Simple Options Strategy That Made 500% While The Market Lost 4%

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[@traderaj1184]

Also plz correct me if I'm wrong... Total profit=26*200=5200, Total loss = 15*300=4500, so net profit is 5200-4500=700... how is it 500%?

[@cluggyahoo]

I don't get it either 🤔

[@peterp4753]

Wait, correct me if I'm wrong. You said that every time I win it will be around $200, but if I lose it will be $300. So if the strategy winning rate is 26 times, that's $5,200. I loose 15 times $300, that's $4,500. So, total gain would be $700 ?

[@user-Tim66]

Nice video. Is there a longer backrest. How has this done over 5,10, or 15 years

[@walterharris1301]

Thank you I’m new to options, great video

[@multiscan8]

I like how: 1- you guys are getting more interesting with your videos with more aggressive strategies. (the world doesn't need another video on an iron condor) 2- You are completely transparent with the risk entailed. There are people out there that DO NOT spell out the risk taken on with the strategies promoted, but only talk about how much money you're gonna make...you put it right out there. Make 200, lose 300 (approximately) then explained why the strategy has a positive expectancy. (at least until the next downturn...haha. Hey, nothing lasts forever!)

[@mrakun]

It would last as long as the market is above the 200 dma. Then get doing it again when it's back above. Very simple rules!

[@SplashVideos1]

Great Video Seth, I'm going to try it. Cheers Jim C

[@dannyvfilms]

Curious how you would define the strikes through Deltas? Trying to backtest this, and the platform I'd be trading with prefers deltas.

[@thehiddenexperience4116]

Which time frame would you look at in your charts? Weekly, Daily, Monthly? Thanks

[@amroz6237]

Excellent video, clear and to the point. Well done Seth!

[@smbcapital]

Thx!

[@bretrb]

Don't know if you will ever see this comment, but a few things. One, instead of just saying 'we multiply options by 100', and not explaining why, I would say 'since an option controls 100 shares of stock, we multiply this by 100'. Also, while technically you are only risking $300 per trade, on credit spreads, brokers take out the difference in strikes for margin on credit spreads (not debit spreads), so you would still need at least $500 per contract in your account to do this strategy. Also, by my math, 26 winners x $200 each = $5400 and 15 losers x $300 = $4500, for a $900 total profit, not $2000. So, for a more realistic return, $900 profit using $500 margin is 180%. Still not a bad return at all, but also doesn't take into consideration needing extra money in case of multiple losers in a row, etc.. Even two losers in a row (which would happen fairly often with only a 63% win percentage) would be $600, so using one contract, you would really need at least $500 (margin) plus $600 (buffer), or $1100 minimum per contract to trade this strategy, which is now a more realistic 81% return. Overall though, your videos are good, keep up the good work.

[@venician2face]

Your math is as wrong as Seth's. The gain is $700 not $900, because 26 X 200 = 5200 not 5400.

[@Schopenhauer72]

Thank you for the insight, Mr. Freudberg. Liked & subscribed.

[@smbcapital]

Thanks Charles!

[@nynath]

Thanks so much. Really, kind and generous of you to share this. Thanks again so much.

[@sethfreudberg4750]

Our pleasure.

[@JDNicoll]

I just ran the numbers on 2020. Assuming an average max loss of $250, the numbers came out just about on point ($2050 for the year). However, that did include getting on the uptrend around April 15th even though the SPX didn't make it above the 200DMA until a month later.

[@mikedarpino2328]

I'm missing something, in the example we make 200 for 26 weeks and lose 300 15 weeks, isn't that 26x200= 5200(win), and 15x300=4500(lose) doesn't that leave a 700 profit? I don't see how it is 2000?

[@MikeNeumeister]

That's the same thing I'm thinking... I can't make sense of the math in the video unless I'm missing something.

[@mrakun]

@@MikeNeumeister see his previous comment under tai hue about the actual test results instead of the 200/300 numbers. More like 217/264.

[@aaronhart8566]

I agree. I can't quite figure it out either. The "compounding" that he mentions must have worked out in their favor or something like what @mrakun mentioned (can't find that comment though). I guess either way making the $700 is 233%....If each contract only costs $200, then yearly at 233% would hypothetically yield, Y1 $900 , Y2 $1,964 , Y3 $4,358 , Y4 $9,944 , Y5 $22,978.

[@Francisco-rg3jb]

Here is the key: If you let the option expire, your winners are ALWAYS $200 but your losers are NOT ALWAYS $300, it is simply your max risk. So the average loser was more like ~~ $228

[@timellis5729]

@@Francisco-rg3jb actually your max risk is always the difference between the strikes (in this case 5 points, $500) minus the premium you received. This will change as the option premiums will always be different but roughly in the same $200 ball park. If for example you get closer to $300 for your short position, then your risk will only be $200 and vice versa.

[@Lala-po9ho]

Seth, I would love to see more videos on how to manage trades gone wrong. Thank you!!

[@smbcapital]

check out our most recent video. kzbin.info/www/bejne/qoWTaaeAmdh7lac

[@luisf7105]

Seth, thank you so much for putting out these valuable videos... Much appreciated!

[@MrCurtis61]

do you sell this spread every Friday morning before the opening bell?

[@alphabeta01]

Great video and right content. If you can share some more recent examples of credit Call spreads during the sell of during Aug-Sep 2019 to give a view of the downside as well that would be great. Thanks again @Seth Freudberg. Appreciate your sharing and educating.

[@WellAlwaysHaveParis]

Right - but what if you get pinned between the strikes?

[@Dave-bm4bu]

Thank you for producing great content. I would love to see an example of a blue chip telecom options strategy

[@Reutzel507]

Check out tastytrade. Way better content and they give you back tested data.

[@BryonLape]

Simple and SMB are not two words that go together.

[@tusharg2751]

Then what does? I think the strategies smb gives is awesome. One doesn't have to judge the market direction as well.

[@tradesinmotion7915]

Excellent topic and video. Videos on intraday futures trading would be great as well.

[@sethfreudberg4750]

We have a bunch of those. Just put "SMB Capital Futures" in the KZbin search engine and you'll find them

[@vassilikovalev7812]

So what strategy we would apply if SPX is trading BELOW SMA 200 as of today 05.05.2020?

[@superswingtrader5388]

Great strategy! Thanks Smb Capital!

[@sethfreudberg4750]

Please tell us what other options content you'd like!

[@traderaj1184]

Are you trading 0 DTE ATM put spread? Did you manage to beck test it for last 10 years or so plz?

[@gregdolley9189]

Hey Seth - but do you initiate this spread on the Monday of the expiration week (so basically 4 DTE), or the Friday _before_ expiration (6 DTE) for the following week's options chain??

[@mauronicolascanseco1643]

Winner of a video, I been tryin to find out about "best options trading advisory service" for a while now, and I think this has helped. Ever heard of - Winoorfa Option Olegroson - (Have a quick look on google cant remember the place now ) ? Ive heard some super things about it and my work buddy got cool success with it.

[@seanedhuie]

Based on what he is saying, it would be whenever the price gets you about $2.00 which is on average 5 days 'til expriation. Good luck!

[@PeterBoivin]

thank you this. Is there a day of the week that has the more expensive put options to sell? I guess what I am really asking is which day would be best for us to do this trade?

[@mrakun]

I would say put the next weeks trade on Thursday or Friday for maximum credit. Monday at the very latest, but preferably not. Tuesday or Wednesday would have less credit (and more risk) from the rapid decay

[@katraju]

Great video! Do you trade any options on ES futures contract? Would like to know your ideas how you would trade? Thanks

[@sethfreudberg4750]

Hari, I don't personally trade ES futures options, but many traders do. They like the fact that you can trade them 24/7. However I've heard that the bid ask spreads and liquidity can be difficult sometimes so be careful.

[@JDNicoll]

To run this in a bull market would you simply reverse it and sell the put below the SPX and buy the put above? Seems like this would result in a debit spread instead of a credit spread and would achieve the desired effect?

[@djb7582]

Unclear as to why above a 200 DMA is the benchmark for a safe trade. Would a 50 or 20 DMA be an even safer trade?

[@pattyaap7345]

Thanks for sharing! It would be nice to see the strategy in the chart to make sure I can place it correctly. Based on what I read, the strike price will be in the middle, the sold put would be above it and the bought put below the strike price? This set up is different than other debit/credit spreads I have seen when both options go together above or below the strike price. Just confused here ;-(

[@mrakun]

sell one above the index price, and buy one below the market price

[@MrCurtis61]

WOW! Simple yet extremely effective strategy.

[@TheArtOfTrading]

Great video as usual team, thanks for sharing. Really cool strategy idea here. And this analysis really emphasises the value of even just a slight edge combined with compounding. Which is a very important concept for new traders to understand. Cool stuff, I love it! Thanks for giving so much value to the trading community for free, you guys are genuine legends!

[@sethfreudberg4750]

It's our pleasure. Please tell us what other options topics you'd like us to cover on these videos!

[@venician2face]

Yeah, Don't see how a fancy Manhattan trading firm makes money with obvious math errors like this. The original $300 turns into $1000, not $2000. The IRS would do well to audit SMB Capital's returns. I hope this was an honest math error and not an attempt to oversell their skill with making profits with options. 500% looks much more impressive than the actual gain of 133%.

[@cli2g13]

would the reverse work with call? ie. sell calls when under 200 SMA?

[@abu4729]

If I understand right, you'd sell call to try make profit in bear market? It appears that this example is using bull market (SPX rallied). And if the trend is under 200 sma, we're talking about bear, right?

[@WillRomero]

Great content as always. I like doing this strategy, but i also play the other side as well, far OTM since no additional capital required. It has worked over 80% of the time. What are your thoughts on that strategy (Iron Condor)?

[@cluggyahoo]

I prefer Iron Condor as well

[@stevepatterson1124]

Not sure your math is right your risk is not $3000 you could easily have 2 or even 5 losses in a row before you have even one winning week. -$15,000 could easily happen

[@Damvilion]

the probability is in your favor so that probably won't happen.

[@ricomajestic]

@The Death of Logic The 2685 put did make him money when the market went down but the 2690 Put which he sold caused him to lose more money since it would be deeper in the money!

[@GregHohman]

ricomajestic cash assignment and automatic ? Exercise on your part would limit the loss to the spread less the credit received plus the debit paid, no?

[@Reutzel507]

How many times are you going to make a video on put credit spreads?

[@InfiniteQuest86]

Mathematically, this feels like a theoretically losing strategy. Suppose a win of $200, 55% of the time (giving the 'edge' 5%). Then you lose $300, 45% of the time. The expected value of this trade is -$25. Are we really giving upward drift more than a 5% probability? Even with 60/40, you come out completely flat.

[@multiscan8]

Is your math right?, given the win/loss on the slide at the 9:44 minute mark... 26 wins, 14 losses over 41 trades (1 scratch?) you would win 63.41463414634146% of the time, Lose 34.14634146341463% of the time. he clarified the win/loss #'s as " average win $217 and the average loss was $262" He probably didn't know the sh#@ he was stepping in when he generalized the #'s...

[@mrakun]

you're supposing a win/loss ratio that is much less than would the case in reality. Remember, in a bull market (when the market is above the 200 dma, the market will be up much more than 50% of the weeks. Closer to 2 to 1 than 1 to 1 win/loss ratio.

[@mehta1967]

Outstanding explanation

[@isata88]

I want to register for the course but this instructor is the only person I can listen to. If he's not headlining that video...

[@bretrb]

Don't know if you will ever see this comment, but a few things. One, instead of just saying 'we multiply options by 100', and not explaining why, I would say 'since an option controls 100 shares of stock, we multiply this by 100'. Also, while technically you are only risking $300 per trade, on credit spreads, brokers take out the difference in strikes for margin, so you would still need more than $300 per trade in your account to do this strategy. Also, by my math, 26 winners x $200 each = $5400 and 15 losers x $300 = $4500, for a $900 total profit, not $2000. So, for a more realistic return, $900 profit using $500 margin is 180%. Still not a bad return at all, but also doesn't take into consideration needing extra money in case of multiple losers in a row, etc.. Even two losers in a row (which would happen fairly often with only a 63% win percentage) would be $600, so using one contract, you would really need at least $500 (margin) plus $600 (buffer), or $1100 minimum per contract to trade this strategy, which is now a more realistic 81% return. Overall your videos are good, keep up the good work.

[@kaedentruong6925]

I love credit spreads.. just don’t get greedy.. I learned my lesson.

[@joyfullmom0068]

Thank you for such awesome information!! Stay at home mom of 6 using your help to become a profitable trader and make a better life for my family!!!

[@sethfreudberg4750]

@Tradermom006 You are exactly the kind of trader that we love to work with because you don't have to sit in front of the screen all day with our trading style. I had two kids, so I can't imagine HOW you'd handle 6. So I'm pretty sure all day screen time is a non-starter for you anyway :)

[@joyfullmom0068]

@@sethfreudberg4750 thank you so much for your reply! It means so much to me! It's been a longer harder road than I expected to become a profitable trader (which I'm not yet but not giving up) and today has been frustrating. I'm going to keep plugging away, learning all I can with the help of awesome videos like what you guys are putting out and putting in my time consistently - as consistently as possible homeschooling the kids! Lol!! Thanks for all you do!!

[@sethfreudberg4750]

@@joyfullmom0068: one of our top options desk traders, John Locke, homeschooled his kids too. But he only had two!

[@joyfullmom0068]

@@sethfreudberg4750 lol!! So trading should be easy for me then!! 😂 Trading stocks hasn't been going so well the last two years and just when I think I'm understanding options, it escapes me again! Ugh! Keep pressing on!

[@sethfreudberg4750]

@@joyfullmom0068 Sometimes it takes a while to find your bread and butter options trade...the one you put on each month and feel optimistic and comfortable that you can manage to turn a profit. You'll settle on one eventually.

[@buelerful]

Great video Seth. Are there any methods to refine this strategy above the 200 day so that winning weeks could be increased (I.e. combination of 200 day MA with RSI and MACD points or 200 day with another MA)?

[@sethfreudberg4750]

That's worth a try Brandon. Let's play around with it and if anything looks valid we'll do another video about it.

[@sethfreudberg4750]

Brandon, we tested including the 50 DMA but it did not improve the returns. We are still looking at some stuff though.

[@buelerful]

Seth Freudberg Thanks for following up after testing some of the other moving averages. I’m trying out this strategy and will try a few extra things as well. If anything comes out of it, I’ll provide an update.

[@mrakun]

@@buelerful I think fighting for a bigger credit would improve your returns better instead of doing a tech analysis, such as $250 instead of $220. If the credit is too small say under $200, skip the trade, assuming you're giving yourself a full week + 1 day to get the full decay. But maybe that messes up the probabilities if you skip trades.

[@josegil4318]

Great video mate👌 I would like to see what strategies are good for a bear market in which case the spy will perform under the 200 moving average

[@gregkeen4907]

Same strategy, except in your example you would use a call credit spread.

[@sethfreudberg4750]

@@gregkeen4907 Not necessarily Greg. Call credit spread in bear markets don't seem to work as well as put credits spreads in bullish markets.

[@genefritts6915]

@@sethfreudberg4750 Agreed. All the research I have read suggests call spreads are a different animal.

[@GregHohman]

Jose Gil - got time to run TOS On Demand trades for each week in 2019, for the under 200DMA Bear Call Spread?

[@hameddadgour]

Great video!

[@sethfreudberg4750]

Thanks Hamed, tell us what else you would like us to cover on a new options video

[@hameddadgour]

@@sethfreudberg4750 Hi Seth, I would love to learn how you trade volatility and it's derivatives. Thank you!

[@sethfreudberg4750]

Hamed Dadgour, we can probably cover that, let’s see what we can out together.

[@hameddadgour]

@@sethfreudberg4750 Fantastic! Looking forward to watching your video :)

[@kylemeade3386]

My broker doesn't have weekly option for SPX, would SPY be a suitable replacement in this situation?

[@multiscan8]

He has them...call them and get them to show them to you...

[@andreaskunst4344]

Sorry, I don´t get it! In 2018 you had 26 winners with +200$ on average (+5200$) and 15 losers with -300$ on average (-4500$) which sums up to +700$ and not to +2000$. If you consider transaction costs for these trades its even less. Did I get something wrong here? Thanks for clarifying.

[@twotap9719]

Hey Seth! Love the content! Has there been any studies with ITM debit spreads?

[@michaeldouglas7989]

can i trade SPX options from the UK?

[@SplashVideos1]

Yes

[@mctermite]

Are you suppose to initiate this trade on Mondays? That part is not clear.

[@mrakun]

I would the previous Friday

[@lorenzoholguin2599]

Will this strategy work with SPY? Or another ETF based on SPX?

[@sethfreudberg4750]

Lawrence, you could conceivably trade this with SPY options but your commissions would be ten times larger for the same amount of capital because the SPY is 10% of the size of $SPX, so personally I would avoid using SPY options if you have the capital.

[@TheRealMartin]

@@sethfreudberg4750 SPX are also european style options, so it helps avoid early assignment. SPY doesn't give you this.

[@mrakun]

so if you use a no comission broker you're good! such as robinhood or tdameritrade schwab nowadays. Until you have enough capital, then go for SPX

[@figh761]

hello seth , please write a book on these kind of income strategies.... GOLD !!

[@smbcapital]

we have a bunch of courses on them! www.smbtraining.com

[@idunusegoogleplus]

Advice so good the cops had to come arrest them.

[@henry9293]

Great video! Given the 200 day moving average rule I assume this is best in a bull market. Would the opposite of this trade in a bear market therefore be selling and buying calls?

[@sethfreudberg4750]

Not necessarily Henry, we'd have to perform some tests to see how that works out. The call side is often more troublesome than you'd think.

[@henry9293]

Thanks for the reply! Absolutely love SMB videos I watch them religiously, haven’t missed one since I started watching them about a year ago. You guys are truly inspiring me

[@mrakun]

@@henry9293 I like Seth's videos better than the other guy's which seem more complicated and a bit more boring.

[@aanon7947]

thanks

[@sethfreudberg4750]

our pleasure

[@taihue5190]

Could someone explain how you got $2000. Because I'm doing the math (maybe wrong) but if you win $200*26 that's $5200 but you loss $300*14 that's 4200 so wouldn't you net $1000?

[@superswingtrader5388]

That's what I came up with too when I did the math. Needless to say options are high risk if you don't know what you are doing at first

[@sc0or]

May be reinvestment is the key

[@johnnyshan1632]

you roll over the winnings so when you accumulated more captial you are actually making more than 300 a week

[@sethfreudberg4750]

Tai Hue the average win in the backtest was $217 and the average loss was $262. When you get more than $2 for the trade on average, it means the reward on that trade is greater and the risk is smaller. If you do the math it works out.

[@aldoh9035]

Very good points I give you credit

[@surfman88]

Sounds nice but when backtesting with this chances and w/l amounts it is a steep line downward.

[@Lyotac]

really? in my backtest i found that this strategy has a 70% win rate on average since 2000. With a 1/1 risk-to-reward, this strategy seems pretty good imo

[@kargs5krun]

🤑"weekly credit spreads"🤑 ...................👊😎👍

[@kevensg1]

great video but those sirens in the background drove me nuts. i was looking out my window trying to figure out what was going on outside.

[@smbcapital]

This is NYC, I don't think we've had one video where we didn't have them. Also it doesn't help that we are on the same block as a Fire Department

[@all69anna]

Then you need better sound insulation. Lots of youtubers broadcast from their closet for exactly that reason 😁

[@dancasey9660]

Don't you have to worry about someone exercising your close strike, leaving you to have to close the far strike. How do you deal with that situation?

[@ricomajestic]

NO! Spx is an index(european style option) so it cant be assigned before expiration and he rolls it out or closes it every week before expiration.

[@stephenhobbs948]

Seth states there were 41 weeks where SPX was above 200DMA. The slide at 9:55 says they won 26, lost 14. That equals 40 trades; one is missing. Was it a winner or a loser? Also, $200*26 winners-$300*14 losers = $1000, not $2000. How did you make the extra $1000?

[@funkywubby]

You don't always lose 300, the 'worst' you could lose is 300

[@jeep1077]

@@funkywubby But you don't always take $200 profit. Most people sell at 90% profit rather than let it expire. This is because you don't want to face the potential of having to buy 100 shares if the market gives you a loss after hours.

[@mawavoy]

Stephen Hobbs , The thing you are missing is you do not invest when the index is below the 200 moving average.

[@GregHohman]

Michael Voy - your comment doesn’t seem to have anything to do with the top comment made, i.e. how did you make the extra $1,000?

[@GregHohman]

Kanishka Thakur @ Seth - is this correct?? I.e. $300 is the worst loss, you could lose less, letting it run to expiration??

[@SteveLavin76]

Has anyone back-tested this strategy for years other than 2018? Many strategies do very well some years, and poorly other years, so would be great to see how this one performs over more than just 1 isolated year ...

[@felixexplore3989]

I just back tested this strategy and I am very far from Seth's conclusion... I backtested 2010 to 2019 included, and I found an average win % of 49%... I find that quite odd...

[@ricomajestic]

@@felixexplore3989 Probability is not what matters most it is expectancy. What was your expected return per year?

[@sirhulk5325]

If SPX stays between the options wouldn’t that make your protection useless and cause you to be put 100 shares? How does it work with indexes?

[@roypettigrew6453]

SPX is cash settled so there is no assignment of stocks here.

[@soccerlife5041]

Is it possible for me to trade your funded account if I am a Non US citizen and resides outside the US ? Plus my country restricts me from trading in US markets. I am a trader and have about 10 years experience in the market.

[@sethfreudberg4750]

@Football Maniac: You can apply here and you'll get a response: smbcap.com/careers/

[@voltrading4966]

Seth, if you win ~$208 * 26 times (= $5408) and lose $300 * 15 times (= - $4500) surely you would have made only $908, not the $2,000 in the video? It could easily have turned out by random selection from the true distribution to be only slightly different at 23 winners and 18 losers instead of 26 W / 15 L, in which case the strategy would have lost $616. That looks like a fairly dangerously small edge that would churn and burn through a pretty good chunk of retail traders trying to enjoy its simplicity. This sort of edge warrants a thorough and sophisticated Bayesian statistical and timeseries evaluation. Maybe 100,000 Monte Carlo samples to better gauge the likelihood. New traders would probably be better served looking at more structural edges like earnings and time decay trades which you cover so well in other videos.

[@rkatz0]

Great video, thanks much! I am sure the devil is in the details but this really spells it out. Thanks again!

[@rkatz0]

@@sethfreudberg4750 I don't have any agenda, I am sure anything you post will be worth watching, and most likely better than that!

[@Mike-lh4wn]

Thanks for another good video. Sounds like the cops are coming to get you guys.

[@bestonemusic]

What strikes me is that on the Internet you could see 1000 videos on selling options and only a few videos on buying options. Despise the free lunch.

[@Dustin_Neal]

26 wins at $200= +$5200 14 losses at $300 = -4200 Total Profit =$1000 300 to 1300 is +333%. That's Awesome, but where was he getting 500%? Was it due to using compounding to buy more than one contract?

[@mukulsharma1078]

BaseLess Logics , Showing only one side of Mirror

[@sethfreudberg4750]

Mukul, not sure what you are getting at. We discussed both the wins and the losses in the video as both will assuredly happen. It's the probabilities that we are seeking.

[@tutdrei]

police lit over there lol

[@ralphd988]

SEEMS PRETTY hypotetical every week with the gyrations and volatility of the market to be that consistant most weeks near the money like that

[@sethfreudberg4750]

It's a numbers game Anthony. Risk/Reward and Win/Loss ratios all combined mathematically is what produced this result.

[@Balanced--]

no ones gonna talk about the sirens blasting in the background?

[@m.t.valenciatrading]

Not a bad return eh.

[@Kanjicafe]

And now the Defiant family of funds like IWMY trade this only without the long protective put.

[@kaushalsahab]

Thats put call spread strategy

[@markevans3267]

It looks like the wins are only large enough to exceed the losses so I'm seeing a smaller rate of return than you are and that doesn't include the expenses of 82 option commissions for the year.

[@terryowens747]

@@sethfreudberg4750 I with Mark. Using the $200 winner and $300 loser amounts you outlined the numbers do not match up. I assume you had losses less than $300 on weeks where the closing price fell between the 2 strikes. Do you have the back test info available?

[@markevans3267]

Seth, I get it. The example you used had a bigger loser but on average, win and loss $ might be close to equal. And yes, no commissions on the expiring options. Thanks!

[@sethfreudberg4750]

Mark: the average win in the backtest was $217 and the average loss was $262. When you get more than $2 for the trade on average, it means the reward on that trade is greater and the risk is smaller. If you do the math it works out.

[@sethfreudberg4750]

@@terryowens747 please see my reply to Mark.

[@KMMIGA74]

Strategies for volatile market

[@michael792able]

Couldnt you just roll over a loser into the following week for a small debit instead of taking the max loss? of course if your assumption of the underlying (spx) remains bullish. ??

[@avitolourenco]

What about using a straddle or even a strange, since it has absolutly no loss, and what about covered calls. Keep up the good work

[@avitolourenco]

@@sethfreudberg4750 thanks, but I'm taking in the above, in a trending Market which will show some movement at least.

[@avitolourenco]

@@sethfreudberg4750 any recommendations in that case

[@sc0or]

If an idea is that market goes up 80% of time, you are right, number of other strategies will produce even bigger result. But credit spreads are less sensitive to market drops, and especially to market sideways. Nobody can guarantee that the market will keep raising. Besides, credit spreads are cheaper in adjustments (not considering weekly options but in general)

[@avitolourenco]

@@sc0or agreed, thanks

[@sethfreudberg4750]

@@avitolourenco yes, go to this workshop, Avito for lots of ideas: broadcast.smbtraining.com/smboptions/?Seth

[@waynehungyong]

Assuming you just trade 1-contract spreads every week, then here's the calculations: You won 26 times at $200 each week receiving an annual amount of $5,200. You lost 15 times at $300 each week losing an annual amount of $4,500. You're annual net gain is $700 profit. Seems like a lot of work for a small return on investment. So why is my mathematical calculation different?

[@superswingtrader5388]

Plus commissions then your earnings are even smaller unless you use Robin hood but you risk your executions

[@sethfreudberg4750]

Wayne, the average win in the backtest was $217 and the average loss was $262. When you get more than $2 for the trade on average, it means the reward on that trade is greater and the risk is smaller. If you do the math it works out.

[@sethfreudberg4750]

@@superswingtrader5388--the backtest included commissions at .37 per contract which is what we pay on our prop desk.

[@superswingtrader5388]

@@sethfreudberg4750 thanks for the explanation

[@multiscan8]

hey Wayne, I mentioned this in another reply, but the win loss was 26/14 with one scratch (apparently) with the #'s seth gave in his reply, it resulted in a gain of $1974

[@racingwitsify]

I think i have some a.d.d. I can't concentrate to what was said while the siren is going on. I wish you re did the vid without it.

[@chaseramos4865]

If you have a.d.d then you can focus better with background noise.

[@sethfreudberg4750]

we'll catch that next time :)

[@bevanclark3828]

Great video. Really appreciate you sharing this setup. Topic suggestion: A problem I have is employing a Beta negative strategy to hedge the long Beta I have with my managed funds portfolio. The strategies I am considering is: 1. having a short order in the market ready to trigger below support in the SPX 2. buying a negative ETF (eg SPXS) when triggered in the SPX 3. buying puts in the SPX when triggered 4. having a series of bull put spreads 1 SD OTM and closing the sold leg if triggered leaving the bought put to profit. 5. combo of the above. How do you control Beta risk at SMB?

[@bevanclark3828]

@@sethfreudberg4750 Thanks Seth

[@russzee]

IMO, it is important to look at the VIX chart and P/C ratio before you put on a hedge. In a bull market, timing the hedge is more important than hedging itself. If you hedge too soon, you could slow bleed in a grinding bull market.

[@russzee]

Let me also add that no hedge can be timed perfectly. Therefore my hedge option strategies are anywhere between 45-60 days out - ONLY if VIX starts showing signs of bullishness on larger timeframes

[@sethfreudberg4750]

@@russzee I agree completely Russzee

[@sethfreudberg4750]

@russzee what is your approach to hedging?

[@jondaley1094]

Lmao yeah y’all really in New York

[@godlee6099]

You heard it too lmao

[@chaseramos4865]

Thanks I'm going to YOLO my life savings now.

[@sethfreudberg4750]

lol what does YOLO mean?

[@chaseramos4865]

@@sethfreudberg4750 Risk it for the biscuit.

[@sethfreudberg4750]

Chase null I know you are kidding but just in case please never trade larger than is prudent for your net worth and income .

[@chopsbump1]

So 300 to 2000 in a YEAR ... WT H ...LOLOL

[@Wesleyplcn]

You lost 4500 and make 5200. It's not 2000 profit, but only 700 profit minus commissions.

[@salivatetruth8263]

Options seems like the russian roulette of trading

[@sethfreudberg4750]

Leo, every form of trading has negative and positive outcome potentials. No different in options trading.

[@salivatetruth8263]

@@sethfreudberg4750 albeit very very calculated

[@mrakun]

@@salivatetruth8263 you can define your risk precisely with options. Russian roulette if your buy random options without analysis.

[@mnestler31]

The numbers don't add up, do your math and check for yourself. 52.4% win rate, 40.5% losers, 7.1% partial gain or loss - for 2018. But according to the video, losers are about 1.5x the size of the winners. If you add these up for 2018 you would have ended up with a loss. Not a 500% gain. And 2018 was a very bullish year. This would have performed much worse for an average year, with high likelihood. And winners could actually pay less (who knows what the historical ratio of short vs. long premium for this strategy is). Do your research and don't believe the hype.

[@sethfreudberg4750]

Michael, alot of people had the same question. What they didn't realize is that the $200 credit and the $300 risk are the least credit and the most risk available. In reality, the credit is almost always larger the risk is almost always lower. The average win in the back test was $217 and the average loss was $262. When you get more than $2 for the trade on average, it means the reward on that trade is greater and the risk is smaller. If you do the math it works out.

[@stevenqualls5016]

Naked puts even better

[@sethfreudberg4750]

How do you use naked puts, Steven?

[@stevenqualls5016]

You sell a put, it’s that simple. This strategy is a bullish strategy where you collect a premium for selling the option contract to someone who is protecting a long position in stock they own. You pick a strike price one standard deviation out of the money and the contract usually expires out of the money and you keep the premium

[@Max0r847]

Scary lol

[@genefritts6915]

@@stevenqualls5016 But if the market goes limit down (low probability but it certainly could) you are cooked.

[@stevenqualls5016]

Gene Fritts if you buy a put say with a 5 dollar less strike you can limit your loss to $500. But collect substantial less premium

[@bobj9518]

No strategy described just advertising