Steve's Autotrading Journey #7: AAPL Long Call Spread, Santa Claus Rally, & Portfolio Beta Weighting

[@LeeSteveHunt]

Thanks Steve, this is a good primer for me to understand how to balance a bot/portfolio through the use of beta weighting. I am also sitting at a negative beta and looking for the market to turn somewhat bearish. I think using beta weighting and associated strategies to move the weighting back toward a more neutral position will help remove some of that angst. Thanks for the video.

[@OptionAlpha]

You're welcome Steve. I agree 100%. It's great to a) get an overview of a bot/portfolio/positions beta weight and b) see exactly how adding a new position will impact it. Powerful stuff!

[@alezgonz]

Hi Steve I have a question Do you know if We can use the bot for trade stocks only without use options?

[@OptionAlpha]

Absolutely. You can use the bots to buy and sell stock only.

[@alezgonz]

Thank you 🎉🎉🎉

[@penzput]

Hi Steve, it's Pen. Wow, this is pretty deep ITM. You could do a Jan 195/197.50 with max loss of 102 and max profit of 148 (near your max profit but much less max risk). 195 is only a couple $ away and if AAPL tries for 200 again, it will go thru this spread and profit nicely. And if it doesn't, your risk is not as high. I know it doesn't have a positive Alpha or EV, but then neither did my TSLA long trades and they are all profiting nicely (wish they were live instead of paper LOL).

[@OptionAlpha]

You just summed up why I love options so much :) there is no limit to the ways we can structure trades to meet our objective. You make valid points. What I liked about this one (beyond the positive probabilities/Alpha, beta weight, and low IV) is that it can stay flat or come down and still hit max profit, which is how I typically approach credit spreads, so it was interesting to use a debit spread in a similar way.

[@penzput]

@@OptionAlpha ahhhhhh, very interesting idea....and your risk is as high as a credit spread might have been also. I look forward to seeing how it plays out. One thing I'm playing with on debit spreads is having the short leg pay for the extrinsic of the long leg. Kinda like with Zebras but on verticals also.

[@OptionAlpha]

Exactly. And actually if you look at the 190/180 short put spread, it comes out almost the same for R:R, probabilities, and break-even price. So the trade is structured pretty much the same. The most important factor was brining some bullishness to help balance the portfolio if the market continued up.

[@sweetdividends]

You mentioned balancing the beta weight of the “portfolio”. But I believe you can only balance the beta weight of “one bot’s portfolio”? Meaning, if you had 10 bots, you would have to balance the beta weight of each bot individually, vs beta weight your entire portfolio made up of 10 bots? useful video, just curious about this. Thanks

[@OptionAlpha]

You can do it both ways :) You can beta weight a single bot, multiple bots, or all your open positions to get a portfolio-level view. You can even focus on specific DTE ranges. This video shows all the different ways to use the new beta weight tool: optionalpha.com/blog/beta-weighting-bots-and-positions-portfolio-management