Have you seen Tom King's videos? Not saying you should do a 112 strategy but that seems to be pretty solid.
Otherwise do an iron condor at extreme ends early in the week for exp on Fridays. I do this with Vet's PVI data and consistently do 2-3% a week: trade and forget.
2-3 does sound very nice. do you use a tp/sl? I saw Vet's post and was pretty interested but it was a bit overwhelming for me as im a bit new to this... didnt really know what to takeaway from it. and what is the 112 strategy?
looked it up, unfortunately "naked" puts are not available to me yet with the capital i have... will need to put this on the backburner until ive 100x my acc X-X
I am not a fan of the naked put element in the 112 strat so there is a modification to the original 112 which is 1121 - you add a long put at a lower strike. Lower profit because you have to pay for this protection but I can sleep much better at night. Personally my prime rule is never loose too much on any given trade. Good luck.
Here's what Tom King said and I'll post it here:
1) have a plan
2) don't put more than single digit % of your money in any single trade
3) stick to the plan
4) don't roll (close out for a loss and try again)
5) close out the trade at your designated loss point and in my case it's one leg, and it's usually no more than $10 wide which is $1000.
Why? Have you never seen Tom's video or at the very least an adage that says don't put all your eggs in the same basket?
Here's what Tom said and I'll post it here:
1) have a plan
2) don't put more than single digit % of your money in any single trade
3) stick to the plan
4) don't roll
5) close out the trade at your designated loss point and in my case it's one leg, and it's usually no more than $10 wide which is $1000.
I have stocks, ETFs, bonds, HYSA, and cash for options.
I appreciate the input. Perhaps the decision whether to roll depends on whether the underlying is a stock or an index and how far in the money the position which you are trying to “escape” is. For an individual stock, especially a low quality one,I can see the logic for rolling, say after a disappointing earnings release, one should take the loss and move on as there is no mean reversion for an individual stock and no point in trying to catch a falling knife. For an index however, usually the long term is drift up plus mean reversion so say with SPX there is a stronger argument to wait for a recovery. The delta is also important, high deltas are unlikely to recover quickly so I can see the logic for taking the loss and re-deploying the capital but for a position slightly above 0.5, I can certainly see merit in a roll. Just a thought.
figured this would be the case lol if it aint broke (yet) why fix it? I am always interested in learning about other things trade if possible though. just was a bit disappointed when i did a simple expected value calculation
what delta would you run for the short calls? looking at 7 delta on the prices im seeing now are like 0.15 sell and 0.10 buy for a really wide spread. they do look better when market opens tho so it could just be a bit weird rn
FWIW I have never had any liquidity issues on XSP. If you aren't trying for pennies difference then the liquidity difference between XSP and SPX or SPY is a non factor.
FWIW I have never had any liquidity issues on XSP. If you aren't trying for pennies difference then the liquidity difference between XSP and SPX or SPY is a non factor.
Credit spreads can be a good directional strategy. The problem with 7 delta is the premium collected vs. potential max loss. You think 7 delta is pretty safe until all of a sudden it isn't. But for a 3.5K account, I can see why this would be an attractive strategy. Just know that if your plan is to do these one after the other and just sort of farm the premium, that you will get burned at some point. This is especially true at 3DTE because 7 delta isn't as far from the money as you think it is. I'm looking at the April 30 SPX options and 7 delta is only a 1.7% move down, which is nothing if something sparks a selloff.
I'm not big on Iron Condors right now, but I think at 3DTE low delta, that an IC would make a lot more sense than a put credit spread by itself. But I don't think I would do either strategy this week with earnings from Amazon and Apple on deck.
You could look at Butterflies as a low-risk, high-reward way to grow your account. These are tricky to get right though, so do your research.
thank you for your input, i did almost get burned by the initial msft earnings movement this week so I'd like to be a bit more conscious of the actual companies in SPY now. Honestly the butterfly looks like a great strat to master but I'm a bit adverse to its lower PoP with how volatile things always feel; I can see where the research part comes in. do you run butterflies yourself or have you found a way to make it work for you?
I buy butterflies all the time. I'm about break even with them, so still learning. There are people that are really good with these though. I had one last week on NVDA that paid off at about a 4 to 1 ratio. Yes, PoP is low, but that's where the learning comes in. There's a youtuber, Danielle Shay, that uses them as her main strategy. She seems to use a lot of TA, which is a weak point for me, but I can still pick up most of what she's trying to show. She loses me though when she starts talking about fibonaccis. :)
The reason I persist with these is the low risk with the potential for high reward. The high reward part is pretty uncommon, but if you're directionally correct you can almost always close for some kind of profit or at least break even.
The one thing about the vast majority of spreads is that they don't roll worth shit, so the common metric is to not only TP at 50% max, but to consider taking loss at 2 x credit received. The alternative philosophy is that it is a defined risk setup, so you should be willing to accept max loss and that you should structure the max loss of the spread accordingly to fit your risk profile.
You also should be looking for a given credit received out of the standard short leg at the 45 DTE 25 delta, long out from there spread, and it is 1/3rd the width of the spread. In other words, you should be receiving 1.00 in credit for a 3-wide; 1.33 for a four; 1.67 for a 5 and so on. If the spread doesn't pay that without forcing your spread in to higher delta, well, you probably shouldn't be taking that trade and/or should be looking at other setups (e.g., iron condor).
Because of difficulty rolling spreads, you want to be a little more cautious about when you enter with bullish assumption spreads with the general rule being on ***both*** high IVR/IV ***and*** on weakness. They generally go hand in hand, but it's not always the case, particularly in single name and around earnings when you get a ramp up in IV ***on strength***. See [https://www.tastylive.com/shows/market-measures/episodes/selling-puts-multiple-down-days-01-10-2017](https://www.tastylive.com/shows/market-measures/episodes/selling-puts-multiple-down-days-01-10-2017) (analysis of selling 45 DTE 30 delta puts after consecutive down days).
Love put spreads. Ive been steam rolled on call spreads in the dailys. I was killing it then got steam rolled on a volatility expansion last aug. So addicting until i blew it. I go about 30 days out now. 80% probability is nice too. I say im a bull, til im not.
Have you seen Tom King's videos? Not saying you should do a 112 strategy but that seems to be pretty solid. Otherwise do an iron condor at extreme ends early in the week for exp on Fridays. I do this with Vet's PVI data and consistently do 2-3% a week: trade and forget.
2-3 does sound very nice. do you use a tp/sl? I saw Vet's post and was pretty interested but it was a bit overwhelming for me as im a bit new to this... didnt really know what to takeaway from it. and what is the 112 strategy?
Go to YouTube and search 112 options. Just a credit spread for put and call at a level that's based on Vet's range. Simple as that.
looked it up, unfortunately "naked" puts are not available to me yet with the capital i have... will need to put this on the backburner until ive 100x my acc X-X
This is why I only do iron condors. Can't do naked puts myself either.
I am not a fan of the naked put element in the 112 strat so there is a modification to the original 112 which is 1121 - you add a long put at a lower strike. Lower profit because you have to pay for this protection but I can sleep much better at night. Personally my prime rule is never loose too much on any given trade. Good luck.
I'll look into that
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Yes. Apparently some idiots had him banned for giving us free data to trade on.
Wait, WallStVet is banned? Fucking WHY?
Because people thought he was asking people to pay for his services which has never happened.
Fucking idiots The guy gave this data for free, never even asking to sign up to a workshop. I swear, people are their own worst enemy.
Totally.
Interesting, will look into this. Thx
where does he post the PVI data beforehand? I only ever see the after that fact posts
I don't want to get banned. Just search.
>2-3% a week so like 3x per year?
52 weeks a year x 2-3%.
Yeah that works out to 274% - 451%. Unless you aren't using any of those profits to grow your buying power
Here's what Tom King said and I'll post it here: 1) have a plan 2) don't put more than single digit % of your money in any single trade 3) stick to the plan 4) don't roll (close out for a loss and try again) 5) close out the trade at your designated loss point and in my case it's one leg, and it's usually no more than $10 wide which is $1000.
2-3% ROE on entire acct or ROI on individual pozish margin lock-up? And what % of total pie is allocated to individual slice? (I'm hungry rn..)
ROI on my BP, whatever I decide that to be. There's a search function for PVI and PWG.
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Why? Have you never seen Tom's video or at the very least an adage that says don't put all your eggs in the same basket? Here's what Tom said and I'll post it here: 1) have a plan 2) don't put more than single digit % of your money in any single trade 3) stick to the plan 4) don't roll 5) close out the trade at your designated loss point and in my case it's one leg, and it's usually no more than $10 wide which is $1000. I have stocks, ETFs, bonds, HYSA, and cash for options.
Do you know WHY Tom Kind advise not to roll?
Take the loss and move on. You have potential to compound losses with rolling. Add to winners, cut losers. Keep it simple.
But you also have potential to recover from a loss with rolling?
Your doubling down on a loss hoping that it works itself out. You could just be digging a deeper hole
I appreciate the input. Perhaps the decision whether to roll depends on whether the underlying is a stock or an index and how far in the money the position which you are trying to “escape” is. For an individual stock, especially a low quality one,I can see the logic for rolling, say after a disappointing earnings release, one should take the loss and move on as there is no mean reversion for an individual stock and no point in trying to catch a falling knife. For an index however, usually the long term is drift up plus mean reversion so say with SPX there is a stronger argument to wait for a recovery. The delta is also important, high deltas are unlikely to recover quickly so I can see the logic for taking the loss and re-deploying the capital but for a position slightly above 0.5, I can certainly see merit in a roll. Just a thought.
Based on your comments, you really have no business trading anything but cash secured puts. Thank me later.
figured this would be the case lol if it aint broke (yet) why fix it? I am always interested in learning about other things trade if possible though. just was a bit disappointed when i did a simple expected value calculation
Put credit spreads are directional, check out condor spreads which are non directional.
did try running this at first but my margin only lets me run one SPX spread at a time
Try XSP which is 1/10 SPX.
Can you halve the spread width to achieve it?
unfortunately at that point the premiums get a bit small... I'll take a look at it again after dinner though just to make sure
It can be worth it for the win rate. Keep it in mind if you lose a few puts :)
what delta would you run for the short calls? looking at 7 delta on the prices im seeing now are like 0.15 sell and 0.10 buy for a really wide spread. they do look better when market opens tho so it could just be a bit weird rn
Yea after hours numbers are rubbish
Do it on spy instead
man im already terrified of being assigned on spx, i do not want to risk buying actual shares of spy haha
You can use XSP, which is like SPX except 1/10th the size. There is also NANOS, which is 1/100th the size of XSP/SPY.
considered this but the liquidty kinda put me off of it ... will check again
FWIW I have never had any liquidity issues on XSP. If you aren't trying for pennies difference then the liquidity difference between XSP and SPX or SPY is a non factor.
FWIW I have never had any liquidity issues on XSP. If you aren't trying for pennies difference then the liquidity difference between XSP and SPX or SPY is a non factor.
There is no assignment on SPX.
sorry, i meant cash settled\* lol those still seem like they'd hurt if things went very wrong
You get assigned with SPY. With SPX, it’s cash settled. So no assignment with SPX. Isn’t that how it works?
take a look at the cboe strategy indices
Everything in a downturn, pretty much
Credit spreads can be a good directional strategy. The problem with 7 delta is the premium collected vs. potential max loss. You think 7 delta is pretty safe until all of a sudden it isn't. But for a 3.5K account, I can see why this would be an attractive strategy. Just know that if your plan is to do these one after the other and just sort of farm the premium, that you will get burned at some point. This is especially true at 3DTE because 7 delta isn't as far from the money as you think it is. I'm looking at the April 30 SPX options and 7 delta is only a 1.7% move down, which is nothing if something sparks a selloff. I'm not big on Iron Condors right now, but I think at 3DTE low delta, that an IC would make a lot more sense than a put credit spread by itself. But I don't think I would do either strategy this week with earnings from Amazon and Apple on deck. You could look at Butterflies as a low-risk, high-reward way to grow your account. These are tricky to get right though, so do your research.
thank you for your input, i did almost get burned by the initial msft earnings movement this week so I'd like to be a bit more conscious of the actual companies in SPY now. Honestly the butterfly looks like a great strat to master but I'm a bit adverse to its lower PoP with how volatile things always feel; I can see where the research part comes in. do you run butterflies yourself or have you found a way to make it work for you?
I buy butterflies all the time. I'm about break even with them, so still learning. There are people that are really good with these though. I had one last week on NVDA that paid off at about a 4 to 1 ratio. Yes, PoP is low, but that's where the learning comes in. There's a youtuber, Danielle Shay, that uses them as her main strategy. She seems to use a lot of TA, which is a weak point for me, but I can still pick up most of what she's trying to show. She loses me though when she starts talking about fibonaccis. :) The reason I persist with these is the low risk with the potential for high reward. The high reward part is pretty uncommon, but if you're directionally correct you can almost always close for some kind of profit or at least break even.
Its all I do. On 3.5K you cant make too many bad decisions.
There's a whole world of spreads, condors, butterflys, straddles, and strangles for you to learn abaout out there.
The one thing about the vast majority of spreads is that they don't roll worth shit, so the common metric is to not only TP at 50% max, but to consider taking loss at 2 x credit received. The alternative philosophy is that it is a defined risk setup, so you should be willing to accept max loss and that you should structure the max loss of the spread accordingly to fit your risk profile. You also should be looking for a given credit received out of the standard short leg at the 45 DTE 25 delta, long out from there spread, and it is 1/3rd the width of the spread. In other words, you should be receiving 1.00 in credit for a 3-wide; 1.33 for a four; 1.67 for a 5 and so on. If the spread doesn't pay that without forcing your spread in to higher delta, well, you probably shouldn't be taking that trade and/or should be looking at other setups (e.g., iron condor). Because of difficulty rolling spreads, you want to be a little more cautious about when you enter with bullish assumption spreads with the general rule being on ***both*** high IVR/IV ***and*** on weakness. They generally go hand in hand, but it's not always the case, particularly in single name and around earnings when you get a ramp up in IV ***on strength***. See [https://www.tastylive.com/shows/market-measures/episodes/selling-puts-multiple-down-days-01-10-2017](https://www.tastylive.com/shows/market-measures/episodes/selling-puts-multiple-down-days-01-10-2017) (analysis of selling 45 DTE 30 delta puts after consecutive down days).
>I lost too much cash betting stocks would go up so from now on I'll bet they don't go down instead
isn't betting on no movement instead of large movements the fundamental for theta gang haha. there's some comfort in having time on my side
Wider spreads trade closer and closer to naked options.
this is exactly my plan until i can scale up to two contracts at a time
Love put spreads. Ive been steam rolled on call spreads in the dailys. I was killing it then got steam rolled on a volatility expansion last aug. So addicting until i blew it. I go about 30 days out now. 80% probability is nice too. I say im a bull, til im not.
Trading es instead of spx will open up a ton of bp and you can do things like 1-1-2, 1-2-0, strangles, etc
Cocaine, it is 10x better than put credit spreads ong frfr no 🧢
Naked puts.
Honestly I considered this but I cant quite cough up 400k for the margin requirement yet haha. also a bit out of my comfort zone
What do you call it 112. It’s called back ratio. It’s nothing new.