MYMWFY

  Summary The narrator proposes using the delta of a covered call to determine what to do: If delta < 50, then wait.  You can wait to expiration, take profit, or roll down. If delta >= 80, then you can either roll up and out, or let yourself be assigned.

  Summary There's some interesting findings here.  The key one is why to have longer DTEs.  There is a slide that indicates that theoretical win rates are lower than actual win rates.  The "expected moves" are (I assume) larger than actual in percent magnitude by at least 2.1% and get higher with higher DTEs.  So, this means that increasing DTEs increases safety. I'm not sure why the table is green at the 45 days column.  Is there statistical significance here... So, this finding addresses win rate which is critical for average win.  (We also have to figure out win size and the related max loss.) One thing this finding did not address is whether this difference is enough to have naive hold until expiration options contracts be profitable on average...  assuming that average profitability = win rate * average win size + loss rate * average loss size. Other topics The narrator also covered the psychology of losing streaks and average profit. The nar...

  Summary The narrator describes the "wheel" strategy:   Sell an ATM put. Continue until assignment. After assignement of the put, sell covered calls at put assignment strike until call assignment On call assignment go back to step 1. Make one trade per month. The narrator made about $6K in premium over 2023 using this strategy for a 15% gain. Problem:  While the narrator made over 15% from the capital requirement, the underlying asset went up by over 25%. Summary The Wheel works best with an upward trending or sideways or stock.  However, if there is huge growth in the stock, then one will have more net asset value by just holding the stock.  And, the price of the stock might get so high as to make it impossible to fund a put.  In the video, the final puts cost about $43K.  Much more than the $37K originally.   If the stock drops, then you will both lose the value of the underlying asset and the premiums will shrink as well. Unless we a...

  Summary The narrator of this video proposes a simple iron butterfly 0 DTE strategy on SPX: Sell 6 puts at the money Sell 6 calls at the money Buy 6 puts 80 points out of the money Buy 6 calls 80 points out of the money Open the position at the start of the day and close it after 90 minutes unless some other stop conditions (not discussed) happen. How this trade works Iron butterflies assume that prices will not change.  This strategy therefore assumes that there is no movement in the first 90 minutes of the day. Additionally, there is a differential in the thetas between the short and long options.  Therefore, there should be more theta decay for the shorts, creating more value with time.  Backtesting The narrator indicates that with backtesting, this strategy won in 9 of the 12 months of 2023 and made about $1,000 per week with a $36K capital requirement. Other The narrator also mentions some other steps that income seekers should follow: Backtest Trade paper mone...

  Summary The narrator of the video suggests that strangles are the best for consistent income.  He uses an example where he shows strangles over SPY. The reason strangles are better than iron condors is because it is has more theta decay on both sides of the current stock price.  Iron condors have their theta decay limited by the long options. The narrator goes on to indicate that the premiums are greater than the expected and the likelihood of breaches is lower than expected.  He shows a case of 100 trades where he had a 77% win rate, with a 32 delta strangle.  The 77% win rate is greater than the expected 100 - 32 = 68% win rate.  He netted $169 per trade. Here is some other advice: Limit the buying power reduction (BPR) to 5% of the account total to reduce risk.  (How do you compute BRR?  How does the broker compute BRP?) Never take the trade past 21 DTE.  Either manage it or take a loss.  (What is the initial DTE?) Trade index ETFs ...

  The victory spread's goal is to create a situation where one can take advantage of expected strong movements of a stock.  Here are some features of the victory spread: Typically, one receives a credit. There is unlimited potential profit. Max loss is limited. One might create a victory spread contract when there are, say, earnings calls. Here is the structure of a victory spread: A short ITM call option is sold above the price that a downward move might update the price of a stock.  This gives the short call option a chance to expire worthless. The expiration date of the short ITM call option is after we expect the price changing event to occur. More than one OTM long call option is sold at a date later than the ITM short option. The number of contracts for these options should be low enough to result in a net credit for the overall contract.  I'm not 100% sure how to do the following: How far into the future should the long options' expiration date be? What should...

  I am not sure what specifically the "3 ways" are, but here are some points. 1.  Use 80 and 20 as RSI thresholds 2.  Confirm breaking of threshold with different time intervals (e.g., hourly to daily). 3.  Look for a bar break (or "double bar break") where "a single candle takes out the low of the prior candle" 4.  As confirmation, see that RSI goes back below threshold (but not necessary if there are breaks). 5.  Take profit when RSI reverts to the mean. 6.  Take profit when price reverts to the mean. Then there is some discussion about pullback trades, how some stocks hover between 50 and 80 in the RSI bands.  I did not understand this section. Random notes Mention of Thinkorswim's Market View to screen via RSI.

This video describe two indicators:  21 day exponential moving average (EMA) and something called the TTM squeeze. The claim from this video is that if the current price is above the 21 EMA, then prices should generally be rising.  The opposite is true if the 21 EMA is below the current price.  The narrator showed cases for both daily and weekly traders. The narrator then describes how to use the TTM squeeze (?), which looks a lot like MACD histograms, to confirm breaks from current trend.  I get lost at this part, though. Takeaway:  Maybe I'll start using the 21 EMA to inform whether I create a call or put or iron condor and at what delta...  Also, if I have such fine-grain signal, perhaps my 1 DTE covered calls can be informed, as well.  

Link:  https://www.youtube.com/watch?v=RbWA61gJSa4 The video describes the use of RSI as an indicator and uses trading DIA as an example. The general idea is that prices will drop when RSI hits 70 and will rise when RSI hits 30 (generally) within 2 weeks. The trade setup is Credit spread Direction depends on whether RSI is bearish or bullish 2 week DTE Strike of short position at a 17% delta (one standard deviation out) Strike of long position at the next price ROI:  100% of capital in a year, 100% win rate Commentary The video indicates that there were 10 time where the RSI indicated overbought or oversold.  Is this typical? The video suggests that the distance to ATM in gives the indicator "room" to be incorrect. Question:  does delta take into account RSI?

Link:  https://www.youtube.com/watch?v=YHW68Ff9Z6M This video is about using the VIX as a trade indicator.  The VIX, which measure volatility in the market, is high when there is an SPX sell off and low when there is an SPX run up.  The video recommends going into a bearish position when the VIX is below 20.  Sell an ATM call credit spread with a distance of 50 points and a 2 month DTE.  It shows that, in 2022, 3 trades were able to net over $40K, which is two times the initial budget of $20K. Commentary:  The VIX has had levels in the teens regularly and for months at a time in 2023, so the 20 threshold is obsolete.  I think if someone used 20 as an entry point for a bearish trade on SPX, he would have lost a lot of money in 2023.

Link:   https://www.youtube.com/watch?v=RxvyHK6OKjk This video shows how to use support or resistance levels from overnight futures activities to structure options trades. Once we have support and resitance levels determined, figure out a plan if there is a breakout.  In the video, there is a breakout downwards in the SPX, so they set up a short position consisting of: A short call at the top of the resistance level range A long call about 25 points above the resistance level A long put such that net premium is positive The maximum loss of this options strategy is $2,500 - premium. The goal of this construction is to make money from the option strategy - in this case $17 - so that if there is no significant drop in price (to increase the value of the long put), there still is a net profit from the premium. Of course, if price actually recovers and rallies above the resistance levels, there could be a big loss. As it happens, SPX dropped below the strike price of the long ...

 2024-09-11 Link:  https://www.youtube.com/watch?v=dk9d7a0rh9U Put ratio spread - 1 long OTM put and 2 short OTM puts with lower strike prices The long OTM put is for defense if the market goes down.  The short OTM puts are for premium. Trade setup Strikes Shorts Can be at resistance levels Buy shares where underlying stocks can have low stochastics (be oversold) Can use delta levels, too (e.g., 25%)  Long Closer to short if bullish - will have more premium Closer to ATM if bearish - will be more defensive DTE Shorter DTE  Gives more overall ROI Less premium to buy long position Less premium for lower strike prices, hence, in case of assignment, higher strike price Management If OTM, then collect premium If "near" expiration and only long is ITM, close out If shorts are ITM Do nothing, or Close out half the trade and roll out remaining short Observations Looks like an iron butterfly, but because of the ratio nature, requires a lot more capital in case one o...

 Link:   The Complete Beginner's Guide To Managing Losing Iron Condors - YouTube Trade setup: DTE:  More than 21 days Strikes:  16 deltas on both sides for short options.  5 deltas on both sides for long options. Algorithm Do nothing before 21 days to expiration At 21 DTE, If ITM, do nothing by default because there are many trades going on.  Take the loss because there are so many other trades going on. Or, try to roll the entire condor for a credit without changing strikes. Or, close out untested side and roll out tested side if you can get a credit. Or, roll down and out the untested side and roll out the tested side for a credit. Commentary:  In none of these strategies does the author roll down the tested side.  He is buying time for the tested side and trying to collect profit on the way.  He also does not have a stop loss besides the long puts. Takeaways:   Not sure if this is what I am looking for.  The overall alt...