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re: Want to learn how to trade options
Posted on 2/13/21 at 12:07 am to makersmark1
Posted on 2/13/21 at 12:07 am to makersmark1
quote:
makersmark1
Invite to the TD-Money Talk discord below, would love to have you share your options ideas if you would oblige. A thread on that topic here would also be appreciated.
quote:
cgrand
You too....you are a wealth of info and would love to have you share ideas there as well as here. Please do consider it
Discord Link: Discord Link
ETA: Apologies in advance if posting the discord Link is frowned upon. I can remove it if that is the case.
This post was edited on 2/13/21 at 12:28 am
1
Posted on 2/13/21 at 12:16 am to Bamboozles
I joined the discord and I don’t see the point of posting on there instead of here. This is formatted much better.
Posted on 2/13/21 at 12:23 am to TheWalrus
Whatever works for you. I personally do both, discord and here (however more reading less posting here). Personally lil opposite of you, prefer discord format tad bit better.
Posted on 2/13/21 at 10:08 am to JimMorrison
quote:
can you give an example of this? What type of trades do they offer?
Although he’s a very seasoned and knowledgeable options trader, the trades that Mike Khouw tends to feature on the show are high premium debit trades - meaning, you pay to play. In what I do (and what TastyTrade and OptionsAlpha does), I get paid to play. Yes, sometimes the debit trades work out, and mathematically you *might* be able to make a case for them. But most all of the ones they tout are low probability and have inflated IVs. The show will sometimes talk about individual trades that won or lost. But not once have I seen a summary of the traders’ returns on the trades they’ve suggested over a quarter or a year. There’s likely a reason for that.
General rule of thumb is, sell options when premiums/IV are relatively high, buy options when premiums/IV are relatively low. That show tends to ignore that ROT. They also tend to ignore where they are with respect to deltas.
Tom Sosnoff (legendary trader who built Think or Swim and Tasty Trade) actually developed that show for CNBC. But now, he pans it as a dog & pony show. I don’t mean to hate on them. I just agree with Sosnoff that the show teaches younger traders some very bad lessons.
Posted on 2/13/21 at 10:54 am to makersmark1
Great advice. I just helped a friend with selling some covered calls against his 500 shares of CCIV this week.
Now trying to convince my mom to do the same with her 4,000 shares of JP Morgan
Now trying to convince my mom to do the same with her 4,000 shares of JP Morgan
Posted on 2/13/21 at 11:43 am to thatguy777
quote:
Jag you need to get in the discord, TD Money Talk. There is an options forum, not sure how to link it. Maybe you are already there?
Thanks. Someone sent me an invite awhile back, but I haven’t made it over there yet.
Posted on 2/13/21 at 11:52 am to TheWalrus
quote:
I joined the discord and I don’t see the point of posting on there instead of here. This is formatted much better.
It’s good that all of that has been separated
Posted on 2/13/21 at 12:08 pm to cgrand
quote:
as in, the option expires OTM and you just keep the premium correct? and on the cash side if there’s a chance of having to buy the shares you keep 100x the strike price as collateral?
Yes to both
Posted on 2/13/21 at 12:13 pm to TigerHornII
I think of selling put options as sort of the bond portion of my total portfolio. I try to get a decent “yield” out of the deal.
I sell calls if the strike is an acceptable price for me to exit the position.
I sell calls if the strike is an acceptable price for me to exit the position.
Posted on 2/13/21 at 12:37 pm to Jag_Warrior
quote:
Although he’s a very seasoned and knowledgeable options trader, the trades that Mike Khouw tends to feature on the show are high premium debit trades - meaning, you pay to play. In what I do (and what TastyTrade and OptionsAlpha does), I get paid to play.
So that show tends to push buying calls or puts and that doesn't align with your strategy since you're mostly setting up credit spreads? I obviously don't watch the show and just curious if they're pushing gambles
. quote:
Yes, sometimes the debit trades work out,
If you know what you're doing, you can be very successful with debit trades. Options trading is a game of knowing when to exit before theta eats the contract.
Posted on 2/13/21 at 12:39 pm to htcthc321
quote:
Now trying to convince my mom to do the same with her 4,000 shares of JP Morgan
Covered call selling is a great way to enhance income in a portfolio. You just have to make certain that the strike you pick is where you’d be content to let the shares go. For anyone who doesn’t want to risk losing the shares (and having to pay to buy back the calls), another strategy *might be* to sell call spreads... OR be prepared to roll the call options up (in strike) and out (in date) if the stock begins moving aggressively toward your strike.
Posted on 2/13/21 at 1:09 pm to JimMorrison
quote:
If you know what you're doing, you can be very successful with debit trades. Options trading is a game of knowing when to exit before theta eats the contract.
It depends on the strategy type (neutral, bearish or bullish) and market conditions, but yes, that’s true. It’s also possible to put on net long positions that are virtually cost free and/or high probability. Those tend to involve using more of the Greeks to determine efficient (or inefficient) pricing - so there’s a bit more mathematical work involved. But you are correct that it can be successful when part of a broad options trading business.
I’m hoping that more people here will develop an interest in this part of the market. Once a person wraps his head around the terminology and how the moving parts function, a light bulb will go off. It’s not so easy at first. But it’s not rocket science either. It’s truly changed my financial life over the past few years. And I don’t have to depend on market or stock direction to generate above average returns in the market. That doesn’t mean that you won’t catch a series of losses every now and again. Sequence of returns is always there, even when you’re flipping a coin and the probability is 50/50. But you can basically determine your monthly “paycheck” based on your level of risk comfort. *Generally* I stay around the 15-20 delta on short options and experience 85%+ OTM success.
GL to all.
Posted on 2/13/21 at 1:23 pm to JimMorrison
quote:
So that show tends to push buying calls or puts and that doesn't align with your strategy since you're mostly setting up credit spreads? I obviously don't watch the show and just curious if they're pushing gambles
I do some spreads, especially on high dollar stuff like AMZN, GOOG or SPX. I used to trade weekly SPX spreads pretty often a couple of years ago. But after getting burned by a series of erratic Trump tweets late in the day, I had to back off those. Most of what I do now involves short naked puts, jade lizards, iron condors/strangles and other mult-leg strategies.
Yeah, it’s true that what they do usually doesn’t align with anything that I do. But more than that, their premises for getting into the trades that are on the show often doesn’t have very sound reasoning. Right you are; it seems more like throwing the dice or gambling.
Posted on 2/13/21 at 2:33 pm to Jag_Warrior
I would like an invite to the DISCORD CHANNEL
Posted on 2/13/21 at 3:13 pm to BayouBengals21
Best thread here in a while. Nice change of pace from all the penny stuff
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