What To Do When Your SHORT STRANGLE EXPLODES! 🔥 | LIVE OPTIONS TRADING

[@scottreesetradinginvesting7936]

As long as you have a plan in place to defend and manage your trades in all possible situations, then you should never be afraid when things go wrong :) 🔥 START YOUR FREE 7 DAY TRIAL WITH MY DISCORD HERE 🔥 * Watch my video about the Discord here: kzbin.info/www/bejne/m3-bkIV4oNOboM0 * Sign up for your FREE trial here: launchpass.com/options-trading-with-scott/discord-member -------------------------------------------------- 🔥 GET UP TO 13 FREE STOCKS WITH MOOMOO 🔥 *** Use my link below to open a brokerage account and make an initial deposit to claim your rewards! *** Open a Moomoo brokerage account = 1 free stock Deposit $100 into your account = 9 more free stocks (10 total) Deposit $2,000 into your account = 3 more free stocks (13 total) LINK: j.moomoo.com/00iYIy

[@rodrigotiko]

Thank you very much for the content in this video, Scott! I really appreciate it!

[@enricosaccheggiani3192]

Very interesting, thanks

[@enricosaccheggiani3192]

Hi, Scott very interesting.All right but it wouldn't be better to take less risk making a iron butterfly or making a mixed strategy? I am afraid that you take the risk to be assigned from both sides from the put and from the call . It depends on how much risk you want to have, but i think that is better to continue to sell credit put spreads staying always at distance (delta short 0.20) , and when there is no more intrinsic value in the call, roll the call out or up and out , many times for many months until the price stabilize. I have a approach that is less risky than yours, and it takes more patience and time. Thanks for your interesting video, I have seen a lot of them. All the best regards

[@scottreesetradinginvesting7936]

As long as there is extrinsic value remaining in the options, there is virtually no risk of early assignment. However you decide to manage/defend your trade, it's all about your deltas at the end of the day. Going inverted on a strangle is sometimes the only way to keep your deltas in check. And when expiration approaches and/or the extrinsic value is very low for one of the options, that's when you would roll.

[@enricosaccheggiani3192]

@@scottreesetradinginvesting7936 Good idea. I will try .Thanks

[@enricosaccheggiani3192]

All right , i have tried to adjust some positions. What strike price do you think is better to choose when going inverted ? thanks in advance

[@משהגוסמן]

Hi, excellent video, Tnx. My question is what's next? Because now you can't leave it until expiration without one side of the strangle be ITM (or both), are you planning on rolling it again or adjust it somehow?

[@scottreesetradinginvesting7936]

Yes, my plan is to keep rolling the contracts and adjusting my strikes to avoid assignment and keep my deltas balanced. Eventually after I have collected enough total credit, I will be able to exit the trade entirely for hopefully a small profit or maybe just a small loss. I will make future videos on this position as I continue to manage it :)

[@tdiler12]

iwm / mruts are wild super volatile esp of late

[@hadassi82]

Thank you for the great content :)

[@anukhe20]

Great video. I think that we need to take control about the width of this strangle (10 in this example) and hope that the premium that we collect would be at least 1000 dollar. Do I right?

[@scottreesetradinginvesting7936]

Yes it would be ideal to have enough total credit to cover the width of the inversion. However, that may not always be possible. For this IWM strangle, my total collected credit is $626, so I would still be looking at a -$374 loss if the stock expired in between my strikes. So that’s why for the time being my objective is to keep rolling the contracts and adjusting the strikes to collect more and more credit!

[@michaelheyn2484]

I sold 5 credit spread on TGT yesterday, should have sold strangles :(

[@scottreesetradinginvesting7936]

However you trade earnings, you gotta be consistent with the approach! These events are very random, so the only edge is to take advantage of an IV crush…which is exactly what strangles are best at.

[@michaelheyn2484]

@@scottreesetradinginvesting7936 I was bearish on it until I saw Walmart's earnings. After reading about price increases on Reddit and complaints of a skeleton workforce, I felt they were going to earn above expectations like Walmart and decided to go directional ... lol. The good news is, that I closed out for -$380 which means 50% fewer losses than the max.

[@scottreesetradinginvesting7936]

@@michaelheyn2484 Haha like I said, earnings are very random! Doesn’t matter what you read on Redit or what the analysts say. I’ve seen stocks plummet on great earnings and skyrocket when disappointing on all key metrics!

[@hemalkhilosia]

Hey Scott , can I ask why didn’t you buy 100 shares of IWM when it went to ITM , as you have explained in other videos to defend position

[@scottreesetradinginvesting7936]

Good question…for my particular strategy, I definitely would have purchased 100 shares of stock once it crossed my call strike. But I recognize the fact that my approach is not a good fit for everyone. Some people prefer to use a rolling methodology to defend short naked trades. So this video is meant to demonstrate how you can go inverted on a strangle if you prefer to roll as a defensive strategy and not deal with the stock.

[@hemalkhilosia]

@@scottreesetradinginvesting7936 - that make sense… thanks for making all these knowledgeable videos… keep doing good work… one question, ever thought using future instead of using shares when position goes ITM? Not sure how to do with individual stocks but definitely can be done in indexes.

[@scottreesetradinginvesting7936]

@@hemalkhilosia Yes you definitely can use futures if you’re trading options on ETFs like SPY or QQQ…or also directly trading options on the futures themselves. Futures are actually more capital efficient than trading stock on margin. However, when trading options on individual stocks, you will have no choice but to use the stock to hedge. So that’s why it’s very important to only use this approach on very liquid stocks.

[@aidangallagher3872]

I’m not sure this is great advice. By rolling your call your basically taking the loss and then putting on another trade that you would have never put on in the first place. And you would never have put it on in the first place because it isn’t a good trade. Wouldn’t it be better to either roll the untested side up and leave the call or potentially sell more puts to collect premium and balance your deltas this way? Or you could take the position off? I’m not saying I’m correct I’m just asking the question isn’t it a bad strategy to take on trades you would never have taken on to try and correct a loosing trade? Also saying that the stock will defiantly come down isn’t correct either because it could do anything, it could continue up for ages. I got burned on ROKU with this thinking it would level out eventually and it just kept falling.

[@michaelsumner8223]

Selling puts has become my favorite strategy The worst thing that can happen is I own a good stock at a good price

[@rantg]

yea only you forgot the case if the stock goes down like crazy and you lose your inverted PUT. It is easy to back test this using Python and show that it doesn't really help, but traders think that if they take many actions they are smart. If they only knew how to back test things, they could realized that "rolling" doesn't change anything. Actually, staying to expiry proved to be better.