Huge Options Blunders: If I think A Stock Is Going Up, I’ll Just Buy A Call, It’s Cheaper (ep 8)

[@smbcapital]

Learn more options strategies here bit.ly/2U1nW9w

[@Touchfootballer27]

Time is the arch enemy of options - right on - this situation just recently happened to me - because I was attempting to be cheap and not wanting to pay for longer expiration period

[@sethfreudberg4750]

Exactly Danny.

[@brasilsoccer0]

Basically pick a good “Theta” and really don’t be too cheap so pick a “Delta” above 0.75. Remember Delta indicates the direct % of option movement in relation to underlying movement: so if the stock moves up by $1 on a Delta of 0.75 then the option will move up by $0.75.

[@ken34258]

Agree. Sometime picking the right strike price is like trying to get the best value of a pot from a hand of poker. And I am still working on that, plus the concept of rolling. Sometime just buying stock is a lot better option (no pun intended), with time decay, the option spread when trading some illiquid name.

[@sethfreudberg4750]

Yes rather than think "I am an options trader" think: "I am a trader who sometimes expresses his views in options and sometimes in equities"

[@gregoryjules2005]

I'm a buyer of options if IV is low and I think we can breach the expected move. Conversely, I'll sell options (always credit spreads), if IV is high AND I think we will stay within the expected move. I have gotten burned too many times buying inflated IV options and getting crushed on any pullback

[@mazenzrek5366]

Ok. How could I know if IV is high ? What makes IV come down ? Also if I sold a spread and got a credit when IV is high, so if IV comes down I think I will not benefit because I shorted one leg and bought another, so the price will not be affected " the two legs will cancell each other " am I right ?

[@CalvinHodgson]

@@mazenzrek5366 the VIX is a measure of overall market IV. It isn't IV for any particular stock though. For equities, there is a technical indicator call IV. In the current market right now IV is higher than normal. IV comes down when the moves of the market stop swinging so widely, volatility.

[@mazenzrek5366]

@@CalvinHodgson thank you, do you know any losing stocks ? I am not a day trader , I am a short term investor who sells a credit spread. I can't go bearish on spy or aapl or any other good quality stocks, they might bounce any day , and at the same time I can't be bullish on them.... I am just holding a cash position .

[@gregoryjules2005]

@@mazenzrek5366 IV being "high" is mostly subjective, but it depends on your chart analysis and if the expected move is high. It also has to do with your budget/willing to spend. If an in the money SPY call normally costs $150, I know the IV is jacked up when the same in the money contract is costing $1,000.

[@bklynboy9999]

The key is to determine your profit level and close the call as soon as it gets there, Holding beyond that or until expiration is when I usually lose, and when I rinse and repeat the same stock too much.

[@ProfRoofs]

Buy a long call 2-4 weeks before earnings when volatility is low and sell day or two before earnings when volatility spikes.

[@pauldacus4590]

I think buying deep in-the-money calls with long expirations is a viable alternative. delta > .95

[@LakesideTrades]

These are called "Leaps" right? Does IV crush impact these?

[@obetbal]

@@LakesideTrades yes. deep in the money is a double edge sword. high gain or high loss and quiet very expensive.

[@sethfreudberg4750]

That's a common practice Paul.

[@SoberFreePress]

Awesome! & trye! Triple witching June 2024 comin’ up!🎉

[@ImChrisBrown1]

More content about those directional option buyers making fortune

[@sethfreudberg4750]

We're working on that Chris :)

[@egoboy]

I usually buy OTM options at least 60 days out and check IV percentile and direction before I enter. What other suggestions do you have to improve the win rate?

[@liamchase7537]

Would be great if you linked the series!

[@smbcapital]

Here is the playlist kzbin.info/aero/PLo5LM9g7Uwib3TlLPM7yAHTmiCPZIgNQT

[@workbreaklounge3755]

Perceive it and believe it.....or not.

[@alexlassalle9124]

Quad witching blunder

[@workbreaklounge3755]

My worst day as a beginner trader was a Triple witching. I've learned to stay away from witches.

[@HomeOwnerTools]

Excellent thank you for the explanation!

[@sethfreudberg4750]

Please let us know what else you'd like us to discuss :)

[@kavoos1375]

Agreed. Best of luck to your firm for the quadruple witching day tomorrow.

[@helmuthmairl4236]

simplistic view. what if stock doesnt move. what if stock moves too late? what if..... you live an ideal world, that doesnt exist.

[@barkingshark6413]

Awesome video...thank you.

[@smbcapital]

Our pleasure!

[@sethfreudberg4750]

Thanks Shark, let us know what else you'd like us to cover in these videos.

[@pantac4493]

If any beginner wants to wipe out their account really fast, try naked options. It sounds very appealing on a low account value or to maximize gains but it works against you if you don't understand the risk.

[@Jeff-xy7fv]

Most brokers won't allow people without a certain amount of options trading experience to sell naked options. The only exception is cash-secured puts.

[@sethfreudberg4750]

The only valid use Pan is if you are willing to own the shares at the option's strike price.

[@brownhousefarm3734]

Typical institutional advice. Not completely truthful however.

[@flowerhour9539]

Can you tell me what is more truthful? I'm a novice trader just learning.

[@pantac4493]

@Highway 1 i don't know what he's referring to but this video was to demonstrate the dangers of using options for its appealing low cost that can come back to bite you. Like the video said, you're not dealing with just the price movement anymore, it's much more technical than that. Like most trading strategies, it's best to paper them before to fully understand what can happen and by performing them many many times to rule out luck.

[@you5711]

@@flowerhour9539 If you're a novice and you want to learn about options, then check out Options as a Strategic Investment: Fifth Edition by Lawrence G. McMillan. After you study that book, you'll know everything there is to know about options. Notice I said study instead of read. Yes, reading will be involved, but you need to study what's in that book, which will take about a year if you do it in your spare time because there are more than a thousand pages. I also recommend McMillan's other books on options because he's the authority. Be sure to paper trade any particular strategy before you risk real money so that you can become intimate with it as well as become confident executing it. Good luck!