Options Boot Camp

Options Bootcamp 21: Playing Defense Basic Training: Playing defense with options: it’s very important right now! Basic Defense: Protective Puts (full overview in Ep. 3) How do you hedge your position with protective puts? Intermediate Defense: Put Spreads and Ratio Put Spreads. Covered Calls - (full overview in Ep. 4) How do you generate income with a modest hedging impact? The Power of the Colla...

Basic Training: We present two choices for using options in lieu of stock: Stock Replacement Strategy. How does it work? Examples include: An ITM leaps call purchase - requires premium over parity payment Selling a one month ITM put - for the more options savvy trader. By swapping out a LEAPS for an underlying, you get a much more preferable position from a Greeks perspective. Stock Repair Strateg...

Basic Training: The topic this week is margin What is margin? If I have leverage in my options, why do I need margin? Is it possible to not qualify for margin? Why do you need a cash account? What can/cannot you do with a cash account? What are some of the most common risks, mistakes or problems customers run into when implementing margin in their account? What are the benefits of portfolio margin...

Options Bootcamp 18: The Joys of Synthetics Basic Training: Today's topic is Synthetics What is put/call parity? Example of put/call parity. What does it mean for your options trading? What are synthetics? What is a married put? Why knowledge of synthetics is important for successful options trading. Mail Call: Fall in for listener questions. Question from EonJ: Does portfolio margin matter if I a...

Options 101: The quintessential options debate -- buy options or sell them? Many options professionals lean toward "when in doubt palms out." Simplify the options universe into two segments of risk: directional risk and volatility risk. The use of delta and other Greeks when deciding or analyzing when to buy or sell options. Short premium pros and cons Long premium pros and cons Mail Call: Recruit...

Options Drills: How to play earnings through options plays. There are two basic approaches to earnings trading: long premium and short premium. Long Premium - PROS: Advantageous because you essentially receive free or dramatically reduced gamma with little decay in the weeks leading up to earnings. CONS: All of that decay comes out, and more, after the announcement. Also, much of the movement in t...

Basic Training: Exercise, Assignment, and Settlement. There are two styles of options you will encounter -- American and European style. What's the process when your exercises and assignments are determined? When do those contracts settle? How do I determine if my options are going to be exercised or assigned against me? What is pin risk? What is a dividend trade? Mail Bag: Even options recruits g...

Basic Training: Spreads with wings. What is a butterfly? Iron butterfly? What is a condor? Iron condor? Mail Call: Even bootcampers get mail privileges Email from Alan Rick: What makes a spread "iron?" What is the difference between an iron butterfly and a regular butterfly, iron condor, etc. Thanks and please keep up the show; I'm learning a ton! Email from Alan Charter: If I think a stock's vola...

Basic Training: A quick review of spreads. What are spreads? Why should we use spreads? How do the Greeks work with spreads? How do you calculate, performance, etc? Why do I want to net reduce my delta and exposure in these elements? What are some of the downsides to spreads? Options Drills: Vertical Spreads Verticals - What are they? Long verticals vs. Short verticals. Credit spreads vs. debit sp...

Options Bootcamp 12: Weekly Options Basic Training: What are weekly options? How do the Greeks differ in the weeklies? How are the weeklies traded? Option Drills: Selling strategies for weekly options. Diagonal and vertical spreads, straddles, ratios, etc. What are some strategies for selling weeklies around earnings? Mail Call: Taking on your questions. Tweet from @JJacks: Does Sogo trade offer w...

Basic Training: Busting Options Myths: 1) Market makers know where the stops are, therefore market makers who take the other side of trades are taking advantage of retail customers. 2) The only way to trade profitably is to be a dark side short premium seller. Plus, credit spreads are better than debit spreads. 3) I only need to be good at one trading strategy. 4) Option trades and spreads in part...

Options Bootcamp 10: Common Trading Mistakes Basic Training: Your COs cover the most common options trading mistakes: Writing long-term options for income. Using market orders in illiquid options. Not closing options offered at a nickel. Buying worthless OTM "lottery ticket" options. Selling when implied volatility is high buying when it's low. Over-adjusting income trades. Believing that sell sto...

Basic Training: We're going to bust many of the myth and misconceptions the permeate through the options market, particularly to those new to retail options. Somewhere between 75-80% (or even more) of options expire worthless every month, therefore you should be an options buyer. Selling options is a risk-less, or near risk-less, endeavor. All out of the money options have higher volatility than a...

Options Bootcamp 8: It's All Greek to Me Basic Training: Time to revisit the Greeks: Delta - The chief Greek Gamma - The rate of change of Delta, as the underlying stock changes, but sometimes overwhelming to beginners. Theta - Time decay. The rate of change of an option given a change in the time to expiration. Vega - The king of the Greeks. The rate of change of an option price, as a result of c...

Roll Call: Mark and Dan introduce the newest Drill Instructor, John Critchley from SogoTrade. Find out more about SogoTrade, from its philosophy to its commission structure. Basic Training: What you need to know Why should someone trade options? What's in it for different levels of traders? Will you be able to drive a Maserati tomorrow? How options work: the honest breakdown. Believe it or not, op...

Options Bootcamp 6: Complex Spreads Basic Training: Today we're going to dive into complex spreads. What are complex spreads? We're usually talking multi-leg spreads. Calendars are when you buy and sell a call/put at the same strike price, but in a different month. Diagonals, a combination of a vertical and horizontal spread, can be a proxy to a covered call. The concept of the ratio, 1-to-1 on a...

Options Bootcamp 5: Spread Trading Basic Training: Today we're going to dive into spreads. Spreads are really the defining characteristics of options. What is a spread? Why would you do a spread vs. trading an option outright? Max value of a spread is the differential between the two strike prices. Long call spread, aka vertical, examples with everyone's favorite stock XYZ. Spreads have components...

Options Bootcamp 4: Selling Options Basic Training: Turning to the dark side! It's time to learn how to sell options. Why sell options? Time decay and theta. Collecting theta, instead of paying theta, turning an enemy into a powerful ally. Example: The Naked Call The Naked Short Put Options Drills: The Covered Call Roll Call: Mark and Dan sit down with this Zecco Trading's President Michael Feser,...

BASIC TRAINING - BUYING OPTIONS Buying Options, with special guest Joe Burgoyne from the Options Industry Council. Benefits & Downsides of buying options. The Greeks most relevant to novice options buyers. Bullish Example : Buying a call Bearish/Defensive Example: Buying a put. Common options buying mistakes: Buying OTM options vs ATM/ITM options, Intrinsic vs. Extrinsic value, Loading up before e...

Options Bootcamp 2: The Greeks Basic Training: Risk variables (aka "the Greeks") are Delta, gamma, theta, and vega. Delta: The measure of the sensitivity of the options' price given a change in the underlying instrument. It's also used to view the likelihood of whether an option will expire in-the-money. Gamma: The rate of change of an options' delta given the change in the underlying instrument....

Options Bootcamp: Premiere Episode Host: Mark Longo, The Options Insider Co-Host: Dan Passarelli, Market Taker Mentoring Guests: Michael Raneri and Tony Leach from Zecco Basic Training: Dan and Mark make the case for trading options, shattering myths and resetting expectations. The evolution of options: eliminating barriers to entry, increasing the flow of information, commissions. What is an opti...