Options Trading Professional Explains - How To Choose The Best Option Strike Price

[@gulamallie3457]

I am so impressed by the simple way you explain options. It's great for people new to options. Not everyone has the skill to teach because options can be very confusing and very risky if you don't know what you doing trading options. Options can be very lucrative and fun but you got master the basics. You certainly explain the basics very well.

[@leelowell]

Thank you. Glad to be of help.

[@Trang-u9o]

Thank you Lee.. very educational

[@leelowell]

Thanks for watching

[@forkeeps5395]

Very nice way of teaching... thank you!

[@leelowell]

Thanks for watching

[@PepperJackStudio]

Really great info, excellent presentation, thank you very much.

[@leelowell]

Thanks for watching

[@brianyoung2468]

thank you so much for helping me understanding how and what to look for in choosing the proper strike price...

[@leelowell]

Glad to be of help.

[@RosaAnguiano-t1m]

how do I get probability calculato

[@leelowell]

Hi, click here - www.smartoptionseller.com/calculator-purchase

[@quantum7401]

@Lee Lowell Thank you for sharing your knowledge. It is important to trade quality names. In addition, when I have traded options on low quality penny stocks that didn't move more than $1-dollar have caused my P/L to suffer, but high quality names often have larger price swings, and when spot-price moved $2 or $3 because change in spot price gets squared - $1^2--> $1, $2^2 --->$4.... 👍

[@leelowell]

Thanks for sharing with the community!

[@btc100M]

Well explained.

[@leelowell]

Thanks for watching

[@allyvyne3002]

Some traders buy 10 contracts at .20 OTM for $200 premium. Why not buy 1 contract ATM for $200 premium? Or 2 contracts 1.00 totaling $200 premium? Which one would you select?

[@leelowell]

Couple things - it all depends on how speculative you want to be, how good are you at predicting the stock's direction, and how long you plan to hold for. As mentioned in the video, OTM options are the most speculative, and the stock really has to make the right move for you to win. ATM options have roughly 50/50 chance of producing a win, and ITM, though the most expensive, will give you the best movement in relation to the stock. Delta is important. I can't tell you which to pick because I'm not in your head and I don't know what you're looking to do. If I'm investing long-term, I buy a DITM leap call option. If I'm going for a lotto, I'll buy a bunch of OTM and pray! I don't do that often because the odds are horrible, but can be fun at times. Adrenaline rush!

[@skyhawk1256]

Great video Lee, and again I learned a few things that I dit'n learn somwherelse, THANKS.🙂

[@leelowell]

Thanks for watching.

[@benrashid7260]

Nice video. Maybe you address this in another video, but what about when you have deep in the money calls on an option but there is not much volume for that strike? And let's say it is expiring in a few days? In another video you recommend buying deep in the money calls with around a 6 months time frame but if the stock moves up quite a lot, will you still be able to easily sell your (by now) very deep in the money call easily as expiration approaches?

[@leelowell]

There will always be a bid/ask market for every option contract that still has value. It's the market-maker's job to provide that. So yes, you will be able to sell your DITM call option. Or, you can exercise it if you wish.

[@benrashid7260]

@@leelowell Thanks!

[@christopherfromme6338]

It was only a paper trade since my real account will not let me buy calls but bought 5 AAPL calls the day before earnings and made a $5000 paper profit and the Delta was about .80

[@leelowell]

Great job! But I'm surprised that you can't buy calls in your real account. That's the most basic strategy for the lowest approval level. What was the reason from your broker?

[@christopherfromme6338]

@@leelowell When I filed out my information With TD last year I was only able to sell PUT's and buy stock am working on getting my account over 25K Schwab will then allow all kinds of trades I can buy Calls with my Roth IRA Was not going to chance the AAPL call as the calls that I bought with my ROTH have had mixed results Also the service I have had for a year does not have a great record on money making PUT's Have done the best on BITO PUT's

[@harshs4542]

How about buying a DITM 90 delta 1 year LEAP on AAPL and sell OTM 30DTE calls on it?

[@leelowell]

Yes, that's called the "poor man's covered call". Very popular.

[@harshs4542]

@@leelowell I see thanks. Can this be done on futures- buy a 90 delta call LEAP on MES(micro-emini) and sell monthly calls on it ? Do you have any videos on selling options on future index?

[@leelowell]

@@harshs4542 - The strategy can work the same on any underlying security. I don't have a video on this specific strategy on futures. Sorry!

[@librisc]

Lee, how about a video about selling options with a higher delts let's say between .3-.4 or even higher and closing out early due to 15, 20, 30% moves in a day or 2 or 3 etc....i've done that few times and came out making nice profits if you catch some bottoms. In other words, instead of staying the entire amount of time to expiration, you set buy to close signals early where % of probability is really high. then rinse a repeat several times in a day sometimes. It is somewhat time consuming but it's making the profits. just a thought. I appreciate you. Because of you i ;pulled the trigger on selling options back in the fall of last year.

[@leelowell]

If it works for you, keep at it. In our newsletters, we always close the trades before expiration once we capture 80% of the decay, but we use very low delta options. It’s true though, if you use higher deltas and catch the right directional move in the stock, you can close out for quick 50% decay or more.

[@RedNoseGETEM]

Its going to get very interesting if the market goes up leading into June-July. HEAVILY weighted Inflection Point waiting up there 👀

[@leelowell]

We'll see....

[@NutanPagadala]

your definition of delta is wrong. please correct it

[@leelowell]

Hi, what are you finding wrong with the delta definition I used in the video? What’s your definition? It actually has 3 definitions: 1. How much the option price will change along with the stock price. This is what I talked about in the video, and it’s the most common definition. 2. What’s the chance of the option finishing in-the-money. 3. The amount of shares that is needed to hedge an option position. This is mostly used by professional floor traders. Enlighten us. Fill us in with your definition.

[@FireLt2017]

Might even fall off a cliff despite a strong uptrend. Just had 3 stocks (DITM trade) with strong upward momentum turn on a dime and loose all their value

[@leelowell]

Of course there's risk in every trade, no matter how strongly we feel about the stock. At least buying the call options have less actual dollars at risk versus buying 100 shares of stock. Still stings, I get it. Was it a short-term trade? If long-term, there's still plenty of time for the turnaround.