Ep 124: Trading Weekly Option Tips: (Earning 9%)
★ SUMMARY ★
In this video we will discuss trading weekly options and option trading tips at how you can earn 9% per week.
We will evaluate the risk profile picture and directly on screen examples of how to find a trade or look for these great opportunities, how to setup a spread, how to sell the vertical, and do it based on stocks that just recently had earnings or a bad drop.
We will analyze the risks and probabilities so that you know your chance of success when you place these types of option trades.
Posted at: http://tradersfly.com/2017/02/ep-124-weekly-option-tips/
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i bet most people can't afford to sell uncovered TSLA /AAPL or any large cap stock options that are watching this video. You mentioned TSLA right off the bat. Don't think you explain that the 9% is only if you have over 25,000 in your account and cal sell naked options
Well you have to know what your doing to make intelligent trades with weekly options. With whatever strategy you use. Numerous ways to sell or buy or write complex legged options to do many things with risk comes reward. Try and actually learn something before posting something this stupid.
Lets do some actual math shall we. The expectancy of this trade is: (1+ (Gain/Loss)) * Prob – 1 = (1+41/459)*0.8753-1=-0.04651=-4.65% (without even taking into account commissions). In other words, this is the strategy where the odds are against you, and you are 100% guaranteed to lose everything with this trade the more times you repeat it, similar to a roulette. The strategy you are proposing is similar to flipping a coin where you gain $100 but lose $104.
I was thinking the same thing. Simulate out 10 trades w/ 80% win probability ($450 profit per $4500 capital risked) where you win 8 of 10: Profit = $3,600 & Loss = $9,000. Poor strategy and a sure way to lose 100% of your account over time.
My god 8:36 minutes in and the guy has already made options look like the most complex product on planet earth.
When teaching you should always stick to the spoon feeding strategy otherwise all the percentage this, percentage that babble falls on deaf ears, and it's horrendous to teach. Small tip coming at you for free, think layman's terms and you're on the right track.
Love your vids BUT in a scenario like the one presented here you should click the "Exclude/Include" commissions button on the analysis page as you have commission costs on the way in and on the way out of the trade. For the smaller dollar trades (beginners) it will knock down the 9% gain to 6% or 7% or less.
I like Sasha. I trust Sasha. Except when he exaggerates. A rate of .111111... is not almost 11.5 or 12% it is closer to 11.10% or 11%. Be true to your numbers. Be honest. Be accurate, and we will reward you by being loyal and trusting to you. You have not lost my trust, but I am asking you to be on guard not to exaggerate.
Too much risk, I don't see how it pays off. 12.5% expires OTM (or 1 of 8 times) while the risk:reward is 10:1. Time is in your favor in the short run, but like in casinos, it's easy to profit thousands of dollars before blowing it all in 20 minutes
i agree with you on the numbers, you cant be placing bets with a negative expectation on return. i see it all over the place. but i am able to find options trades every day that have positive expectation. I specialize in $1 wide spreads, where my credit vs risk % is always higher than the ITM odds%. $.20 on 75% ITM in a $1.00 spread is even money, so always having theta and vega on your side is the edge you need in the long run.
I always recommend doing your own analysis of the charts before entering any options position. I trade naked calls and puts 2-3 times a week and my returns are amazing, I also keep my losses tight and I only day trade. I never sell to open, only buy to open. My goal is to see an increase in premium value then sell the contract back at a higher price. Basically I flip premium for anywhere from 15%-40%+ in a few hours and my losses are limited to 10%-12% while figuring in the bid ask spread. I have a 4:1 profit:loss ratio. Just hope I could keep this up when I'm 60-70 years old lol. I'm only 22 now. Been doing this as my main source of income since I was 17.
If you have a $5,000 account - I suspect you would only risk say a max of $500 on such a trade...So if you make 11% on this it is only $55. That as a percentage of your entire account is 1.1% you have made in one week. How much could you lose in a worst case scenario ? What is the risk : reward ratio please ?
with a 5k account i would suggest only using $1 spreads. that sets your risk at ($1 - the credit received) x 100. so if you had a $.15 credit on a $1.00 spread your risk is $85 and your reward is $15. or you stand to make 17.64% profit on the trade verses your risk factor. setting a total amount of 50% of your account or in this case $2500 as the max amount invested at a time, with an average risk of $80 per trade you could have up to 31 trades going at a time and would shoot for an 80% to 90% win rate.
So you have 90% possibilty og making 9%? The odds are against you. If you run the trade 10x you will loose at least one time. And most likely most of the money becase there is only a small interval between loosing the trade and winning it....
elimar008 but just because you can sell doesn't mean you just blindly sell options at any strike price. you have to have a technical reason to sell options. for example selling a put when a stock dips because you think it won't go under the strike price you sell
elimar008 actually it is. when you flip the low odds of buyers winning 10% of the time who do you think wins when buyers lose? of course the seller does. also time is in your favor as a seller not against you. you get paid theta each day that goes by as the contract decays..
Hello Sasha, just have a question i can't find answer for, its like how you can sell to someone a call or put on stocks, if you don't have those stocks? Or its covered somehow with a put/call you buying before you selling put/call??
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