/biz/ - Business & Finance

why settle for 100% a year when shitcoins can pump %500 in a day

what broker is good for options? I had a friend who liked to use scottrade but I want to know your pick

>>1699578
rofl, cant wait for that memecoin bubble to pop and read all of the retards post about muh monies lost.

bitcoin is unlimited risk and your arent getting paid for it.

>>1699581
scottrade is not good for options. my dad uses it for simplicity, but TD has by far the best software.

Although there is this new brokerage that is coming out that I have my eye on. Tastyworks. The commission schedule will be released in a week I think. They tailored their system to options trading.

>>1699573
can you give an example of a 2016 call option that could have been sold for a profit?

>>1699585
What's a good forum or board to visit that talks primarily about options; or one you use personally?

are you doing naked calls? what does the timetable look like for executing the sale? if I'm bringing in $1000 of expendable money this month, is it enough to start selling options?

>>1699586
Unless you have a really strong directional assumption, selling only a naked call or vertical debit spread would not be as effective as and Iron Condor or a Strangle.

I suppose I could cook one up for you with a high probability of profit.

NVDA
RSI is way over bought.
IV rank is 66% plus which is very high.
You could sell a 2 point wide vertical call spread with DTE closest to 45.

you usually want the probability of OTM to be ~30% so a .3 delta is preferred.

Example:
NVDA FEB 17 115/120 for a @1.57$ credit.

Your chance of keeping the whole credit on expiration is 70%, but you can increase this chance drastically by buying to close when you attain 25-50% profit (usually 2-3 weeks)

>>1699591
Not naked, you can certainly trade defined risk with will net you a very conservative 20-30% a year if you are still learning.

Naked would be possible if you have a large enough account with a good income. Account sizes of usually 50k+ is preferred. If your income is good enough/assets you can get away with 25k.

>>1699594
Corrections*

you want probability of ITM to be 30% or for the short leg to have a .3 delta.
this spread is a CREDIT*** spread and is 5 points wide. your max risk is 350$

you're actually only half memeing since selling options IS the one of very few ways for poor fags to get rich, but selling naked strangles 2 std out is still dangerous af and eventually you will get btfo and wiped out completely

>>1699602
in a sep 2008 scenario if you managed your strangle this wouldnt happen.

you are right, REMEMBER KIDS IF YOU SELL AN UNDEFINED RISK OPTION AND YOU DONT SET ALERT FOR WHEN THE STOCK GETS NEAR OR AT YOUR BRAKE EVEN YOU HAVE NO BUSINESS IN UNDEFINED RISK TRADING.

and you my friend are only half memeing as well. you would only get BTFO if you hold to expiration. can you name me one stock (that isnt a penny stock) that OPENS at 2 STD above or below its previous close? Dont think so senpai.

>>1699606
how do you personally choose your stock/index? how many at once and how many times a year?

after researching it seems like an iron condor is like saying you will only take so many profits and so many losses, and you are selling right around 45 days bc thats the safest day to know you are going to make SOME type of profit

>>1699573
>Only a 2 STD move
But anon if I have STD's how will I ever into gf?

this is beautiful stuff man, didnt even know this was a thing, but I have no skin in the game...YET

>>1699607
40% of my account size
and im glad you brought up frequency.
the only way you can make this return consistently is to make many small trades.
1 a day at a minimum. 5 - 10 positions at a minimum.

I personally find lists of notable, good to the core stocks and filter by IV % rank. anything above 50% is fair game if I like the way the stock is going.

do you actually ever let options deteriorate/expire?

>>1699610
45 DTE and buy back at around 13-23 depending on how comfortable you are with the stock. taking 25%-50% profit is statistically best.

Selling ICs gives you an edge. You make money every day if the stock stays between your short legs.

Strangles are just the undefined risk version.

>>1699573

tldr: sell 2 standard deviations strangles on high implied volatility % stocks at 45 days and buy back after 25-50% of profit is reached. This is the ONLY way to legitimately make a huge yearly return. Sure there is "unlimited risk" but there is a reason your BPR only a 2 STD move in the stock price.

Ask your answers.

Can you explain that in English pls

>>1699617
expire no.

taking early profits is also KEY.
25-50% of max profit is where you NEED TO GET OUT. If you let it expire, over the long run you will not make anywhere near are much as coming out early.

>>1699620
if you dont understand what I am talking about do the following:

1. Learn what an option is
2. Learn both sides of options trading (being a buyer and a seller)
3. Learn the different types of options wombo combos you can trade (namely naked puts, iron condors, strangles, etc.)
4. Learn about how options are price. ITM options and OTM options are priced very differently.

>>1699606
i dont have the screener to find that but i'm pretty positive that has happened more than a few times. it's not even that impossible there are plenty of stocks that have very low volatility, and 2 std out move is totally possible when buyout or merger news happen during market close

>>1699624
and how much have they dropped? 50%? 75%?

Also, this strat is much safer with well established stocks that are 50$+ per share in value. Of course this is a garbage idea for companies that can go out of business/be liquidated.

but if you look at the returns, this tailrisk that you are talking about is very easily mitigated with the proper management.

>>1699621

what do you mean by 40% of your account size?

what is your personal best trade? Or something memorable that you did with the IC strategy? If you set it up correctly, I assume it's all automated so that if you are working your job you don't have to be stuck watching your monitor?

>>"Meaning, statistically over time, you will either be where you started or worse due to commissions."

lol what? Robinhood has $0 commissions. How do you lose money from commissions from $0 commissions??

>>1699629
to close the position you have to do it yourself. But the IC is a defined risk strategy. If you follow the guideline of a .3 delta on each short leg (this can be adjusted depending on market/stock biases) your chance of success at EXPIRATION is 70%. You should watch all of your trades at least once a day so that if one of your trades go wrong you can get out before max loss.

My best trade was in around 2008/9. It has nothing to do with any of these strats but I bought a LEAP call with 450+ DTE at 1100 and told myself not to touch it a year from that day. I did so and made around 20000$ from that one trade. This isnt sustainable by anymeans and the chance only comes once in a blue moon.

What I mean by account size is 40% BPR is held for the risk you take in selling options and the 60% is either cash or dividend paying bond etfs which you sell covered calls on.

You should really learn the ins and outs on ICs.

The best trade you make with an IC is not losing within the first 2 weeks and buying back. I dont remember much of them. Each trade is not supposed to be a home run.

>>1699635
can you read? even with no commissions its still a zero sum game.

from my POV robinhood is garbage.

if you cant afford commissions you dont know what youre doing in the market.

>>1699637
the IC strategy seems pretty sweet for making steady daily gains. a lot of tutorials mention think or swim...is this a good tool to visalize your trades? I am now curious in checking out the tasty one you mentioned.

>>1699644
TOS is probably the best platform in existence right now. The same guy who made TOS also made tastyworks (he got bought out by TD) and wanted to make a platform dedicated to selling premium. Yes of course you have your charts, info, stocks, future etc but none of the extra garbage investment products.

the IC is great if you have limited capital

>>1699623
Thanks I do know what an option is like call put and butterfly strategy. Only basic idea tho.

Can you guys help me understand a relatively safe strategy to make about 20% from options.

>>1699649
thank you sir
how do you sell covered calls on bonds?

>>1699660
20% a year? Sell vertical spreads/ICs dude.

*Make sure the stock is stable and not a bad one (50$+ is a good rule)
*Make sure when you place the trade IV Rank is above 50%
*Make sure you pay attention to price extremes and binary events or even earnings dates to take advantage of IV rising
*Exit trade at 25-50% max profit
*Only sell closest to 45 DTE
*Each short leg should have a .3 delta for a great chance of success
*trade small and often
hmm dont think I missed anything

also, your max loss is limited. Collecting 1/3 the width of your strikes is key

>>1699665
bond etfs***
not bonds.
just companies that buy bonds on your behalf (high and low yield) and pay you a dividend with slight capital appreciation.

>>1699670
what kind of risk/ratio reward do you think is smart, considering these programs let you slant your IC.

>>1699668
Yes 20% a year. Thanks I'll read on all the jargons you posted like DTE, IV, etc

>>1699680
I really hope I havent been writing all of this for nothing.

Like I said a .3 delta is considered the sweetspot when it comes to risk/reward ration.

65%/45% and 70%/30% is best.
The first number of each set is of course your chance of keeping the credit you received when the option expired. That is if you dont touch your position you will have a 65%/70% chance of keeping the whole credit, but this is advised against. Taking profits early is key. 25%-50% profits.

Im off to bed for now, Ill answer questions in a couple of hours. Pile them up and Ill answer soon.

Dont make me repeat myself as much as I already have. If you dont know what I am referring to when I write something, educate yourself.

>>1699684
also if your account size is big enough and your broker will let you trade naked options, set strangles in your line of sight in the future.

what happens if you lose a sd strangle? do you get btfo and turned into a slave? or is it just your credit that takes the hit?

>>1699710
realistically if you have a strangle on something thats not a single stock you will never get btfo by the time you can do something about it.

Take 2008 sep for example.
If you sold a strangle in early sep. The biggest as fastest crash happened during that time but you have to remember it wasnt all in one day and it never will be. The biggest lose in one day of the worst financial crisis for almost 100 year was 100 points, or around 8%. This IS the worst possible case scenario.at this point you would cut your loses and get out of the position. What would your lose be at 100 points down in one day of a strangle thats 2 STD OTM?
You wouldnt have lost a dime on the intrinsic value on the strangle because, by my estimation, a 2 STD at this specific date would have been around 120-140 points wide.

And as the put short gets more expensive aka a lose the call short loses value aka an equal gain. you would probably lose maybe 1000-2000$ in this doomsday scenario because of IV shooting straight up which would increase the cost of getting out of such a trade.

Not that much of a loss for an unlimited risk trade huh? Just gotta be realistic about the markets. You can also roll your positions to mitigate losses of even come out flat

>>1699710
Im talking about the SPX btw

>>1699573
have you ever heard of the phrase 'no free lunch'?

>>1699573
if you can make 100% returns per year, why don't you just fuck off and do it?

>>1699641
>can you read? even with no commissions its still a zero sum game.

How are stocks zero sum if companies pay dividends, expand their businesses, world population grows and globalisation increases? HOW?

As horrible as some of this thread is it is an absolute legit strategy. High probability trades cap your gains but I'd take that side every single time. High number of occurrences, vary your underlyings and strategies, stay small and let the maths play out.

I think 2 standard deviations is too wide though. 1 standard deviation will give a better risk to reward ratio. But that's the beauty of options, you choose the level of risk you're willing to take.

>>1699585
>Tastyworks
Amen. I'm opening an account as soon as they'll let me. (Which will be around the 3rd week in Jan apparently, for international customers) They also sent out the commission rates today. $1 for options and no closing fee. Pretty sure that will beat every other brokerage. They are all about the retail investor and they're keeping the commissions as low as possible to facilitate the "trade small, trade often" mantra.

Can't wait to get started. Been paper trading for a year and been getting more and more sophisticated and am so ready to start for real now

>>1700011
I dont have permissions to trade undefined risk options. I do the defined risk version of this strategy and it works out great for me. The undefined risk version is sure to work out better though.

>>1700012
Rofl I literally answered to this, unless you are in it for the long run, stocks are 100% a zero sum game. And even then your returns are mediocre at best

>>1699727
I don't think you will but what's the harm in asking

Can you pls explain step by step what exactly you are saying in OP.
I only know what call and put is.
Thanks

Call me an idiot if I am one, but how do you deal with earnings reports? A stock could swing 5-10% overnight which could be higher than your 2STD. Do you avoid any contracts that could fall within an expected ER?

>>1700170
If you know what a call and a put is, then learn about theta decay and delta.

Then learn about ICs and credit spreads if you dont have rights to undefined risk strats. If you do have the ability to use undef risk strats research the Strangle.

After you are acquainted with how these options spreads work, you want to find a stock that isnt garbage and has a very high implied volatility (above 50%). Once you do this you can make the proper trade on it and collect a credit. 45 DTE is best and once theta has chewed away 25-50% of your max profit you should close the position and find another stock.

Things to remember:
*IV Rank should be ABOVE 50%
*Each short leg contract should be closest to 45 DTE with a .3 delta
*each trade should be a max of 5% of your account so that the probabilities will eventually work out in your favor.

>>1700175
A calendar spread takes advantage of earning because IV Rank shoots straight up during this time.
You could also sell an overpriced strangle/IC/credit spread because the expected move tends to overstate actual.

>>1700175
Sorry, I did not finish reading your post. But the idea still applies. Personally I sell ICs/spreads/calendars on earnings but you do get paid a hell of a lot if you take the risk. If the company isnt pure dogshit its a good way to bump the amount of premium you receive.
5-10% swings almost never happen with shit companies and when they do 5-10% really isnt such a huge loss. 98% of the time this wont happen.
2 STD is around 30% room for expect move I believe. A huge window

thanks for the info OP, its very much appreciated

>>1700178
>>1700184
Thanks, I've been trading mainly by speculating ERs so far, but they can be pretty risky depending on the company. I might try playing around with options to mitigate risks.

>>1700454
just read a shit ton of studies and report on playing earnings. Seems like a garbage strat actually.

>>1699573
What about finding a high volitility stock and buy strattle, with the strike price both ITM? worked for me with TZA recently.

>>1700176
Sounds like a decent strategy, thanks :)

>>1700502
its because of the fact that high IV equals over priced options. You only really have an edge in this type of trade if you have inside info tbqh

>>1699573
>selling your positions instead of just selling contracts on them
Are you retarded?

Ready for the RNVA pump on Tuesday from .08 to .16 or .2
Or till the 1/5/17 CC

>>1700511
kys

I've talked with an active trader, and he described how he mostly traded options. He did claim to have a higher return than the market average. I didn't entirely understand what describing, but he said that trading options had much less risk than stocks.

>>1700509
>taking a monumental amount of risk buy holding positions that net you a less than 10% ROC at best per year
rofl

>>1700525
>monumental amount of risk
You think a strangle has "unlimited risk" when it actually has a very clearly defined maximum risk, so why the fuck would I listen to you?

>>1700524
if you want to capture the profit of hundreds of shares with options it sure is much much cheaper with no tail risk

>>1700532
theoretically it has unlimited risk to the upside and a maximum risk to the downside if the stock price drops to zero

>>1699582
>bitcoin is unlimited risk
You can't lose more than 100% of what you put in, though.

>>1700564
alright it is defined but 100% is almost as bad as it can get

>>1700567
no. losing more than what you put in is way worse.

damn i dont understand anything here, what happened to buy high and sell low? damn jew magic

>>1700595
if you dont understand this stop trading and do yourself the favor of learning

>>1700600
im not trading, i just sometimes come to this place

Hey OP where can I go or what book can I buy to read about this in detail?

why are you telling us about your epic strat?

>>1700603
dont pay anyone a dime for strats on trading, its not going to help you. Just google studies on strangles and eventually youll pick it up

>>1700606
so you faggots stop posting retarded penny stock xd threads and robin shit.

its not a secret trade strat xd

>>1700537
Any options strat that doesn't involve selling naked contracts has a maximum defined risk. Unlimited risk is for shit like shorting a stock, in which you could theoretically owe thousands of times what you own, or selling naked calls, in which case again the price could increase so much you owe many times over what you actually own. Unlimited risk is a very specific thing, and doesn't just mean you lose 100% of your investment. It's much, much worse than that.

>>1700638
You act as if I didnt say this exact thing.

a strangle is NOT a defined risk strat. unless you close the short put leg. If you consider it as a package it has unlimited risk to the upside

>>1699573
Saved for later reading OP, appreciate the bulk info.

Dabbled a month ago with theoretical and mock up stocks through ASX and came out with "$13,000+" after investing 48,000 using similiar methods you've used here. It was part of some ASX Sharegame though as I wasn't entirely confident on the strategies I had in place.

I lost interest once I was Bogged down in work.

TLDR: Appreciate your advice and plan on re-implementing the above rules and strategies to make delicious Money over time in order to Develop an application on the side of working.

They key to remember is that even though you're dealing with potential unlimited risk the chances of that happening are relatively low. 6-7 standard deviation moves like the crash in 1987 or the financial crisis in 2008 are once in a lifetime events. And the 2008 crisis happened over the period of a year, easily time to deal with any open positions you have.

These are black swan evens, you can't let that sort of thing stop you. It's like saying you'll never cross the road because you might get run over. It's impractical, not realistic,

And they key to not blowing out your account is to stay small. Then nothing can take you out.

>TFW have no clue what this means.

I'm an ETFcuck. How can I make use of this information?

>>1700676
this

worse thing to happen in a 1987 scenario is that you lose 50% of your account if you had correct risk size

>>1700677
tbqh watch the tastytrade financial network

just watch their videos on youtube. They do all sorts of great studies on the topic.

>>1700683
tastytrade shill detected

>>1700690
stahp, im just trying to help out

>>1700683
How do I know they have my best interests in mind?

I'm somewhat skeptical of your mentioning of overly high returns.

>>1700692
Help me out. 40 year old, going to start investing now. Yes I know, I'm old and just starting. I made this decision because in 10 I want enough money to buy an 80k house. I am going to use Robinhood to purchase penny stocks in hopes of a big turn around. I usually spend 100 a month whiskey, i'm gonna pump that into these high risk things. I don't have enough to pay commissions, nor do i feel like paying a jew to do what i can do for free. If I lose out I don't care, because it's money that was going to waste anyway. tell me why this isn't a good idea.

>>1700696
if you seriously need help and you arent just shit posting

tell me your income and savings and I can tell you what you personally need to teach yourself and you can very well be making good returns this year.

>>1700693
As I was when I started to hear things like this.

You dont have to and shouldnt take my word for it, those guys NEVER market their company and dont ask the consumer for a damn penny. They founder of tastytrade created thinkorswin and sold to TD for 600+million. He has the investors interest at heart.

All the research he does on the stock market costs lots of money and gives out amazing information for free.
Just watch some of their vids with adblock on so you get to decide whether its bunk or not

>>1700702
I'm in the same position as this guy >>1700696

20 years old, no economic knowledge besides a few things I read in the intelligent investor. Have a Robinhood account that I use to trade meme Gold ETF's. My primary source of income in gambling on political outcomes. Made over 10 grand betting on Trump winning and have it mostly in Bitcoin. I also get neetbux and will probably have a job to add to that income. With expenses I'll probably have around 500-1000 dollars expendable income per month for the foreseeable future. Got any books that I should read, I don't mind learning that way, and I have a lot of free time.

>>1700653
I didn't see that you mentioned selling strangles in the OP, not buying. Selling a strangle definitely has unlimited risk, but I'm not seeing why you would do that instead of buying iron condors

>>1700711
you mean selling ICs? Why would you buy ICs?

>>1700706
Ok but I live in Canada.

Will this help me? Can I do it with only 10% of my portfolio instead of a significant portion? It sounds scary.

>Sure there is "unlimited risk"

Lmao.

Yeah, so what right? Quick question: what's your annual return? 8%? 9%? The risk/reward isn't there whatsoever.

>>1700717
With a 1 SD strangle sure there is

>>1700702
Income is 40k a year. Raising 3 children. Extra money is slim. I have 500 to start. I want to buy cheap stock in large quantities for as cheap as possible. For example, buy 1000 of SHIT at .0345 a share then hold onto it. When it hits 2 or 3 dollar sell. That's my plan. Not shitposting.

>>1700721
tough situation dude, I would say to NOT buy into shit stocks and save up until you have 3000$. At that point you should sell defined risk options spread and youll make good money that way. Youll never make a dime on pennymemes

>>1700723
Pls help me above I have a portfolio of $35k

>>1700716
well it depends how big your portfolio is.
if 25000$ isnt 10% or less then you need to do the defined risk version of this/these trades which works just fine just not as much of a return. Still 2-3 times better than the best etfs/funds youll ever find

>>1700727
what would you like to know?

>>1700728
>>1700732
Why doesn't everyone do this then

Why did I get trolled into etfs? Do I need to be smart to understand this? Is there a catch?

>>1700723
>defined risk options
I will read into that. Thanks for the heads up.

>>1700735
people dont like the term "unlimited risk"
its as simple as that.

>>1700743
>people dont like the term "unlimited risk"
>its as simple as that.

I can't tell who's jewing who anymore.

Are options really that great?

>>1700751
>Are options really that great?

They are great if you happen to know the future but don't be retarded and actually listen to /biz/.

>>1700751
sellers have a 6-9% extra premium collection edge.

combine that with high implied volatility trades and take profits early you statistically cannot lose.

>>1700763
Do I have to be smart to do well? I'm kind of retarded.

>>1700702
Ryan, I am checking out your TastyTrade site. Videos are informable. Rachel is hot. More her, less you, homo. Thanks for the educational vids.

>>1700778
No problem, they are opening a new brokerage firm as well. 1$ commission to get into a position for options and free for closing. Its awesome.

>you statistically cannot lose
>I'm kind of retarded.

never change /biz/

>>1700770
uhh you have to understand how the market works somewhat I suppose. If you can understand the terminology sure you can.

>>1700720
You said do a 2 STD strangle in your OP, as it's the "only legitimate way" of "guaranteeing" "huge" returns.

Even with a 1 STD strangle, your cap requirements would be shite

>>1700788
Wow don't be so harsh

Soery not everyone is a smart guy like you

>>1700790
1 STD is most defiantly worth it on the SPX in my opinion.

>>1700788
Cannot lose in the end I mean. Do a small study for the last 10 years with this strat if you want and take a look at the ROC

>>1700790
do it on ETFs is you want lmao just not on one stock

>>1700793
>implying you need to be smart to know there are no sure things.

>>1700789
Okay op I will try to learn it

I want to get rich

>>1700798
>Cannot lose

>>1699573

OP, you are giving out potentially useful information in a dangerous way. Yes, that is a popular way to use options, but damn, you are not teaching them the repercussions. When you teach people something, you need to give a foundation, and then connect these concepts. When I taught my friends, they started pinpointing these strategies together and understanding the risk themselves, so they could evaluate it properly. Talking like this is an easy way to lure people to lose money because it "makes sense" but they can't see the full picture.

>>1700828
If I buy an option and it reaches it's expiration date, does that mean I lose out on the option if it is not bought?

>>1700828
I'm trying to learn options now, would you care to explain the unlimited risk?

Surely if you are buying calls then you are paying the price of the contract and your losses wouldn't go into the intrinsic value of the stock as you don't have to buy the stock?

And if you are selling calls then you would either make profit from your sell or not have your contract sold so you'd lose your premium and nothing more.

And if you were buying puts then you would only lose the premium again and nothing more?

> or am I just retarded?

>>1700828
Also could you buy an option with the intention of not buying the stock?

Lets say you pay $500 for a $50,000 sale but you don't have $50,000 you're just hoping that you can sell that option for much more than $500 before it decays.

>>1700845
>unlimited risk


DEFINITION of 'Unlimited Risk'

The risk of an investment that has unlimited downside potential.

BREAKING DOWN 'Unlimited Risk'

Examples of investments with inherent unlimited risk include short positions and futures contract trading. In short selling or trading futures contracts, the potential to lose more than your initial investment is theoretically infinite.

Read more: Unlimited Risk Definition | Investopedia http://www.investopedia.com/terms/u/unlimitedrisk.asp#ixzz4UZEqn4Bt
Follow us: Investopedia on Facebook

>>1700852
I know what unlimited risk is retard, how does it apply to trading options?

It seems to me all you are doing is buying and selling stock sales. How can you lose more than the premium and the stock's intrinsic value?

>>1700844

That means the money you paid to get the rights associated with the option (whether it be the right to buy or sell stock at a certain price), is now over. You will have to buy another option.

Though I am not sure what you mean by "lose out on the option" if it is not bought. Are you asking if the order isn't filled?

>>1700845
Unlimited risk in regards to options applies to puts specifically. In options you have either infinite risk or unlimited risk.

Infinite risk is associated with SELLING call options because if the stock explodes upwards, are the seller of the call, you would have to go into the market, buy those stocks and deliver them to the buyer of the call at the set price. So your loss is equal to:

Market price - set price (aka the strike price). Since the market price could go up to infinity, you have infinite risk.

Now as the SELLER of puts, you have the obligation to buy stock from a person at a certain price. Now your worst case scenario is if the stock becomes worthless (aka $0) and you must buy that stock from the person at the agreed upon price.

So the max loss in this situation is :

Strike price - market price

Since the lowest the market can go in this situation is $0, you can say that the max loss is just the strike price. This max loss is called unlimited risk.

tl;dr infinite risk = SELLING call and unlimited risk = SELLING puts


So looking at what you said (CONT)

>>1700857
http://www.investopedia.com/articles/optioninvestor/08/naked-options.asp

If you are incapable of using google you should not be calling other people retards newfriend.

>>1700872
>I have 3 cocks in my ass though I am not sure what you mean by "lose out on the option" if it is not bought. Are you asking if the order isn't filled?

I didn't fully understand what "option" meant. I'm learning now from the vids on TastyTrade.

>>1700845
>>1700872

>Surely if you are buying calls then you are paying the price of the contract and your losses wouldn't go into the intrinsic value of the stock as you don't have to buy the stock?
Correct, because you are on the buying side. The risk associated with buying calls or puts is the premium you paid.


>And if you are selling calls then you would either make profit from your sell or not have your contract sold so you'd lose your premium and nothing more.
First part is correct. Selling calls, the maximum profit is the premium. The second part is incorrect because you are forgetting about the potential obligations that you might have to fufill.

Now when you are selling calls, assuming they are out of the money (meaning they are calls where no one would activate them because they could buy the stock at a better price from the market), you are hoping the stock either stays where it is, or goes down because then no one will activate the option, and you get to keep your full premium aka your max profit.

Now if the stock starts going up, things can get scary because once that option becomes in the money (meaning it is worth activating), you will either want to buy back the option to avoid the potential risk of having to fulfill it, which might be more than the premium you received, depending on how quickly that happened, or if you decide to hold it and things don't change, someone might activate it on you and then things get messy. Normally people start noticing this, they buy it back before it becomes in the money so that way they can capture 25-50% of their max profits, which is what OP is talking about.


>And if you were buying puts then you would only lose the premium again and nothing more?
Correct, see the first question for why.

>>1700876
What's with the hostility? I am not OP. I was trying to explain why he needs to give more information before he riles people up with all this jargon.

>>1700878
What's with the hostility?

It was an attempt at humor.

>>1700878
So what you buy a call and then sell a put right?

>>1700883

O my bad. It's hard to tell through text. Did you have any other questions?

>>1700885
If you are asking about OP's strategy of selling strangles, you sell an OTM (out of the money) PUT, and sell an OTM CALL.

>>1700878
>>1700885
So is this guy in the pic buying call options at #1 (red) and #2 (red buying call contracts and then #1-5 selling put contracts?

>>1700887
Alright thanks for the help, I am honestly trying to learn but its pretty hard especially when flooded with so much jargon and so many different strategies from one google search.

>>1700887
Let's say I buy an option of McDonald's. 100 stock at the price of 3 dollars which will cost me 300. There is a time limit on that option.If it doesn't reach a certain price point in the allotted amount of time am I out my 300?

>>1699573
I actually recently started thinking of getting into buying futures options as a alternative to position or swing trading futures trends.

>>1700890

#1 red = he buys to open 15 call options
#2 red = he buys to open 25 more of the same call options

#1-5 green = he is selling to close his call options. So since netflix became more expensive, the value of those options went up, so he is selling his options back to the market for a better price than the premium he paid. In doing so he is terminating his right to buy the stock at a set price in return for the premium he received (this is what selling to close means. He sold his contract back to the market).

>>1700893
Yeah, I try to teach in a way that removes most of the jargon from the explanation, and then slowly add it back it, and try to get the student to use it rather than the laymen terms so when they use it, they also know what they mean when they use those words. Otherwise, what's the point of saying these words to them if it has no meaning, right?

>>1700898
That is correct!

>>1700910
ok. I understand that. I'm learning and I thank you.

>>1700911

Hey my pleasure. I am going to take a shower. If you guys really want, we can look around for some online streaming or open a thread, and I can teach you guys the basics of option trading so you can understand what is happening and what all these terms mean.

>>1700916
Jesus if you would happily do that I will happily lurk or post questions loool

Ill be watching youtube videos on it during.

>>1700919

I feel an interactive platform will be better, where you guys can come in and chat with me as I explain so you can better understand. I'll look around and see if there is anything without having to install a bunch of trash on my PC. If I can't find anything, I'll just continue browsing the thread for 15 or so more minutes and answer questions as they come.

>>1700943
> I'm in the UK can I still trade options?

> Also which option trading platform or brokers do you use?

> What kind of stock analysis software can you download and install to aid with TA and deciding when best to sell? (I'm sick of using google searches for graphs and stuff.)

>>1700943
Just set up a discord server m8.

>>1700945

>I'm in the UK can I still trade options?
Yes, but you will need to have a broker that accepts international accounts. I am not too knowledgeable about that process since I never had to worry about that.

>Also which option trading platform or brokers do you use?
Personally use TD Ameritrade/Think Or Swim (TOS).

>What kind of stock analysis software can you download and install to aid with TA and deciding when best to sell? (I'm sick of using google searches for graphs and stuff.)

Well the Think Or Swim platform has a lot of built in information that cuts down on using 3rd party websites. I still browse google for additional information to get a better scope of the market though.

>>1700948
Does discord have drawing?

>>1700958
You can upload pics via imgur etc or link vids but I don't know about streaming live.

>>1700919

Alright, try this out. I'll wait around for 5 minutes, and see if we can try this out.

https://scribblar.com/wgh4y5t

Requires flash by the way.

>>1700977
>https://scribblar.com/wgh4y5t

How many people are in the room?

>>1700977

Alright, I am going to go ahead and start teaching.

>>1700988
can you copy paste the text since i can't join the room?

>>1700988
Hey room is full
any way you can make it bigger?

>>1700995
>>1700991

Let me see if I can make it bigger.

>>1700995
>>1700991

Do you guys have any other whiteboard tools? I can switch there before I get too far into this lesson. I can use a discord and use imgur, but it will be far slower.

>>1701008

We are working on getting it set up, and then I'll restart the lesson.

>>1701017
If this thread dies, can you make a new one with the info. What will the tread title be?

>>1701019

https://discord.gg/UTCUk

Everyone hop in there. I can just name it option teaching if you guys like if that happens.

>>1699573

what do you mean by "2 standard deviations" in the straddle trade?

>>1699573
First of all, if you are posting bait threads about stocks being a zero sum game RIGHT NOW STOP. CLOSE ALL OF YOUR THREADS AND STOP WASTING YOUR LIFE.
MAYBE GET A GIRLFRIEND.

>>1699594
so i have the option chain for NVDA out 45 days.

what are you looking for here? (prices not shown since markets closed)

So how do options compare to futures, and what is the best way to trade futures? There's alot of great suggestions about options here, thanks anons :)

Man, reading through this thread is a nice reminder of how retarded most retail investors are

>>1700458
Could you elaborate? I've just started trading and made about 30% in 5 months from just trading ERs. Not great, but I think it's pretty good for someone with no experience.

>>1701077
op was a faggot and bailed to get elephant sperm pumped out his ass and stomach

CAN ANYONE TELL ME WHAT IC MEANS?????

I've tried to research and found nothing

>>1701353

It's an Iron Condor

>>1701077
>>1701343
nah I was just busy, I cant stay up all day for you guys.

Just from looking at NVDAs RSI I decided to short some call spreads as in pic related. If it drops fast enough and I make a quick 100-150$ Ill close out my position. If not Ill make that over time anyway. The only way I lose is if it rallies again.

>>1701299
thats really good, but your trail of luck will stop. Trading ERs is literal gambling. Im glad that you won, but with enough occurrences you will eventually be at breakeven or worse.

>>1701866
Just spent the day/night learning options. is it rude to ask for 5 stock picks right now? From what I understand, to do this effectively (going 5% max of your portfolio per short strangle) you'd need 20 picks to fully invest so 5 would be a good start to get a good idea of what to look for

>>1701884
Remember, high IV rank above 50% is key pham

GME
NVDA
LULU
FXE
T

When you're trading like this in a margin account you don't want to fully invest all your cash. It depends on the size of your account but you want to keep at least 50% in cash all the time. On smaller accounts it's a little harder to get the number of occurrences going so you might have to go a little higher.

And for this style the main number one thing you're looking for in an underlying is liquidity.

Liquidity, liquidity, liquidity.

>>1701891
FXE is 106 a share.

Why would I buy that when i can put money into something cheaper and get more of it.

>>1701929
^

>>1701930
???
listen man if youre going to be a troll fuck off
for those who want an answer to this retarded question,
FXE is perfect for a strangle/IC strat because you get paid so much for the high IV rank

>>1701933
>1700828
Address this post then nigger

>>1702027
nice single arrow,
yea there is technically tail risk in this strat. Im still refining it, seems like a 1 STD is far superior with the same risk. Everything else I have said is a defined risk strat. You lose the width of your strikes at max.

>>1702027
Ill make another thread with refined information and ill map out the risk involved

>>1701930
The steps here are very simple and I just learned what an option is after a 2 hour drive and an audio book. It's a numbers game. You find stocks in the right parameters, with the right number, set up your strangle and set up your limits. Sit back and address the options day to day when you hit 25-50% max profit, you sell. And if it goes out of the limit you take a hit. Statistically, if you're buying stocks with the right parameters you will have more "winners" then loses.

>>1701933

>watches tastytrade and thinks he's a fucking options wizard

IV is high in FXE for a reason. it works till it doesn't.

>>1702057
Statistically it will work more than it doesnt, the high number of occurrences will weeds out the losers

>>1702062

it only works more than it doesn't (assuming your gains and losses exactly cancel on winners and losers) if the implied move turns out to be greater than the realized move. the studies that the TastyFags spout off stating IV is overstated were done on indexes and commodities, not individual stocks/ETFs or weird currency/market hybrid ETFs like FXE.

again, it works till it doesn't. sometimes IV is high for a reason.

>>1702066
it was done on individual stocks as well mate im making nice steady returns doing this and my BPR is much lower than having to buy stock and holding.

options sellers have at least a 6% edge of extra premium paid as well. So even if your a retard with enough occurrences you should still at least break even.

If I want to be a billionaire using options, what price range should I go for? Will above tactics work?

Oh boy look at that.

>>1702073

Thanks for sharing your strategy OP, I may end up using it soon.

As far as options go, have you made money trading 5min binaries? Have you used IC on shorter expiry like 7pm-11pm?

what do you think of signal sellers?

>ITT idiot /biz/ listens to the advice of a guy without sufficient options experience, training or capital to get Level 4 trading permissions.

>>1702344

feel free to enlighten us with your wisdom then, can't hurt right?

Can this be accomplished by using Nadex?

>>1702375
1. Every options contract in existence is a bet on the future direction of the underlying stock. Every one.

2. Options are short-term contracts.

3. Therefore every options strategy in existence is, by definition, a gamble on the short-term direction of a stock.

4. You can use multiple contracts to increase or decrease the risk by increasing or decreasing the conditions under which the options will be profitable.

5. However, every compound options strategy still requires a specific set of market conditions to occur to achieve profitability, and is therefore still a bet on the future short-term direction of the stock.

6. It is impossible to accurately and reliably predict the future short-term direction of any stock.

7. Any options strategy that outperforms the underlying stock does so by leverage. There's no free lunch. More reward = more risk.

8. Leverage isn't inherently bad, but coupled with a losing strategy -- such as trying predict the short-term future direction of a stock -- it will magnify your loses.

9. Margin interest is at least tax deductible; options premiums are not. If you're dumb or desperate enough to use leverage, at least use it wisely.

10. There are legitimate uses for compound options strategies for certain institutions and in highly specific individual cases, none of which applies to anyone on this board.

But what do I know, right? I was simply trained in options trading by the CBOE, earned Level 4 options trading privileges, and traded options (profitably, luckily) for years before wising up. Whereas OP got his options education from a blog website, doesn't even know what Level 4 approval is, and makes performance promises so ridiculous as to defy all credibility.

Caveat emptor.

>>1702431
Dayum

>>1702431
hooooooooooooolllllyyy fgggggggggggggggggggggggggggK

>>1702431

Maybe you should test it with a small account. You might find you are a better trader than you ever were before.

>>1702335
don't because he left a lot of details out

>>1702431
TEACH US
>what do you trade
>how
>why
pls

>>1702560
>CBOE
If he is Level 4 then he is really good at what he does. I doubt he gives away info for free.

>>1699573
tldr short penny stocks?

>>1702431

Awesome, so it's basically gambling. you said you traded options yourself, what was your strategy?

and furthermore what do you see as the flaws in the strategy proposed by the OP? aside from the inherent risk that all options trades seem to have.

what do you recommend people on this board do with their finances? Robinhood trades, bitcoin, real estate?

I would think the ultimate goal of anyone looking to make money through this board is financial independence (no debt, sustainable living cost with minimum effort/time) How do we get there brah?

>>1702535
>Maybe you should test it with a small account. You might find you are a better trader than you ever were before.
It's not about being a "better trader" and it never was. Picking the short-term direction of individual stocks is a losing game. You might win a few times, but eventually the odds will catch up to you if you keep playing the game. Meanwhile, you're paying fees and commission at a rate of 2x-5x in the options game compared to the equities game. It's just not smart.

I understand the temptation of leverage is seductive to young investors. You feel like your capital is small enough that if you lose it all, so what? You'll just earn it back again. And if you win, you can achieve growth normally reserved for much larger players.

But that kind of thinking is a logical defect caused by failing to consider your long-term financial prospects and opportunities. One of the biggest assets any young investor has is time -- time to compound your investments safely over time. A dollar lost today on risky investments is actually $20 lost in the future.

I suppose I'm a hypocrite for warning people about options when I myself traded them in the past, and managed to come out ahead. Fine, then I'm a hypocrite. But I know that was one of the lucky 1-in-5 that came out ahead, and I don't pretend it was due to my incredible trading talents or skill. And I'd rather be called a hypocrite than see some anonymous namefag lead people down the garden path of a financial strategy that he neither fully understands nor is qualified to explain.

>>1699635
u cant day trade with robinfucked so whatever you gained you will lose the next day and regain the next day and etc

>>1702618

See now I know you're full of shit. You made 2 glaring mistakes.

When you're selling option spreads like this you're doing high probability trades. So the odds are in your favour. And the second mistake you made is saying the commissions you pay for options are 2x-5x compared to stock. It's actually the opposite.

Try again, and do a better job next time.

>>1702636
The only way to increase the odds of an options strategy is to trade return. Indeed, the only legitimate use of options (particularly compound options strategies) is to fine-tune risk to a degree completely unnecessary for most investors.

Options are a powerful tool. They can be used to increase risk or decrease risk, and do so with equal efficiency. But there's no free lunch. You ALWAYS offset risk with reward, regardless of which way you turn the dial.

Managing risk is important, but options are the wrong way to do it outside very specialized and unusual need cases. Most investors can and should manage their risk much more cheaply and efficiently with simple asset allocation decisions.

>the second mistake you made is saying the commissions you pay for options are 2x-5x compared to stock.
Ok, junior, how about you compare the trading fees, expenses and taxes of an options strategy to the fees, expenses and taxes of a long-term buy-and-hold diversified investment strategy and then tell me I'm wrong.

Unlike you, I've done both.

>>1702676

You already exposed yourself. You're just talking bollocks. I saw you in a different thread saying similar things and your lack of knowledge shone through there as well.

I also doing both. Go to sleep grandpa, your knowledge is out of date.

>>1702703

>>1699747
Here's were I saw you post before... just so everyone else can see.

>>1702710
You're awesome

>>1702616
>Awesome, so it's basically gambling. you said you traded options yourself, what was your strategy?
I don't want to go into the details lest it be considered an endorsement of the strategy or of options in general. Suffice it to say that in hindsight, I believe I was successful with options primarily because of the market conditions at the time. Those conditions do not exist today, and probably will never exist again in the future due to changes in exchange regulations.

>what do you recommend people on this board do with their finances?
I have no magical formula for investing success, and anything I told you will sound a lot like conventional wisdom: focus on the growth of your wages/salary, protect yourself with an emergency fund, live frugally but not monastically, invest your excess earnings (tax deferred as much as possible), and put your wealth into long-term diversified holdings in a composition consistent with your risk tolerance and goals.

>I would think the ultimate goal of anyone looking to make money through this board is financial independence (no debt, sustainable living cost with minimum effort/time)
Let's be honest. The ultimate goal of most people on this board is to find a SHORTCUT to these things, when one does not exist.

>>1702703
>I also doing both.
Apparently to the exclusion of your English homework.

>>1702710
Tremendous detective work, Sherlock. Since I used the same screenshot in both threads, it must have incredibly difficult for you to connect the dots.

The same namefag who made this thread showed up in that thread too. You might have noticed (if you bothered to read) that I said the EXACT same things to him there that I said here. So congratulations: you've now proved that I'm both consistent and correct in two different threads.

>>1702723
So I defiantly exaggerated what a 2 STD strangle return would be, you still haven't said how high probability credit options trades are the same if not worse than "loltrading" or pennymemes.

They are in fact better. Getting a 15% return a year is easy AF without putting even 50% of your account at risk.

>>1702335
>gambling ever
Rofl no ty
Binary anything is a waste of time and is a zero sum game

>>1702735
>So I defiantly exaggerated what a 2 STD strangle return would be
I'm not sure who "You" are since this is the first time your ID appears in the thread. Is this some form of 3D samefagging?

>Getting a 15% return a year is easy AF
Then go do it. You're completely full of shit, as every scientific and academic study of trading has found. But no one cares if you lose money except you.

If you think you have the secret to beating the market, then go trade it. Something tells me your compulsive desire to post about it here is proof that you don't. But winning is the ultimate validation (see pic in >>1702431 in case you want to know what winning means) so go prove me wrong.

>>1700760
this seems like a paradox to me.

> by listening to you telling me to not listen to /biz/ then i'm actually listening to /biz/ but you said to not listen to /biz/ an... system error!!! BOOOOOOOM

>>1699582
coping pussy

>>1699573
I would like learn more about options. Is there a specific time of the day you need to be working when it comes to options? Also how much money at a minimum is required to make it worthwhile?

>>1702781
Tbh 10000$

>>1702794
I see

>>1702760
I meant more the collective voice of /biz/ which is retarded as hell. There are a few people here who are actually useful (see above).

Sadly if /biz/ was a democracy we would be make South American tier financial decisions and whoring ourselves to /fit/ for protein to survive the winter because 95% of our user base is fucking retards.

>>1702344

>>1702431
Thank you based anon

I have no idea what any of these terms you use mean- what is a good book to become familiar with options/futures trading terminology?

>>1702749
This.

Also when I was looking into options to see how they worked I noticed the sheer amount of shill sites designed specifically to get the average idiot trading options so the broker can rake in more commissions. Take TastyTrade for example, they are not even subtle about it with quotes like 'trade small and trade often'. A lot of shill site will claim that they are 'not affiliated with any trading platform', they are liars.

To get options to work, you need to:
- beat the other side of the trade it IS a zero sum game
- beat the risk free interest rate (US 10 year gvt bond return around 2.4% now)
- beat the RAKE: say the broker charges a buck per contract and the contract is a 100 bucks that's another 1%

I'm highly skeptical of the long term viability of option trading. Sure you will find a lot of winners that beat the market in the past year but what you don't see are the corresponding losers on the other side. They are not bragging about how their account got blown up.

For people insisting on options I would recommend a thorough study first and playing only with money you don't need. Also define your strategy before hand and backtest it first on historical data, like what would have happened in the last 5 years.

>>1703369

Let me break down a couple of very simple concepts for you and anyone else here who might be skeptical.

Lets take a look first at buying an option which is currently above the stock price. When you buy that option you are then hoping that the stock price rises and that it does it before the option expires. That sounds hard right? It sounds difficult, you have to be right on a couple of things, time and the direction. I mean it sounds more difficult to me. But I'll let you decide.

So on the other side. Imagine you are the seller of that option. For the seller it must be easier. Right? I mean that kind of makes sense. If it's hard for one side, it must be easier of other other side. The seller can just sit there and the market has to come and beat them directionally by the stock price rising and it has to do it before the option expires.

This is why selling premium works.

>>1699618
Can't someone else buy your puts and calls, therefore forcing you to hold till the last day? I assume the way to "close out" at 25-50% would be by buying up your own contracts. Can't someone else just snipe your contracts from you? Esp if it's going the wrong way

If you're pro can you make a twitch stream of you trading...

Bumping for compounding interest

>>1704035
you just gave me canceritus