There are definitely strategies that use many of the Greeks. The most useful, especially when starting out, are trades that limit the negative effects of theta, or use theta in your favor. For example, debit vertical spreads incur less time decay as compared to just buying an outright call or put. Opening positions by selling options (or really any credit trade, including credit spreads) use theta in your favor. In this kind of situation, you will be making money each day even if the stock trades sideways. There are a lot of other methods that use the greeks strategically to earn profit or hedge (such as "delta neutral" strategies), but minimizing theta's negative impact should be every trader's primary focus in my opinion. Does this help?
Vega, Theta, IV and time decay. Real M'Fers Best quote here is " you could be right about the direction but if IV and therefore Vega changes drastically you will lose money (on long options)." This happened to me with a long put very recently. Expensive lesson.
Whew, I subscribed and will watch more videos because you summed it up in 5 damn minutes!!! Now going to do some math on some options I'm looking at. Thank you kind sir
You are the only person that I can fully understand how to learn the stock market. Don't know why but your teaching just says perfectly into my brain thanks.
OK so I have watched many videos on the greeks, and understood them ... meh. And I just watched your video right now and I totally get it: well explained, concise, mathematical. At last a good explanation! Thanks- and ... subscribed!
Thank you for making those educational videos it's been very helpful to many people including me for some other reason I wasn't aware of how easy it is to buy and sell stocks before. For some weird more reason I thought enable for individual to buy or sell stocks they have to be licensed 😂 like insurance agent or brokers but of course I was wrong. Knowledge is powerful.
Hey have you explained in any of your videos why theta can be different for options with the same expiration date? Is that because the options were written on different dates? Also a general explanation of what kind of timeline you're talking about when it comes to theta and IV decay would be helpful. I'm coming from a swing trader background, so when you say "really fast" about either affecting the premium price, I imagine maybe a few hours, or a couple days. Ty again for the awesome videos.
Hi Adam, great video explanation on the Greeks. Can you share with your viewers how you got so smart in stocks/trading/options/etc.? Was there influence from your parents? Did you take a course? Do you have a wealthy relative who was a brainiac in this field? Trying to get a glimpse into how you became smart, so we can attempt to emulate what you've done. Thanks again for sharing this content. You have another subscriber now! :)
Thank you for the short explanation @InTheMoney. But I’ve been wondering, why do certain greeks (gamma, vega and theta) tend to be higher At The Money than In or Out of the money? Thanks in advance
I know weekly options are very risky but I am confused why ford which is at like 13.45 the 13.50 call that expires in 2 days has a gamma of 1.4 but chargepoint which is 13.48 with same expiration date and same strike price has a gamma of .49
Can Option Greeks be used to filter and find good options to trade? Anyone knows any tools or guide lines on how to use Options Greeks for entering a trade either long or short? Kind of what values to look for in each or all of them to enter or exit a trade?
Hey Adam, I'm learning about option trading and would like to start to look at it soon and im loving your videos. I have been binge watching them for the past hour or so and taking notes to help me get into options. I'm a little confused about the selling before they expire, is it better to do this as it seems it is easier to make a profit then waiting for the expiry date to come? Also you mentioned in your first video about option trading how if you by one in the money that you can sell it for a profit right away, maybe i missed something but what is stopping anyone from doing that constantly surely you can't just buy and sell instantly for profit right? Also if you have any one tip that shows you what is a good option to buy what would it be? Thanks so much for the videos they have taught me a lot!
Hi, Adam. I’m watching more and more of your videos on trading options, but is there a way not to just trade them, but use them to complement your stock positions? For example I own a 100 shares of company Z and some bad review comes out, I don’t want to sell them and buy them again at lower price for many reasons, but I want to make money while stock drops temporarily, like i have idea to sell the put far out of the money? Is it a good idea, assuming I don’t mind to own another 100 shares of Z ? Or opposite of that if some good news but not good enough to to 2x the price the stock to sell the call at 1.5 the strike price, assuming I don’t actually want to sell my shares? Can I time for such opportunities, and if yes, what news will present these opportunities and at what numbers greeks values I should look for to make these trades? So long question short: is it possible to prepare my mind for such opportunities, or its as bad idea just like to time the market?
So you are saying if I am selling a cash secure put or a cover call, because they are both "SELL", Theta won't effect my return? I just sell a cash secure put and I didn't even know about Theta or pay attention to it at all. TIA.
This might be a dumb question, but if you're looking for profits it's better to buy 100 shares of a stock then 1 option call right? Like in the hypothetical situation if they were the same amount of money then 100 shares would have a delta of 1 since it's actually the stock and Delta for the option has to be 1 or less and most often times it's less so less profitable.
The most important thing is to see what the two affect: the bid-ask spread. The tighter the bid-ask, the easier and cheaper it is to get in and out of the trade. Open Interest and Volume are positively correlated with the tightness of the bid-ask, so they are a gauge of how easy it is to get in and out. Check the volume and check the OI, make sure there’s plenty of both, then check the bid-asks to make sure you’re comfortable with their width. That would be my recommendation.
Yes, but the delta of OTM options is a larger % of their value. This means, if you buy a bunch of OTM option for the same cost as one ITM option, that OTM options position will have a higher delta. In other words, when buying multiple OTM options, you have more leverage. But your Break-Even is also much higher.
3:15 can someone fill me in here. He says that every day the value of this option decreases by 11 dollars. I read a bid of $1.59, so a contract would be $159 correct? Then this option would be worthless after 15 days of no price changes?
Remeber that the Theta decay is faster in the last month, I saw that the Contrat expiration date is 2/15 and the video was uploaded 2/08 so it had 7 days to exp. the -0.1115 theta will decay faster, also the Option is 0.4946 Delta, so its close to be ITM, the closer to the ITM the Theta is also higher. Hope this helps!
Thanks for making videos that sensibly explain how this all works! I hate FOMO videos! "YOU'RE GOING TO LOSE $14932543882957098 IF YOU DON'T KNOW GREEKS!!!"
Any ideas? I bought a TSLA bull call spread just OTM with 45 days till exp. It immediately went DEEP ITM. I looked how much I made but I had lost money. I waited a few weeks and still losing money. Finally near expiration I was making pennies and then the stock dropped so much my spread was worthless again and expired worthless. Was this only the greeks? I know some basics but maybe not using them properly or poor strat?
Thank you for replying Adam. It has been a while. The best I can recall is that it was a $10 spread. I may have entered around the earnings report Jan 2020. Not sure.
I just have one thing, your "Bell Curve" chart doesn't really give us any perspective/information because you didn't label your X and Y axis. Otherwise, very instructional video.
![ARGENTINA vs. CHILE [3-0] | RESUMEN | ELIMINATORIAS SUDAMERICANAS | FECHA 7](http://i.ytimg.com/vi/De3AWmXzhuA/mqdefault.jpg)
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Do you ever base your trades on the Greeks or are they just for reference? Are there any strategies that focus on Greek values or ratios?
There are definitely strategies that use many of the Greeks. The most useful, especially when starting out, are trades that limit the negative effects of theta, or use theta in your favor. For example, debit vertical spreads incur less time decay as compared to just buying an outright call or put. Opening positions by selling options (or really any credit trade, including credit spreads) use theta in your favor. In this kind of situation, you will be making money each day even if the stock trades sideways.
There are a lot of other methods that use the greeks strategically to earn profit or hedge (such as "delta neutral" strategies), but minimizing theta's negative impact should be every trader's primary focus in my opinion.
Does this help?
yes, tell us more about different strategies using greeks and how to use them in live trading.
@@InTheMoneyAdam Vega has entered the chat...
@@InTheMoneyAdam would love more in-depth videos on the mentioned strategies! Thanks for all these videos!
This is one of the best informative option greeks explained. It’s basic, short, and right to to point with no fluff or bs.
I love it when your struggling with something and then some kid just sums it up in 5 minutes
lol I got you
Yass!! This the third video and the best damn one. 5 minutes!!
I love how he explains shit. Like u can tell he’s not just reading off gibberish from website
Vega, Theta, IV and time decay. Real M'Fers Best quote here is " you could be right about the direction but if IV and therefore Vega changes drastically you will lose money (on long options)." This happened to me with a long put very recently. Expensive lesson.
Dude awesome video, you simplified this so well. You deserve a much larger following!
Whew, I subscribed and will watch more videos because you summed it up in 5 damn minutes!!! Now going to do some math on some options I'm looking at. Thank you kind sir
You are the only person that I can fully understand how to learn the stock market. Don't know why but your teaching just says perfectly into my brain thanks.
1:36 delta = probability of profit WHAAAAAATTTTTTTTTT, great video man and just 5 minutes too!
Dude youre awesome. That helped me understand my RH account so much better.
This was really helpful!! Please do another video on this!! I am trying to use this especially with the wheel strategy!! Thank you!!
Straight to the point. Thank you.
Wow, Adam, thanks! I find this to be useful information. You’re one smart guy! 👍
OK so I have watched many videos on the greeks, and understood them ... meh. And I just watched your video right now and I totally get it: well explained, concise, mathematical. At last a good explanation! Thanks- and ... subscribed!
2:41 as·ymp·tote: “a line that continually approaches a given curve but does not meet it at any finite distance.” Great video as always btw. 👍
Perfect video. Clear and to the point. Thanks man!
GREAT EXPLANATION. Holyyyyyy
hypothetically theoretically well explained.
Great presentation, thank you.
Thank you for making these videos. You probably have the best explanations. You make easy 💎👐
Just wanted to say I love your stuff and dig the humble beginnings. Keep up the killer content.
This vid helped me understand that I'll never understand options and should just stay tf away
It's the way it's explained lol. That's why you're probably not getting it.
this helped a ton, thank you
Great video, about to subscribe. I love how simple you kept it.
Thank you for making those educational videos it's been very helpful to many people including me for some other reason I wasn't aware of how easy it is to buy and sell stocks before.
For some weird more reason I thought enable for individual to buy or sell stocks they have to be licensed 😂 like insurance agent or brokers but of course I was wrong. Knowledge is powerful.
Thank you for your videos. I love them.
Karla Alcala Hey thanks!
Omg! Asymptote! I haven’t heard that word in forever! I love your vocabulary! How old are you n your brother? You both are gonna be so wealthy....
Thanks for this vid, it was one of the easier ones to understand!
OMG. This is too funny, after having been watching your vids for about a year. 🤣
Thanks bro, it helped
5:33 is the best!
Hey have you explained in any of your videos why theta can be different for options with the same expiration date? Is that because the options were written on different dates? Also a general explanation of what kind of timeline you're talking about when it comes to theta and IV decay would be helpful. I'm coming from a swing trader background, so when you say "really fast" about either affecting the premium price, I imagine maybe a few hours, or a couple days. Ty again for the awesome videos.
Addendum: I’ve watched theta fluctuate up and down in short periods of time on the same one option. What’s going on there?
Look back bro, we all watched!
Thanks
Thanks a lot! Actually helped :)
Very helpful. Thank you.
You should remake this in your new studio
Does Theta become meaningless if my option is far ITM
This is the best possible option educational material available from a dude in a cargo elevator.
Shannon Kelley lol thanks my dude!
Hi Adam, great video explanation on the Greeks. Can you share with your viewers how you got so smart in stocks/trading/options/etc.? Was there influence from your parents? Did you take a course? Do you have a wealthy relative who was a brainiac in this field? Trying to get a glimpse into how you became smart, so we can attempt to emulate what you've done. Thanks again for sharing this content. You have another subscriber now! :)
Thank you for the short explanation @InTheMoney. But I’ve been wondering, why do certain greeks (gamma, vega and theta) tend to be higher At The Money than In or Out of the money? Thanks in advance
Thank you 😊
Delta and theta are two of my favorite Greeks.
nice work! thank you!
great vid
Ur the best i understood so much, can u help me with the option of buy put or sell put? Im little confused on that.. thank you
So what is the best metric in determining when to close a position?
I know weekly options are very risky but I am confused why ford which is at like 13.45 the 13.50 call that expires in 2 days has a gamma of 1.4 but chargepoint which is 13.48 with same expiration date and same strike price has a gamma of .49
I’m new to all this most of the time what would you recommend setting your expiration date out at ? 2 weeks 1month 2months? Thanks!
So better boy a call options after earning cause implied volatility drops?
Thanks fam fam
Stonks
👏🏼👏🏼👏🏼👏🏼👏🏼🤘🏼🙌🏼💎🙌🏼🤘🏼💪🏼
Can Option Greeks be used to filter and find good options to trade? Anyone knows any tools or guide lines on how to use Options Greeks for entering a trade either long or short? Kind of what values to look for in each or all of them to enter or exit a trade?
@2:38 did you mean "...there's a diminishing return to how quickly Gamma** reaches one."?
I recently spot delta at .00 on Friday but it was still early in the day around 11am. Anyone know why that is?
Hey Adam, I'm learning about option trading and would like to start to look at it soon and im loving your videos. I have been binge watching them for the past hour or so and taking notes to help me get into options. I'm a little confused about the selling before they expire, is it better to do this as it seems it is easier to make a profit then waiting for the expiry date to come? Also you mentioned in your first video about option trading how if you by one in the money that you can sell it for a profit right away, maybe i missed something but what is stopping anyone from doing that constantly surely you can't just buy and sell instantly for profit right? Also if you have any one tip that shows you what is a good option to buy what would it be? Thanks so much for the videos they have taught me a lot!
I have that same question... Have you found an answer to these questions????
What if a theta is 0 when multiplied by 100? For example, -008.
What number is a good vega?
Hi, Adam. I’m watching more and more of your videos on trading options, but is there a way not to just trade them, but use them to complement your stock positions? For example I own a 100 shares of company Z and some bad review comes out, I don’t want to sell them and buy them again at lower price for many reasons, but I want to make money while stock drops temporarily, like i have idea to sell the put far out of the money? Is it a good idea, assuming I don’t mind to own another 100 shares of Z ? Or opposite of that if some good news but not good enough to to 2x the price the stock to sell the call at 1.5 the strike price, assuming I don’t actually want to sell my shares? Can I time for such opportunities, and if yes, what news will present these opportunities and at what numbers greeks values I should look for to make these trades? So long question short: is it possible to prepare my mind for such opportunities, or its as bad idea just like to time the market?
@@scottreesetradinginvesting7936 thank you, Scott 👍
So you are saying if I am selling a cash secure put or a cover call, because they are both "SELL", Theta won't effect my return? I just sell a cash secure put and I didn't even know about Theta or pay attention to it at all. TIA.
Awesome, okay got it.
is theta measured in RH as trading days or calendar days?
Is it possible to see the greeks and volatility before purchasing the call option?
Yes. On RH you tap on the bid ask ask spread, idk how in other apps
Hey Adam, is there another RUclips or you know that explains well how to calculate profit and loss in percentage for options for beginners?
Try using optionsprofitcalculator.com.
This might be a dumb question, but if you're looking for profits it's better to buy 100 shares of a stock then 1 option call right? Like in the hypothetical situation if they were the same amount of money then 100 shares would have a delta of 1 since it's actually the stock and Delta for the option has to be 1 or less and most often times it's less so less profitable.
He went from being squeaky clean like this to burping to the viewers in two years.
Adam. With volume and open interest what’s more important having both or a little bit of one then the other?
The most important thing is to see what the two affect: the bid-ask spread. The tighter the bid-ask, the easier and cheaper it is to get in and out of the trade. Open Interest and Volume are positively correlated with the tightness of the bid-ask, so they are a gauge of how easy it is to get in and out. Check the volume and check the OI, make sure there’s plenty of both, then check the bid-asks to make sure you’re comfortable with their width. That would be my recommendation.
Does deeper in the money option calls move more then if the stock price goes up a $1? They're deltas are usually higher then OTM
Yes, but the delta of OTM options is a larger % of their value. This means, if you buy a bunch of OTM option for the same cost as one ITM option, that OTM options position will have a higher delta. In other words, when buying multiple OTM options, you have more leverage. But your Break-Even is also much higher.
3:15 can someone fill me in here. He says that every day the value of this option decreases by 11 dollars. I read a bid of $1.59, so a contract would be $159 correct? Then this option would be worthless after 15 days of no price changes?
Remeber that the Theta decay is faster in the last month, I saw that the Contrat expiration date is 2/15 and the video was uploaded 2/08 so it had 7 days to exp. the -0.1115 theta will decay faster, also the Option is 0.4946 Delta, so its close to be ITM, the closer to the ITM the Theta is also higher. Hope this helps!
Thanks for making videos that sensibly explain how this all works! I hate FOMO videos! "YOU'RE GOING TO LOSE $14932543882957098 IF YOU DON'T KNOW GREEKS!!!"
Gimme your take on the GREEKS
Any ideas? I bought a TSLA bull call spread just OTM with 45 days till exp. It immediately went DEEP ITM. I looked how much I made but I had lost money. I waited a few weeks and still losing money. Finally near expiration I was making pennies and then the stock dropped so much my spread was worthless again and expired worthless. Was this only the greeks? I know some basics but maybe not using them
properly or poor strat?
What were the strikes?
Thank you for replying Adam. It has been a while. The best I can recall is that it was a $10 spread. I may have entered around the earnings report Jan 2020. Not sure.
I highly recommend you watch “InTheMoney” videos for an Outstanding Education in stock Options trading!!! 👍🏼
wut happened to the discord?
One word. Papyrus
I just have one thing, your "Bell Curve" chart doesn't really give us any perspective/information because you didn't label your X and Y axis. Otherwise, very instructional video.
So, is gamma basically just the rate of change of theta? The second derivative? The acceleration of profit vs price?
No. Gamma is the rate of change of delta with respect to the strike price.
I'm upset about your 13% battery life. It causes me anxiety. I can't get over it.
Mr. Peabody
RHO SCALPERS UNITE🥴
Are you speaking english?
Nope
This video was horrible I would like to secure a put!!!
Super helpful thank you