Options Boot Camp

Latest Episodes:

Options Bootcamp 66: Trading Calendar Spreads During Earnings Jun 22, 2017

Show notes

Options Drills: What is a calendar? How do we set them up for earnings? Strike/Month selection? Should we carry them through the event? When do we take off? Calendars vs. Diagonals?

Mail Call: Fall in recruits and get your questions asked.

With $VIX giving up the ghost - which products are you hoping will provide new sources of #Volatility for your #options trading?

33% - Crude Oil (WTI, etc)
20% - Metals ($GLD, $SLV, etc)
20% - FX (GBP/USD, etc)
27% - Indv. Equities-$TSLA, etc

VIX Limbo: Last Month 40+% of you said $VIX wouldn't break 9 in 2017. But recent events have us asking again: How low will $VIX get in 2017?

Still Won't Break 9
Won't Break 8.5
Won't Break 8.0
Lookout - 7 Handle in '17

Listner Questions and Comments: What is on your mind?

Question from Lesnod - How do you get out of the straddles? One side of a straddle is always a loss correct?
Question from Meatz - Would you describe successful options trading as primarily singles and doubles or more swing for the fences home runs?
Question from Bulzeye7 - Are options worth it for day-traders? Or just for swing-traders?
Question from Axel D - What does open interest only update once a day?
Question from Mary - What is the shortest expiry available for plain vanilla options?
Question from Lincan - My go to options strat is to sell covered puts on stocks that I want to buy then get paid to wait. If the stock comes my way I eventually trade out of it using a covered call. What do you think? Savvy or stupid?
Question from Steve: With the VIX so low, I am not selling a lot of options anymore, because I am afraid that I will not collect enough premium. Am I thinking of this incorrectly?

Options Bootcamp 65: Revisiting Delta, Butterfly Breakdown and Your Questions May 05, 2017

Show notes

Basic Training: Delta Revisited

A basic overview of Delta
What is it?
How does it impact your trading?
Inspired by a Market Trader Mentoring newsletter article Delta Can Still be Your Friend

Mail Call/Options Options Question of the week

With $TSLA threatening $315 how are you leaning in your Options trades this month? Would you rather:

18% - Buy 1-month $300 put
25% - Buy 1-month $330 call
25% - Sell 1-month $300 put
32% - Staying far away from it

Listener Questions and Comments:

Question from Joshua Shealy: Thanks so much for all that you guys do! Sorry if this is a novice question. I know that Delta is not literally the % chance of expiring in the money, but more so the rate of change for a $1 movement in the underlying. I noticed today looking at VIX Calls that the strike closest to .5 Delta is the 20 strike, a long way from ATM. I usually associate near .50 Delta with being near ATM. Is this just a nuance of VIX, or am I missing something bigger?
Qustion from Brian Fortin: Options Boot Camp Dan is fond of saying, why trade options naked when you can spread off the risk and make the same money by doing it twice? I feel the same way about carrying a short position into expiration? Why try to carry 6 short contracts into expiration to capture that last 5 cents, when you can just trade 7 contracts and do the right thing?
Question from Gameday Dog: Aww man My vertical put spread has gone bad. I have +3 options at 61.5 and sold -3 at 62.5. Yesterday it gapped down to 50. I now have +200 shares of LULU in my account plus 3 put options at 61.5 and -1 put option at 62.5. I thought it was a $300 max risk spread. Do I have to do anything? Do I sell the shares? Everything expires in 7 days. Please help. Thanks. So, I learned about selling shares and back ratio spreads and even got an $19 credit.
Question from Elio: Confused. How did that guy end up with only two of his short puts getting assigned to him? If he was short 3 shouldn't all of them have been assigned?
Question from JDog: I just got an options pitch that says that options buyers lose money seven out of 10 trades. Is that true?
Question from Allen: Why would I trade options when 90% expire worthless?
Question from AndersonIvesting: New to options. I use TD Ameritrade but currently I don't like it for options. I was looking at Charles Schwab. Any recommendations for an options newbie?
Question from Sharkcake: I've been approved to trade options by my Brokerage but I have yet to execute my first trade. What trade do you recommend?

Options Bootcamp 64: Settlement Myths and Misconceptions Sep 22, 2016

Show notes

Basic Training: Today we are going into the depths of option settlement. A question that is often asked in Group Coaching is that of the various settlement issues.

Many option traders limit their universe of option trading to two broad categories:

One group consists of individual equities and the similar group of exchange traded funds (ETFs).
The other group is composed of a multitude of broad based index products.

Individual equities and ETFs trade until the close of market on the third Friday of each month for the monthly series contracts. These days there are more and more ETFs and equities that also have weekly settlements too. These contracts are of American type and as such can be exercised by the owner of the contracts for any reason whatsoever at any time until their expiration.

What is automatic exercise?
Equity settlement?
Cash settled indexes?
Determining settlement?

Mail Call: Listener questions and comments

Question from Mike: Hello, Love the show. I am curious as to why one would ever use a collar instead of a bull put spread. Am I incorrect in thinking these strategies are identical with respect to risk/reward? Since the put spread will cost less to put on, it seems like the better trade. As an additional advantage, there is no need to tie up the capitol to hold the underlying. Thanks for your help.
Question from Yukoner: Do you ever do spreads in LEAPS? Why and how? So I used to trade the LEAPS rather than buy the stock. Is that a good use case?
Question from TradeCraft: Is there a correlation between high options OI and options price levels?
Comment from Ian Felder: I started off in crude futures, then moved to VIX futures, now VIX options. Each time I trade a new market, I feel like I see more panoramic moves because I am less familiar with the underlying in the first few days. It sounds scary, but it is actually refreshing. I guess looking at options has changed the way I look at futures. Has something similar happened to you? Have options changed your outlook on other products?

Options Bootcamp 63: The Proper Way to Trade Covered Calls Jul 29, 2016

Show notes

Options 101: Our topic today was inspired by a listener question.

Question from Mark Davis: Hello, I am a new listener to options bootcamp and am currently on Ep. 4. There was a mention of using covered calls to generate a "dividend." I am having trouble tracking down more information on this. Being still new to all of this I am hoping to get a clearer picture of how it works. How far out on expiration should I look and how do I figure the strike price? Thanks!

Mail Call: Even more listener questions and comments

Question from Robert Kornacki: I would like to use strategy regarding naked puts. If the naked put is far out of money what strategy could I use to protect myself. Could I use some type of order in case it was getting close to naked put strike price. Thanks
Question from Dmitry Shesterin: What happens to LEAPs for tickers that get delisted before expiration?
Question from Fred: I read Natenberg options volatility and pricing twice now and I have also set up paper trading accounts. But I am stuck going forward in my options progression. I do not want to trade using the greeks formula. But I want to spec on crude futures intraday using options. What should I do? Should I make more SIM trades until I figure it out? Or am I just too ignorant to trade options?
Question from Jack Rieger: Do you have any specific strategies near or on expiration to profit from theta decay?
Question from Bobby: How long did it take you to become comfortable trading credit spreads? Also what is my max loss when trading a credit spread?
Question from from Tor: Hello. I am (restarting) my options trading on a shoestring; any thoughts on mini-options? Thanks.
Question from Fred (#2): Is it my imagination or do options traders trade more markets than futures traders do? Is that a good practice? Is it good to look for multiple markets when trading options? Should I expand my horizons?

Options Bootcamp 62: Selling Puts Revisited Apr 19, 2016

Show notes

Basic Training: Short Puts Revisited

Want a complete overview of selling puts? Check out Options Boot Camp episode 4 from May 7, 2012.
New study: "An Analysis of Index Option Writing with Monthly and Weekly Rollover," written by Oleg Bondarenko, professor of finance at the University of Illinois at Chicago, and sponsored by CBOE. It is.the first comprehensive study to examine strategy benchmark with traditional stock, bond indexes incorporating weeklys options.
CBOE Russell study "Analyzing Russell 2000 Index Options-Based Benchmark Indexes Designed to Provide Enhanced Yields and Risk-Adjusted Returns." CBOE announced the release of a new study that examines six benchmark indexes that invest in Russell 2000 Index (RUT) options and compares their performances with those of traditional benchmark stock and bond indexes. This is the first comprehensive study that examines the performance of multiple options-strategy benchmark indexes that incorporate Russell 2000 Index options. Written by Mark Shore, an adjunct professor at DePaul University's Kellstadt Graduate School of Business, and sponsored by CBOE.

Mail Call: Listener questions and comments

Question from QKT - If i sold a $1 strike put with a current trading price of $.50 and then the stock goes to $5-what happens and what is my risk? How do I look at expiration? Can my puts be exercised against me?
Question from Nick S. -I am thinking of a cool new strategy that I haven't seen listed online before. It effectively involves buying an iron butterfly (one of Marks favorite strategies) and then selling an extra put on the downside leg. You would select your strike at a price where you are comfortable buying the stock should it drop. This has the obvious benefit of reducing your initial outlay for the position. However, unlike a naked short, put you have the added cushion of the long straddle to help protect you on the downside and lower your effective break-even on the downside.
Question from AJ M. - I have a question for the drill instructors. I hope you guys can calm my frayed nerves over this DOL thing. What exactly is going on? Am I not going to be able to sell calls in my IRA anymore? Since the vast majority of my assets are in retirement accounts this would be a HUGE hit to my savings. Please tell me this is not the case. Is there anything I as a retail stock and options trader can do to help prevent this? What if I open an international trading account? Would that do the trick? Help - I need the drill instructors to talk me off the ledge.

Options Boot Camp 61: Earnings and Election Volatility, Day Trading Options and More Mar 03, 2016

Show notes

Options Questions of the Week:

How do you prefer to trade options?

19% - Long premium

15% - Short premium

56% - I avoid earnings

10% - Other, explain below

How many U.S. options exchanges do we need?

5% - 14 is perfect!

29% - The more the merrier

62% - Make it stop!

4% - Other, explain below

Should options trade after hours?

53% - Heck Yes!

15% - Only in Major Names

15% - No, poor liquify

17% - No, other

Question from Alfy - Is it possible to be a day trader using options, or do you gave to take a longer term view?
Question from Alex - Insider Trading, What are your thoughts on Shorting 1Y 25 Delta Puts on LNKD midday today (LNKD is at 105 as I write this message). Puts are quite juicy right now with quite acceptable break even points. I am very interested in hearing your feedback. Cheers, Big Options Trading Podcast fan, Alex.
Question from Michael - $15 put Twitter drops off the map; yet the premium still has been declining. Can you explain?
Question from FuturesMD - Is there a directional options strategy that you'd suggest for someone who wants to play the 2016 election?
Question from TraderSon - Can a trader make a decent living buying straight call and puts, or do you have to get crazy with the complex stuff like iron condors?

Options Bootcamp 60: Adding Weeklys to Your Income Strategy Feb 16, 2016

Show notes

Basic Training: Theta. A review of Theta and its impact on income trading. New Study: An analysis of index option writing with monthly and weekly rollover - First comprehensive study to examine strategy benchmark with traditional stock, bond indexes incorporating weeklys options.

Mail Call: Listener questions and comments.

Question from KDDiddy - I want to protect a stock position with puts at a strike 2% below market but there is not a strike there. I thought of dividing my purchase between two different strikes to get an average of 2% but I do not want all the guys to call me stupid. Mom always said I was a genius but it is hard to feel like one when buying something called a Put Stupid. What should I do instead? Regards, Mr. Smart
Question from LATom - Can the drill squad explain covered strangles vs. covered calls? What is the difference?

Options Bootcamp 59; Going to the Dark Side with Second Order Greeks Jan 14, 2016

Show notes

Basic Trading: Second Order Greeks

Question from Brian F. - My question is for Dan. I listened to the Boot Camp shows, and recently had a question about gamma. Imagine my surprise when I learned there are other secondary greeks and even tertiary greeks. What this? Are you holding some greeks up your sleeve Mr. Black hat? So my question is what are these greeks, but more importantly, who uses them and why? Does a retail mope like me need to know about these greeks?
Question from Charlie C. - Do second order greeks have any relevance for retail traders?

Mail Call: Listener questions and comments

Question from AV56 - When is a good time to start trading options - is there any certain time of the week or year that options traders are focused on?
Question from 777: How do you adjust your options trading for cheap stocks below $10
Comment from Brian F. - I went through the Options Bootcamp shows twice, and read a few books, and now have the bug for options. Have you perused the options videos on Youtube? Is it me, or are most of these people idiots? Thanks for the education on options, I now have a way to screen the real trading educators from the BS artists.
Question from Max S. -I have a lot of AAPL in my IRA but I am worried about the downside potential going forward. I do not want to liquidate that position for a variety of reasons. I have some free capital in my trading account with TD. Does it make sense to potentially pick up a few AAPL puts in that account and use them as a hedge against the position in my IRA account? If I switch that trading account from TD to my IRA custodian will the firm treat those as offsetting positions? Thx for the show.
Question from TJD - What os the story on using options in my IRA? Is it still legal for 2016?
Comment from Matt L. - Huge fan of your shows, I have been binge re-listening to options bootcamp as I prepare for a new year of options trading, thanks!

Options Bootcamp 58: What the Heck Are Binary Options? Oct 30, 2015

Show notes

Options 101: Today we are joined by Dan Cook from Nadex. He walks us through the following:

What is a binary option?
How does the pricing work vs. standard options pricing?
How do the ticks work?
Is there a multiplier?
Does the price represent the pure probability of an option expiring in-the-money?
How does expiration work?
What about the final minutes around expiration?
What is the farthest out you can trade a binary on Nadex?
The Greeks: Binaries vs. Standard options
Which underlyings offer binaries?
How can you trade binaries?
What is a typical binary use case?

Mail Call: Get your questions answered by the team.

Question from Jeb16 - I have seen a number of sports books online offering products that appear to be sports derivatives. Is it possible to trade actual products based on sports outcomes or other event-type derivatives in a legal exchange-traded form in the U.S.?
Question from Amelia G. - Do you notice anything different in the options trading in higher volume products vs. lower volume products?

Options Bootcamp 57: Mail Call Palooza Aug 31, 2015

Show notes

Mail Call: The drill instructors will take your questions now.

Question from TennisGr8t - Can you give examples of managing positions using Greeks and is it a good strategy? Your show is awesome.
Question from Pedro Indio - Discovered podcast within the last week and I am up to episode 8. I understand how overall market and industry direction might influence a stock direction. Is there something similar, regarding volatility that can be observed, where an overall sentiment might influence or work with an option's implied volatility? As a new recruit, wonderful educational basic training, SIR!
Question from TopStep - Why would we use options in lieu of futures or other underlyings?
Question from Steamboat Willie: What would you say is the best buy and hold strategy using options? I am interested in using some options in my retirement account but I do not have the time to manage them on a daily basis. I would like to put something on and only check on it every few weeks or months. I am mostly interested in large cap stocks although I am not averse to dipping my toes into alternative assets such as oil.
Question from Beansie - Is there such a thing as a commitment of traders report for options? Something that shows bullish and bearish positions in the marketplace?
Question from 999 - How do you spec on the market falling out of bed using options?

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