How to Buy an Options Contract for FREE

[@TotalClarity]

It's important to note that if you're assigned these PUTS because the market suddenly sold off, the trader would need to be prepared to spend $174,000.00 to purchase the 500 SPY shares represented in those contracts. Certainly one could close the position prior to that (Prudent) but for any novice trying this, it could mean a catastrophe.

[@stevefellows7063]

Correct. This a synthetic long stock position that benefits from convexity if price moves up fast

[@scottydog9997]

I really like this strategy, I was going to use it on some other instruments, issue is I have limited buying power to take on the risk. So alternatively a trader can use a short put spread in order to limit their downside risk, but you will have to increase the risk either by number of contracts, and or time to compensate for the downside risk. Some may call it a Jade Lizard. Loving the content SMB, you guys are giving too much away for free!

[@TableTennisLover1234]

I like SMB videos, but I’m sorry to say that this was definitely a clickbait one. Risk reversal trades require the trader to put up collateral against the sell side of the strategy, in this case the put options sold. So even as the presenter in this video says that your account receives a credit, you are still required to tie up 348 X $100 X 5 contracts which equals $174000 minus the premium you received. That’s not free!

[@stevefellows7063]

No trade is free ... but you can put a trade on without physical cash outflow

[@gerardocomas450]

No such thing as a free trade. 🙄

[@Andrewbliss44]

How much margin will be required for the above strategy? I think this is a very important point!

[@JamesClements-so1xj]

You "forgot" to mention that this trade, which involves selling naked puts, involves significant risk as the SPY drops below the downside breakeven (about 346), and requires a substantial margin for the trade: $46,953 as backtested in my TOS account. Indeed not appropriate for either a novice trader or small account.

[@bhobba]

I thought the idea was it was a Cash Secured Put - not naked. I wouldn't try it naked, personally. Of course, that means your account needs considerable buying power.

[@sc0or]

What if the trader sells a put spread in a quantity which is enough to pay for a naked call? In this case the worst scenario price range narrows significantly (not down to 0 but just to a price of the second leg of the credit spread) with the same profit and money paid in the best one.

[@JTORO9]

Would you need to have the cash available in you account incase the sold put goes against you?

[@kvarag]

The email subject said "Would you like to know how to buy an options contract with no cash outlay?" Very misleading as buying naked puts involves a significant amount of cash/margin. Guess it's a marketing style to get the reader watch the video.

[@bhobba]

As usual, Seth, another great strategy.

[@splicify745]

What about collateral? It is not discussed…

[@kirbi8864]

Why do you never show the resulting performance profile chart for options positions? Do you have such branded game or like who knows, he will figure it out without it?

[@ЕвгенийБагрянов-н9э]

Options Trading Blunder number 2 🤑

[@timb4695]

Not free, requires a large amount of margin. That was not presented at all in the presentation.

[@dumbcat]

i've been practicing in a simulated environment during market hours with real time data. i sometimes trade more than once a minute. this can really add up to a lot of trades and i'm just not sure how realistic that would be in live trading. for example, i've had days where i made a profit but had over 100 trades. i'm just practicing on highly liquid equities right now, and only using a reasonable size like 100 shares. can anyone tell me how realistic it might be to make 100 trades a day in a very liquid market with tight spreads? thank you. (please give my comment a thumbs up if you reply so i am notified)

[@sanjeevgig8918]

You are revealing yourselves to be the JT Marlin of option trading. . LOL

[@ntbohl]

In this example, you propose a scenario that could end with a 175k cash obligation to the trader. Just making sure we all acknowledge that.

[@adriel3339]

✨ ρяσмσѕм

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