MYMWFY

Summary Over past week, the trader found SPX in a trading range between 4460 and 4540, so the trader used an iron condor when the market opened at 4503 with the these limits for the short calls (4460 and 4540), about 40 points around open.  He also added long calls 25 points beyond the short calls (4435 and 4575). The premium for this position is about $2,180. At 1pm, SPX dropped from 4503 to 4475, threatening the 4460 short put. Roll the short puts down 10 points from 4460 to 4450 and roll the long puts down 10 points from 4435 to 4425.  This transaction cost $1,500. The options ended OTM, so the trader netted $2,180 - $1,500 = $610. Upshot The questions are,  1. When should one trigger this trade?   2. What strikes should one use on the roll? 3. Why not roll out, too?

  1.  Prepare for / embrace risk - Accept losses.  Have plans before getting into positions.  Don't let emotions get in the way. 2.  Max losses will happen - Due to probability. 3.  Losing streaks will happen - Size trades appropriately. 4.  Ask, Can I accept max loss? 5.  Have the mindset of a "clerk" - stick with a plan. Very nice video that lists not just attitudes successful traders should have, but also includes a checklist of questions that must be answered before entering a trade. There is also a bit of cheerleading here.  Davis tries to let people know that losses will happen, even to him, so one should not be discouraged when they occur.

  Summary This video contains three random tips for designing and managing credit spreads. Do not hold spreads to expiration It is tempting to hold a spread to expiration, thereby maximizing return, when all legs expire worthless.  However, two risks come into play: Risk of early assignment - There is a chance of assignment if a position is ITM and close to expiration.  It is also a risk if there are dividends coming up. Empirically, holding to expiration decreases performance (see the Tasty Trade table) as the risk of max loss increases. Prefer wider spreads over many smaller spreads (assuming a given short strike) Having more contracts (i.e., many smaller spreads) increases commission costs. Having a farther out long position decreases its price. On the other hand, there could be more premium with multiple contracts since the incremental premium probably descreases with increasing width. Do not create naked positions I can't have naked positions.  But this is obvio...

  Summary This video lays out in detail how to design iron condors for monthly income. DTE:  45 days - shown to be profitable Strikes:  15 to 25 delta and $5 or $10 wings Should get 25% - 30% premium for the width of wing (e.g., $1.50 for $5 wings) Should spend no more than 5% of capital per trade Trade management Close when hit 50% profit Or, at 21 days Because the gamma risk increases after 21 days Can close Or, if close to 50%, close Or, if not close, but inside breakeven price, wait. Optionally Can roll around Narrator does not generally adjust The rest of the video shows how Thinkorswim can generate PnL curves. Upshot This is a very nice video and shows a very clear, well motivated way to implement iron condors.  It is also presented as a framework in the sense that it can be adjusted per investors' tastes.

  Summary This video describes how to set up put credit spreads for "perpetual" income.  Here is the setup: Trade on positive drift ETFs, like SPY that have a track record of growth.  This increases the win rate in the long term. Choose the short strike with a delta between 25 and 35, since these give the best risk reward. Choose the long strike to be $5 to $10 lower. Set up a DTE of 45, which has empirically been shown to increase the probability of options expiring worthless. Close positions at 21 DTE, regardless of PnL.  (I am not sure about the justification for this, except that it's simple) Repeat. Based on TastyTrade's findings, there is up to a 47% return on capital over the year (not sure how this is computed). Selecting Stocks Pick a set up with an oversold condition on stochastic or RSI. Find support in the charts Pick a 45 DTE with a strike below the support level with a 25 to 35 delta. Upshot I like this video.  It is very clear, accessible, and act...