Options Strategies for AGNC and SPY

[@aaronstein8585]

This video is filled with experience and info. You really need to watch it multiple times to pick all of it apart. Its also good to have the benefit of hindsight to see how all these trades worked out (they all did!)

[@sirstudalot20]

I still watch his KZbin videos at 1.5x speed

[@GoldEspresso]

2x

[@caseymyles4048]

sorry to be so offtopic but does anybody know of a tool to get back into an instagram account..? I somehow forgot the login password. I love any help you can offer me

[@DanT-iu6oc]

Mark, you are quite possibly one of the best finance educators on the planet. If you taught any other certificate, trading course, etc. I don't CARE, I'll buy it at any price.

[@Bogdanbmm]

Same

[@GabrielA-uw2bs]

Hey Mark, we need an options course from you!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[@TheNick1569]

Thanks for all the additional content while we are all stuck at home. I use your material for Level 2 and this recent content is great for something to look forward to at the end of the day.

[@bRANKLATA1]

Thank You for sharing Your knowledge with us Mark. Great content!

[@Fuhyr675]

Awesome video Mark, appreciate the insight. Generally speaking, how would engage in risk management if it fell below your 240 mark? What trades? Thanks!

[@MarkMeldrum]

That depends on what gets it there, but a short on SPY would be a first go-to.

[@vincenthor]

I'd like to understand more of shorting SPY Vs rolling down (And out). Shorting and rolling down would usually cost money. Wouldn't rolling down and out be the better option?

[@mikesmacedo]

Hi Mark - love your videos. Keep it up. I will support as you continue to inspire and educate us with your knowledge and experience. Thanks! mike

[@noorhussain2094]

Great video Mark! Thank you for sharing this, really helps us in putting that theory to practice

[@vincenthor]

On time value erosion. An interesting information I got from the book Option Math by Scott Nations. Time erosion accelerate toward expiration for ATM and ITM options, everyone knows that. However, time erosion is heavy at the front and decelerate towards expiration for OTM options. This is the first time I come across this information which was not covered anywhere including CFA. Or I wasn't paying attention when reading the curriculum.

[@peterhudlow984]

Great video Mark! BAC had a perfect channel in 2019 that I used a similar strategy on with writing options.

[@AgricEcon]

Great application of CFA content! Thanks!

[@jaypeng6860]

enjoy wathcing your videos Mark.

[@michaelrodgers6675]

Mark you commented that you think the big selloff was liquidity related. I'm curious were there tell-tale markers/quantifiable signs at the time of the selloff that this was liquidity driven? I'm curious what the evidence is for this and what signs I should look out for in the future to see if it's liquidity driven or "genuine" selling

[@MrFlamingTacoMan]

could you do videos on buy side equity research? @mark meldrum

[@polililo]

I like the "paycheck" play. One question: do you let the sold options to always expire, or you close them earlier if the price is close to your goal?

[@MarkMeldrum]

I don’t close them, just let them expire.

[@hunterstraus843]

How do you evaluate the opportunity cost of having cash-secured puts versus just having more dividend-paying stock (and writing more covered calls)?

[@MarkMeldrum]

Less capital tied up, don’t need as much cash as one thinks. I don’t use margin on a normal basis, so if need be I can use margin when assigned. I get assigned about 25% of the time.

[@RT-bs3zg]

Any thoughts on AGNC and RWT? I feel that they are attractive at current valuations.

[@MarkMeldrum]

With rising rates, MBS loses value and durations extends, so without swaps they will have MTM losses.

[@valhalla9688]

All hail Mark!

[@Vishal-ih3tc]

Hi Mark - you have mentioned that you like apartment REITs and health care REITs. What are you views on NWH.UN ? Could you do a video on how to analyze it or think about it as you did with BTB.UN. Thank you!

[@vincenthor]

I see you are deciding your strikes based on valuation range instead of imp vol, delta and prob ITM/OTM. More difficult to do, I'll try to use that for my trades. Thank you Mark. Great video, do more of this please.

[@emilylaurie1747]

Mark, you mentioned in the video that you would manage your risk if the SPY risk reversal went against you. What would be some ways that you would go about minimizing the risk, at that point in time?

[@MarkMeldrum]

Well, I would be more likely to have SPY assigned to me. 2% yield and a long position at $249. If I did not like the price action down the 249, I would short SPY in the number of deltas to hedge the options.

[@bgvianyc]

Good video. Question about how you prefer range bound equities like AGNC for selling option premium, since one of the inputs to options pricing is volatility wouldn't more volatile stocks create more premium which ultimately compensates the seller for the additional volatility, perhaps more so since the stock is being valued using intrinsic value while the option is being valued using price volatility?

[@MarkMeldrum]

More volatility means higher probability of capital gains, so less willingness to sell calls. I invest for income, hence AGNC. Now I want to double that income.

[@bgvianyc]

Mark Meldrum isn’t what matters ROI whether it’s received as income or capital appreciation does it matter much other than for tax purposes(cap gains are taxed less anyway). If AGNC entered a period where its volatility doubled and the options premium increased would you stop this strategy? You don’t think the increase in premium compensates in such a case?

[@ohitsdeeesh]

Hi Dr. Mark, Thank you for the video!! Would it be advisable to sell naked call/puts on AGNC if I have a very small position in it?

[@MarkMeldrum]

That depends on your level of comfort. Selling a put risks the stock being put to you, and selling calls risks the stock being called away. If you are comfortable with those risks, then give it a shot.

[@iglitartaraj3433]

Hello Mark. I want to know your opinion about this massive quantitative of easing and the risk of hyperinflation.

[@btcbull]

NLY option D25 Volatility was priced at 130 for Oct; It give me the courage to do a covered call.

[@marcopanzera8572]

Many thanks for sharing your videos Professor. May I ask what broker do you use? Interactive Brokers? Cheers

[@MarkMeldrum]

IB. yes

[@deepakchitnis1]

Please also share your views on Gold

[@prula]

Very interesting!

[@RaulGonzalezG]

Hello Mark, thanks for your applied videos. They are really interesting. You gained the risk reversal trade, congrats! Would you mind explaining how you calculated the support level at 2490 or reference other video if you are busy please? Thanks in advance.

[@vincenthor]

Hi Mark, exactly what I'm looking for right now. I have been doing hybrid of risk reversals + calendar (cash secured). Selling weekly puts and buying long dated calls. I would be able to adjust the puts over time specially if it slides down. Position can generate more income instead of free position. I don't want to be blind sided. Can you critique this strategy please?

[@MarkMeldrum]

When you think about premium per day, selling short and buying long makes a lot of sense. The delta of the call is lower with longer time, that is the only critique I have.

[@yongeunlee6719]

What platform do you use?

[@MarkMeldrum]

Interactive Brokers.

[@mrjohnv01]

theta gang baby

[@Bogdanbmm]

With all the options strategies out there, which one exposes you for losing your account / unlimited losses ? I keep hearing options imploding accounts, even professional ones ... thanks

[@FreedomFighterz215]

Hi Mark, which trading platform do you use?

[@MarkMeldrum]

Interactive Brokers.

[@eyanglu]

May I know which trading software it is ?

[@MarkMeldrum]

Interactive Brokers.

[@eyanglu]

@@MarkMeldrum Thank you very much Professor ! Appreciated.

[@xiangpengxiang6636]

thanks

[@NateTheGreat541]

Hi mark great video! I've been using the gist of this strategy for the last two years with solid success. Unfortunately you can't sell puts in registered accounts (TFSA,RRSP) is there anyway around this that I haven't considered? The covered calls have worked great but I feel I'm leaving money on the table. It seems kind of arbitrary that cash secured put selling is forbidden. Thanks!

[@MarkMeldrum]

Sell the put in a taxable account. If the stock gets put to you, make your annual contribution in stock rather than cash.

[@NateTheGreat541]

@@MarkMeldrum so simple, thanks alot!

[@paulalger10]

Hi Mark, Would you say writing iron condors, setting your breakeven legs to your upper and lower bands, be similar to your options strategy with AGNC?

[@vincenthor]

No. Your loss and profit would be limited with iron condor. Mark's position would be infinite profit and max loss is SPY going to zero.

[@paulalger10]

Vincent Hor yes I know because it’s covered on both legs. I was asking more about whether it’s similar, but different payoffs.

[@vincenthor]

@@paulalger10 oh sorry, I wasn't focused in my reply. I think there are 2 things at play here and you need to confirm which you are referring to as similar. To me, there is nothing similar. 1st thing is your objectives/views/convictions are different for the 2 strategies. Mark don't mind when the stock is assigned/exercised/expired worthless. Regardless where the stock ended, he is (almost) equally happy. For writing iron condor, your view is the stock will stay within range and expire worthless/close with a profit otherwise you will make a loss. 2. Premium collected for iron condor will be much less than what Mark gets. You can try to collect higher premium but the range would be so narrow, probability of staying within your range will be very low, most of your trades will be at a loss. Hope this is relevant to your question. Let's wait for Mark to reply to you and to poke holes to my reply.

[@a.j.conway1442]

Your thinking and rational toward SPY paying you a dividend while ES (Emini S&P 500 future) doesnt is faulty. I understand why you would think that but the futures price (The curve beyond the lead future especially) is derived based on dividends and rates. When SPY dividend is higher then Rates then the futures curve is downward sloping which accounts for the lost dividends compared to saved money on carry cost by owning SPY or the index as outright legs. On the contrary when Rates are higher then the Div the futures curve is upward sloping because the cost to carry is higher then the respective dividend. The reasoning for this is you only need to put up 6K in margin so essentially the other 135K or so in notional value of the contract so you save alot of cash and you can keep it in a money market or invest it however you please. Basically what Im saying is regardless you will end up in the same spot financially owning SPY vs ES at the end of the day. BUT!!.... ES has a big advantage.... That is is it trades 23/5 and there are often anomolies in vol spikes during the asian and london shift that lead to tremendous opportunities to sell vol. For example I was able to sell the 1850 strike put expiring in 3 days during the asian hours for 38.00 ($1900) per contract when the S&P was trading 2550. This is a absolutely absurd price that only came around during the XIV blowout. By trading ES options you can capitalize on opportunities like this. For reference by 9 AM the next morning S&P trading 2625 the options were worth 1.25. ($62)

[@MarkMeldrum]

I didn't say anything like that. I said I don't want to be assigned a futures contract.

[@a.j.conway1442]

@@MarkMeldrum Ahhh i gotcha that is a fair point. For me being assigned a future is kinda nice because the thing cash settles regardless but thats just my person preference. I also love the extended hours trading especially on Sunday nights when something crazy happened over the weekend. You can catch some huge short squeezes and locals puking (Market makers).

[@mcli8802]

I watched this one at 0.75x speed. Think slow.

[@mikeschroeder8356]

Mark, loving the recent content. I never thought I’d see the day you’re using technical analysis😈 I need an explanation here! I’ve always thought you’re very against it based on how you talk about it.

[@MarkMeldrum]

No technical analysis here. I determined the strikes on AGNC based on book value per share, a fundamental indicator. I determined the strikes on SPY based on forward PE multiples, a fundamental indicator.

[@mikeschroeder8356]

Mark Meldrum that makes sense. It looked like you were doing this based off the chart (based off recent highs and lows) which is how I like to chart. It’s funny how the two merge sometimes.

[@1234doawee]

So hard to understand baseball analogies coming from England haha

[@MarkMeldrum]

Well, think of it this way. You don't have to bow to every royal, you can wait and only bow to the ones you like.

[@1234doawee]

@@MarkMeldrum haha thanks this actually makes it much clearer! I watched a bloomberg clip earlier, where a guest suggested the reason oil turned negative was because of a massive amount of long positions having to get out... I don't think this is right, surely you wouldn't have big long positions if you knew you couldn't take delivery that close to expiry. Or am I misunderstanding this?

[@thomson4420]

this is more interesting than your course.lol

[@MarkMeldrum]

The fight is always more fun than the training.

[@william_8844]

Thanks