learning more about options i understand these strategies
Made my head hurt but good video.
Options can be confusing, especially at first. It will all begin to make more sense the more time you spend with it!
Thanks for the comment.
-Chris
Yes I agree with what a couple of others have written - definately more risky than it sounds to make money with forex and you can be likely to lose more than you make.
You should be aware of this and take advice from other people who've made cash. I looked round many websites and discovered plenty of great advice by searching google on websites like Trevs Exchange Tactics. Good luck and hope you make some cash!
I thik I did fairly well until you wet to the platform. the I lost everything I thought I had uderstood wow you are really fast like a magician, I do't mean to be critical but I can't learn that fast.@@projectfinance
Lol.
Cheers for this, I have been researching "trading weekly options for a living" for a while now, and I think this has helped. Have you ever come across - Eeyarah Mysterious Eradicator - (do a search on google ) ? It is a good one off guide for discovering how to unlock an effective options trading method to win fast minus the normal expense. Ive heard some great things about it and my mate got amazing results with it.
So for the iron condor strategy, after you bought and sold the calls and puts, you don't need to touch it for the next 60 days? Or, should you sell your calls and buy the puts back?
Big ups for putting out such an incredible content, options strategy are the foundation to a good option income trade investment. Been doing a bit of Investing myself which has been turning out great and am happy there are great people like you sharing such amazing knowledge.
Just started my journey and am hopeful it would turn out okay.
Still struggling with mine and trying multiple strategies but my trade is not getting any better, just wished their is an opportunity to help me earn.
With a well structured trading system and strategy success is 💯 percent achievable. If you looking for a reliable body and brokerage, write to advance capital trade centre.
Write them through mail with
Thanks for this video. I think I'll start trading the bull put spread and the iron condors in my demo account
Finally someone who explained with great visual and actual trade software. CONGRATSULATION.
Hey man.. from a fellow educator its nice to see someone just educate without all the click bait.. very nice work im a fan.
When doing an iron condor or any of the other strategies. Do I HAVE to wait for the contract to expire so I can get the profit? or can I close out all the positions and take the profits sooner?
Take the profits at any time, if the price for the options drops a lot and there is still a long time to expiration then calculate how much more you will make if you wait till expiration. If the remaining profit is more than you will make by closing out and starting a new position then don't close yet. But if you will be able to make more in a new position than you will give up by closing the current position before expiration then do that.
In the first strategy you say:
"...as the stock price is above the short put spread as time passes, that short put spread is going to continually lose value and that's going to create profits as a put spread seller."
Isn't it the other way around? Isn't it the long put that loses value and expires worthless?
I am new to learning options. Thanks
Great video guys. Hopefully vol picks up a bit in 2017 so my iron condors can be wider. I find myself selling more put credit spreads these days than full on iron condors. At least on the indexes. Thank you. Eric
Thank you for your video. A lot of insights and good info., I have a question. It may sound stupid, and I apologize. I just started getting options. In the example one, I know if an option goes worthless and out of the money you lose everything. Did you lose anything in the first one? I know you said you had a profit of $100, but how much money did you invest to get a return of $100? Or that $100 plus money for selling the long put? My apologies again for the question
Hi Israel,
Great question! It's confusing at first, but option prices change over time based on the amount of time they have left until they expire, and where the stock price is relative to the strike prices. If you buy an in-the-money option and it becomes out-of-the-money, you don't instantly lose everything you invested in the option. The option's price will slowly decrease if the option becomes further out-of-the-money, or if time passes while the option's value is mostly extrinsic.
With a short put spread (sell a put, buy another put at a lower strike price), the put options will lose value as time passes when the stock price is above the short put's strike price. In the video example, the 210/205 put spread was sold for $1.00 ($100), which means the risk was $4.00 ($400) because the spread's value can only reach $5.00 (the width of the strikes). Since the spread was sold for $1.00, an increase to $5.00 represents a loss of $4.00 ($400). With a maximum loss potential of $400, a trader would need $400 to put the trade on. A $100 profit on a $400 margin requirement is a 25% return on risk/margin.
In the example, the stock price is well above the 210/205 put spread at expiration, and both puts expire worthless because they're out-of-the-money. Since the spread was sold for $1.00 and both options expired worthless, the profit on the trade is $100 per spread that was sold.
Does this help? Please let me know if you have follow-up questions. I'm happy to help!
-Chris
projectoption good explaination
projectoption thank you for your explanation. Sounds so clear when you put it that way. I'll try these strategies and I apprexiate your vid and the help!
@@projectfinance I had the same question, but still dont' quite understand. Trying to put in my words, if I bought the long put for $1000 and I sold the short put for $500, my total premium is $500. If it expires OTM, doesn't this mean I lost $500 since I had to pay the $1000 for the long put when it expired worthless?
I might be wrong but I believe you explained the Covered Calls upside down. In another video, you said that shorting calls is a bearish strategy. In other words, selling calls means you enter into the obligation to sell your stocks at a target price. So, if the price rises beyond the premium, you lose, because it will be cheaper to get shares from you than from the market. On the other hand, if the price decreases, then you keep the premium because it will be cheaper to get shares from the market, than taking them from you. Not the other way around. Or am I wrong?
yes but i don't see any backtests, what is more interesting is can you make any money with iron condors and why
On the put spread example, what happens if the stock falls below the short put strike but above the long put strike?
The only thing I’m confused about is whether you need to actually have 100ct of any stock you’re doing an option strategy against. I only have a few positions of any given stocks in my portfolio. Do I need to have the multiplier equivalent to start trading options?
No. You don’t need 100 shares to buy an option. You need 100 shares for some strategies but there are plenty where u don’t. That’s a benefit of options
Very good teacher......could you talk about scalping..
Hi Chris thanks for these great videos, they have been my company while washing the dishes after dinner...(LOL). May I ask if you have any recommendation for an Options Simulator? Thanks! Cheers!
Great video & explanation...thank you so much for sharing the information. Still trying to understand it though 😁
What happens if you close a covered call before expiration?
I don't understand the difference between selling a call and buying a call?
With iron condor. what if during the 60 days i see the stock price get closer too much to one side. Can i create new iron condor to adjust the stock price as in the middle again?and what is the impact of this move on the total revenue?and close the previous iron condor within the range so i might make some proft there but i lower my risk by placing new iron condor(as if i am chessing the stock price to keep it in the middle range) and i might do it several times until expiration
how about your loss if trade doesn't go our way. i would love to know it. thanks
Your max loss is the width of your strikes (E.G. sold the 100 Strike put & bought the 95 strike put. 100 strike - 95 strike = $5 5 dollars x 100 options = $500.00).
However, before your spread gets a positional delta over -30. (which means your position has a 30% likelihood of trading in the money), you want to either adjust your position or roll it out to make money on your "losing trade."
If you do NOT wish to...
A. adjust it (close your spread and open it at a further strike price away from where the security is trading), or
B. roll it out (close the position and open the same position again but this time with the next expiration month - thus allowing more time for the position to correct itself to your benefit),
...because your assumption of the direction of the stock has changed - then simply exit it early at a slight loss and not the maximum loss of $500.00
Bro, u r awsm , God Bless U
Do you use Delta to determine strike price when selling a cover call? Thank you
Great Vid. And Jason Bond annoys
This is just superb, been searching for "equity options in india" for a while now, and I think this has helped. Ever heard of - Jenameron Penny Smackdown - (search on google ) ? Ive heard some unbelievable things about it and my friend got excellent results with it.
Jesus, all these get-rich-quick ads that one gets once you start watching investment videos. There's some serious douches out there.
Oh and all the robo scammers in the comments too!
Nice video though. Thank you for the information!
Yeah it’s insane! Thanks for watching!
Hi. I think your P/L graph for the covered call example trade (the graph appearing from 16:25 onwards) is incorrect. The covered call P/L should track the stock price movements inversely. For example, when the stock price moved up above the 120 strike price at 48 days to expiration, the 120 call you sold should have increased in value and this should result in a floating loss (but your graph shows a profit for the covered call option even though the option is in the money at 48 days to expiration). Am i getting this entirely wrong?
Is it possible to make a call spread?
It's always possible
Love your videos in general, and have learned a lot. But this one seems like a rare misfire, at least in its declaration as “for beginners”. I’ve been studying options intensively now for a few weeks, and it’s not easy material. I’ve been taking the last week or two to wrap my head around simple bull put spreads vs bear call spreads. So jumping right to Iron Condor, with four legs to the trade, seems way beyond “for beginners”. I’ll probably start wrestling with the iron condor concept in another month or two, maybe more. So I’ll be back here then. :)
Another month?!?! The video is only 10 mins.
What different stock options between tasty and interactie broker?
Put like, the video is very useful for me...
Winner of a video, I have been researching "day trading uk tips" for a while now, and I think this has helped. Ever heard of - Annahiy Stockify Sabinianus - (Have a quick look on google cant remember the place now ) ? Ive heard some decent things about it and my mate got amazing results with it.
This was great, I have been researching "stock option trading journal software" for a while now, and I think this has helped. Ever heard of - Winoorfa Option Olegroson - (Have a quick look on google cant remember the place now ) ? Ive heard some extraordinary things about it and my partner got cool results with it.
I am a regular viewer with like buttons. Are these doable for a small cash acct newbie ? I want to start with small amt with options til i get more experienced. Thank u for ur good contents. Mahalo. From. Hawaii.....😁
Limited risk strategies such as buying/selling spreads (or combining them into iron condors or butterflies) can be implemented in small accounts, but you will need the privileges to trade spreads. I'm not sure you will be able to trade option spreads with a cash account.
@@projectfinance so i guess i need to talk to different brokers who is willing to do business cause they make commissions i do enjoy ur intelligent channel. Mahalo from Hawaii.
on current market, what would be the contrary deal, making money when stocks fall
Strategies that make money when the stock falls:
1) Buying puts/put spreads
2) Selling call spreads
3) Buying calls on volatility products (VIX, VXX, UVXY)
really helpful, thanks
You're welcome. I'm glad the video was helpful, Alex!
-Chris
I scrolled around thinking your pic was a hair on my screen
ONe thing I don't understand about the Iron Condor is you say "Selling Iron Condors". I are you selling the long call and long put before expiration or holding on? Or is it more context dependent?
Wow I love it! very interesting, what software do you use to analyze these?
Thanks! I have a bunch of historical options data stored in a database. I use Python to analyze/simulate trading strategies and also create data visualizations.
Great video 🙌🏾
On your first two examples. You need to address what 's your potential maximum loss against your potential maximum gain. If the risk reward is not conducive in your favor. The reward ratio wouldn't make sense. Example: To make $150.00 for max gain versus to $600.00 of possible loss.
Hi Kerry,
That's a good point. With that said, everything in options trading ties into probabilities. With $150 max gain and $600 max loss, the probability of the trade making money is higher than 50%, in theory, because the loss potential is greater than the profit potential. Such risk/reward ratios are common when selling options/spreads.
On the other hand, if a trader bought an option and had $500 of max loss but unlimited profit potential, that trade would have a less than 50% probability of making money, in theory.
In my opinion, the strategy being traded doesn't matter as much as the trading plan the trader is following (how they manage and size the position, etc).
I hope this helps!
-Chris
Im fairly new to trading, I was just curious as to how can you sell something before buying it first?
Hi Jay K!
To sell something before owning it is called "shorting." With options, you can short an option with the intention of buying it back (closing it) at a lower price in the future (sell high, buy low).
It's the opposite approach as buying an option hoping to sell it (close it) at a higher price in the future (buy low, sell high).
It's a new concept to be introduced to, but you can sell options/stocks without owning them first.
Keep in mind that shorting options/stocks are highly risky strategies and should not be done without a full understanding of the inherent risks. Feel free to drop a comment on any of my videos if you ever have a question about the risk of a position/trade.
-Chris
@@projectfinance Thank you for taking the time to give clear and concise explanation. Much appreciated!!
You got it!
Becareful when you do it, If you get assigned without having a contract you are on the hook for the full 100x shares you wrote the script for
All three of these strategies are for seasoned traders not BEGINNERS!!! Grow up buddy. Dont mislead people , I've traded for years and this kind of videos just keeps hopefuls out of the market. Beginners to single leg trades and covered calls.
Can you speak to the max loss potential for each of those examples?
How do you know how many strikes to have in between the spreads? Like how do you know when to sell 140 strike and buy 135? Why not sell 140 and buy 120? Based on what should we make that decision?
Question so do I have to wait till the 60day expiration till I get paid?
You automatically receive the credit, how you actually making your profit is buying back the spread at a cheaper price than you sold
What technical indicators do you use to determine direction with 70% confidence? Implied volatility is low as a result risk/reward ratio is 3:1. Why not buy ITM call if you are bullish?
I love you thank you for making me cash
Thank very much, your videos are great. One question: Are selling put spread and vertical credit spread the same strategy?
Hi Leo!
Great question. It can be confusing because there are many correct ways to describe the spread strategies:
Bull Call Spread = Long Call Spread = Call Debit Spread = Buying a Call Spread
Bear Call Spread = Short Call Spread = Call Credit Spread = Selling a Call Spread
Bull Put Spread = Short Put Spread = Put Credit Spread = Selling a Put Spread
Bear Put Spread = Long Put Spread = Put Debit Spread = Buying a Put Spread
To answer your question, a put spread is a vertical spread, and selling a put spread can be referred to as "selling a put vertical spread."
It can also be referred to the other names listed above. I know it's confusing, but unfortunately, every trader prefers one of the different names and we just have to learn all the nicknames.
Thank you very much, Chris. It was a great explanation. Your channel is really the best. I'm watching all your vídeos and reading all your guides. I will use your referral link in Tastyworks, but it's going to take some weeks because before I want to watch all your videos. God bless you. Bye.
@@leocarmona4760 Thank you for the kind words, Leo! I really appreciate it. Be sure to send me an email (www.projectoption.com/contact-us/) when you sign up/use the tastyworks referral code so I can send you access to one of the courses!
@@projectfinance Ok, Chris. Thanks!
Don't mind me, just a comment and like to help u get into recommended
Hey Chris, this video is AFU! Starts w/ Strikes of 210 + 205; then demonstrates strikes of 135 + 130; WTF?! Did you confuse two trades while editing?
Hi so ihave 80% win rate on my options but i usually break even or small loss. What could i be doing wrong. Right now i bundle two to three OTM options in either direction. I do have a small acct im playing with 600 bucks. And i consider myself an options scalper. Most time the fees are more than my profit!
I new so forgive me. But in layman’s term, you essentially BUY those positions (above or below) your SELL positions as an ‘insurance’ policy to mitigate your risk and exposure potential to massive substantial loss correct?!?!?!
Can you please be my mentor?
All these 3 strategies, am I able to sell options before expiration date?
Yes, you can close all of these positions before expiration.
-Chris
@@projectfinance how can we calculate PL if we close before expiration? Is there any disadvantages or benefits if we sell earlier?
@@keshav567 The P/L of any options trade is equal to the difference between your sale price and purchase price, multiplied by the number of contracts and then 100.
If you sold 5x puts for $7.50 and bought back (closed) the puts for $3.00, your profit would be:
($7.50 Sale Price - $3.00 Purchase Price) x 5 Contracts x 100 = $3.50 x 500 = $1,750.
@@satoshiorange thank you for the reply.
@@satoshiorange Thank you for the nice video first, now, $7.5 - $3.00 = $4.5, in the calculation is the other $1 for commission or something else. And also what is typically the strategy to close before expiration, reading in some forums people use the option like day trading does it make sense
Hey Chris, this video is AFU! You started with Strikes of 210 +205, then switched to 135 + 130 - Then back to 210? WTF?!
your arrow on the 1st example points towards a price increase, but mentions the stock price has fallen, when infact, it has risen from 210$ to 215$. Confusing as fuck!!!
I want to implement these strategies but I don't have the necessary option levels to trade spreads. What do I do? Is there a broker who allows these levels for anybody or do I really have to buy naked calls/puts for a period of time before I can trade these strategies that involve spreads?
You'll have to wait until you get approved for the higher tiers. If you don't want to wait, you'll have to consider switching brokerage firms. I personally trade with tastyworks, which gives you full options trading privileges if you apply for "The Works" margin account. tastyworks.com/accounts
No hard sell here. You should do your own research if you are considering switching brokerages, but I trade with tastyworks because of the ease of platform use and their commission/fee structure for options traders. If you do sign up with them and you want to get access to one of the projectoption courses/strategy research products, you can use the "projectoption" code when signing up. Again, no hard sell, just informing you of the standing offer we have in case you do go that route.
Let me know if you have any questions!
-Chris
You will have to get approved for higher tiers or switch brokerages. I trade with tastyworks and they approve traders for full privileges if you apply for "the works" margin account. If you get approved for a margin account, you'll likely be able to get the fully-privileged account:
tastyworks.com/accounts/
No hard sell here. I think it's good for everyone to do their own brokerage research. Just letting you know who I trade with and what they offer.
This was hard to follow for me (a beginner). You moved a little too fast and didn't explain the why's. You put out great content, but I couldn't follow this.
Good morning guys! I have a question. Is it possible trading sereval spread strategies with bitcoin? Thanks!
Why not vertical spreads
You can use vertical spreads for sure. One of the strategies in this video was a vertical spread.
In the 1st strategy, how'd it get 1.43? The midpoint of 3.4/3.6 minus 1.98/2.16?
Also with covered calls you get divined payout on top of it.
I know this is a good video. I'm still confused, though. 😆
Edit: Every time I watch it, it sinks in more. Thank you for this video. It's exactly what I need!
You have one the best presentations and lessons about options. How can I support the channel????
@user name taken LMFAO
Do u do supply and demand if u do can u make a video on it because I have trouble knowing when a stock is going up or down
This might sound dumb, but how can you sell a contract that you never had then buy another one? It doesnt make sense to me, im very new into this. Thanks
Hi Chris,
Great question. In options/stock trading, selling something without owning it is called 'shorting.' In the context of stock, 'shorting' is essentially borrowing shares that you plan on returning (buying back) at a lower price.
When shorting stocks/options, you want the price of whatever you're selling to decrease. The idea is to sell high and buy low instead of buy low and sell high.
Be careful shorting stocks/options, as the risk is typically significantly more when compared to buying stocks/options. If you do sell options, it's a good idea to limit the risk by purchasing another option against the option you've sold.
It's confusing, I know, but you'll get the hang of it as you're exposed to various options strategies and begin trading them.
I hope this helps.
-Chris
projectoption hey i would just like to say that since i have left this comment i really took the time to try to understand options and now im even confident in understanding strategies. Im very grateful for your channel and the others here on youtube for helping me and opening new doors for me to supplement my income in the future. I just wanna say thanks!!
Glad I read through the comments. This was exactly my confusion. I knew what shorting a stock was, but didn't quite understand what selling an option was. Now I know it's the same concept. Thanks to Chris for the question I also had, and a strong thanks to Chris at projectoption for all the effort you put into this channel to help all us newbs. Projectoption is by far leaps and bounds above the rest of the options guys on YT, you are greatly appreciated by so many.
These might seem like dumb questions but with the short put spread, you're actually opening two different positions and placing 2 separate orders correct?? Also if the share price rises significantly wouldn't the gains be offset by the put you bought at the lower strike price??
Hey Cashmere!
You are combining two transactions into one order/position. You are simultaneously selling a put and buying a put at a lower strike price, but you complete both of those transactions in one order.
The put you sell will be more expensive than the put you buy, which means the losses on the put you buy will not exceed the profits from the put you sell if things go well (the stock price remains above the spread over time).
I just redid my bull put spread video and it should be very helpful for you: ruclips.net/video/fSMCL5U9M-I/видео.html
Check it out!
-Chris
projectoption thanks so much for the quick reply!! About the combining it into one order is this what the “add a leg” means when I’m placing the order. Like is that how it’s done lol
Which platform are you trading on? "add a leg" would mean adding an option to your order.
projectoption I use Fidelity. I guess my question is how would you open such an order?
Unfortunately, I have no idea. I've never used Fidelity's platform/website. You'll have to contact them to see how to do spread orders.
Wish I could help more!
-Chris
As an options trader this is great video.
Thanks for the comment! I appreciate it.
U sale a put then u buy one ...how u buy first one
imho covered call/covered put are worst strategies ever invented
Ima start watching all your option trading vids
Trading is the best option for accumulating but if done wrong can be disastrous so be careful or follow an expert with a known success rate+1 469 409 6480
Waht✓-- sApp✓
Ayla Brooke and earn huge in the trading market like I do with her strategies 💯
How much was a leaps options for Netflix then? Two years out would have got you over $20k and if you did it again 2 years later it would have been $20k+ again.... I’m starting to see why there are so many zillionaires
Don’t think beginners would be able to be selling puts and calls
I wish Netflix was still at 149 lmao it hit over 500 great vid tho thanks for the info!
How nice it would be to time travel. If I could go back to being a little kid I would’ve said to my mom “hey!..... invest in Apple..... please don’t put anymore cigarettes out on me.”
Hi I've been watching your videos for a few days and subscribed to your channel great info...but I still cant decide on what to do on my acct... I own 100 shares of a stock, my cost basis is $42 after covid19 and the shutdown the stock fell to $24 per share... I'm still holding and dont want to sell.... the covered call option that's going to pay the highest premiums are in the money... but if I write one of those doesn't it mean that someone can just ex excersise it from me? I'm confused on what to do?
I have another question. Btw, thanks for your first answer. Do you have to stick with thr minimun of 60 days for your strategies to work or it can work with expiration dates earlier than 60 days? And thanks again
Hi Israel!
I typically trade with around 60 days to expiration when entering trades, but traders can trade whatever time frame they like.
Unfortunately, I can't just go out and say that trading shorter-term expiration cycles will be more or less successful than trading ~60 days to expiration. The historical results will be different when analyzing different trade time frames.
tastytrade did a study a few years back on this topic: ruclips.net/video/TCg1EX6vc2Y/видео.html
They may have done updates of this study but I couldn't find one.
I hope this helps!
-Chris
@@projectfinance rolling forward. this is best.
Nice video, easy to understand.Thumbs up!
Thanks for the comment, Harry!
I have FB bull put position right now and the the price is close to sell Put price ($5 to sell Put price) what should I do? close position? eventhough I already put Bear Call spread to off set the floating loss
Hi Harry,
Could you give me more information on your position?
1) Strike prices / expiration
2) Your entry price(s) on the spread(s)
With more information, I can be more specific with my response.
-Chris
I have FB Bull Put Nov155/135 (floatins loss 214%) and FB Bear Call Nov200/205 (floating profit 46%), I was going to add more Bear Call to off set the loss.What do you think ?
I have FB Nov Bull Put 155/135 (floating loss 214%) and FB Bear Call Nov 200/205 (floating profit 46%). I was going to add more Bear Call to offsett the loss.What do you think?
In Brazil we have both American and European options, which can be executed anytime or only on expiration day respectively. Do these strategies work on both kinds or only on American options?
Nothing beats knowing your profit is on the increase. Don't be a victim to gamblers out there, ask the right questions, if you get a reliable pro-trader to assist please treasure it. Trade wisely and stay safe.
+ 1 3 5 2 4 4 1 2 4 3 4
I'm trying to wrap my not-at-all financial head around options trading and your complete, clear explanations are extremely helpful. I've taken notes on everything and will try all three of these with Paper Money.
Nice video! My only question with these strategies is that they are all related to a long period of time. You can’t predict for how long a price will remain in a sideways…
As a beginner I would like to see a pattern which I have confidence that in a matter of hours it will remain. Or at least for a few minute.
Does it makes sense ?
This is probably a silly question, but in the spreads and iron condor, why not just buy the strikes that are severely OTM since we can almost guarantee the stock will remain in a certain range? For the iron condor example in the video, why not buy a the 170 and strikes for the 165 call spread and the 110 and 105 strikes for the put spread? I guess I don’t understand the downside to this
Hi Zach,
Great question. The answer is that options with strike prices further from the stock price are cheaper because there's a lower probability of the options having any value at expiration compared to options with strike prices closer to the stock price.
Because of this, selling iron condors with strike prices extremely far from the stock price will not yield much premium, which means you won't have much profit potential and you'll still have plenty of risk.
Using just a short call spread as an example, if the stock is at $100, the 110/115 call spread will collect far more premium than the 125/130 call spread, as there's a much higher chance that the stock price is above $110 at expiration compared to $125.
The same concept holds true for selling put spreads. The further the put spread is from the stock price, the less the profit potential will be. Also, since less premium is collected overall, the loss potential increases.
Does this help clear things up? Let me know if you need more clarification.
Best regards,
Chris
@@projectfinance You explained it perfectly, thank you very much. Just curious, is there a certain delta you like to sell for your spreads?
I’m new to this! So when you buy a lower put from the put you sold it off sets it. But is that also for protection in case the strategy doesn’t work in your favor? Or is it just because you have to buy the 100 shares back?
During the covered call example you were saying 1.04 when the option chain read 1.08? Just curious..
Great vid. for begginners.Thx
clicked off this video as soon as I heard him promoting his paid course. Never trust someone who is promoting their own thing inside a beginners guide.
Any comments on the risks and collateral
Couldn't you sell naked puts? If you have enough money in your account and you lose/get exercised you have to buy 100 shares. Then you could do the opposite and sell covered calls? Am I missing the something? Is this generally safe? @projectoption @chris butler
You could do that, yes. You can take assignment on the short put and then sell calls against the stock. But, you'll need enough money in your account to actually buy 100 shares and hold it. The margin requirement for selling a naked put is not the same as the margin requirement for buying 100 shares at the strike price. But assuming you have the appropriate amount available to buy 100 shares at the put's strike price (strike price x 50 if you are in a margin account), then you can do what you're suggesting.
@@projectfinance Thank you so much! Was using robinhood for the longest time lol, just got a tastyworks account under you 2 weeks ago and love everything about it except the charts lol. I use ToS for charts. This market is crazy rn, and wanted to do a more safe approach! Thanks for all your help and educational videos!
Very informative thank you!
You're welcome!
Finally found u man I been looking how to trade option. I don't know nothing about options. 🍻
Are there any adverse effects to closing an iron condor before expiration? Even if the stock price is within the two spreads? (i.e paying commissions on manually closing the trade, getting debited for the premium that I collected at the open of the trade?) ... BTW I have TD Ameritrade
Closing an iron condor before expiration costs commissions but you will guarantee profits if you buy back the iron condor for a price cheaper than you initially sold it for.
Of course, by closing the trade you remove the potential for earning the maximum profit potential when the stock price is in-between the short call and short put strike prices at expiration.
If you trade a lot of iron condors, I'd check out the tastyworks commission structure to see if it makes sense for you: www.projectoption.com/tastyworks/.
I hope this helps! Let me know if you have any other questions.
-Chris
Awesome Chris, I appreciate it. I indeed have an account with tastyworks and I am a current user. They have a great commission structure but their software (both mobile and desktop) is still in its infancy and I feel isn't up to par with thinkorswim. Which I've been a long time user of...
Which option trading platform do you use ?
I use tastyworks.
Hey, I am new to this and the option premium in my country, is so high that its pushing break- even point far away from the strike price so much so that, even the if the stock value is-in-the money at expiration, I would still be suffering loss. This kind of market setup forces me to trade on premium prices based on extrinsic value rather than realizing the true intent of option markets. How to tackle "over inflated premium" problem?
For eg: Spot of a particular index BankNifty is 28000. The premium of 28300 call is 500 with 30 days to expiry. So even if the stock expires in-the-money at 28600 according to my guess, I would still be suffering 200 loss. So the only way for me is to some how sell the option when its premium is greater that 500. So I will either end up trading premium prices or lose it to time decay. What to do?
There's no over inflated premium problem. What you are doing is buying options that are already in the money. Therefore paying huge premiums and making break even seem far away. That's the stuff you should be "selling" not "buying."
Make sure you aren't buying calls and puts that are already in the money. Buy them when they are just out of the money so you aren't paying huge premiums. Because if you purchase something deep in the money. The premium that you have to "pay" is what causes the break even to be so far. A lot of people make profits just trading the premiums. Remember big premiums are what you want to sell. Not what you want to buy.
Buy low sell high. Not the other way around. Hope I answered it correctly or helped you
@@brandonvillatuya9539 exactly,
But what to do when out of the money premium is very high.
That's what I said in the example. The spot is 28000. And 28300 call is 500 with 30 days. Out of money premiums are also very high.
@@varunnrao3276 Extrinsic value of an option is based on two things. Time(Theta) and Volatility(Vega). If you think the premium of a 28300 call that's 30 days until expiry is too "pricey." Pick one with a closer expiry date, it will be cheaper, but more risky. Also if you think it's overinflated, check the price action and volume of the underlying stock. It might seem high because you just missed a rally in the stock. If you are saying 500 is high, you imply that you are sure the underlying stock is overbought. Maybe wait for the price of the stock to pull back so the premium gets cheaper
@@brandonvillatuya9539 thank you, I learnt there's one more thing you can do if the option is too pricey, instead of buying a call option, we can buy call spread at the same price, this reduces both potential loss and and potential profit, but becomes very cheap.
@@varunnrao3276 There you go! well Good luck to you. May we both find success :)
Life just got alittle more harder! Great video tho!
Thank you! It takes time to learn for sure. Keep it up!
For a first timer trying to learn something new yes it gave me a headache..
I understand how the stock market works because I have been investing in the stock market for over 3 years now.
But Option is new to me and I would to fully understand it...Help plz