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Tom Preston Says Every Options Trade Comes Down to Theta and Delta

NowPress play to follow along0:00 / 12:09
Chapters7 segments · tap to seek
ticker lesson

Breakdown

0:00lesson

Super bear vs regular put spread

  • Super bear inverse of super bull
  • Short call spread offsets put spread cost
  • Max risk 516-518
  • Credit vs debit for risk management
1:35lesson

Theta and delta metrics for trades

  • Theta 0.57 per day
  • Delta -18
  • Four legs trade
  • Super bear vs regular put spread
3:34lesson

Risk defined strategies and compliance

  • Low risk is subjective
  • Risk defined strategies like put spreads
  • Compliance reminders
  • Start with low risk trades
5:19lesson

Risk assessment and personal factors

  • Risk depends on age and income
  • Start with single point spreads
  • Utility curves for risk return
  • Mechanical profit taking
7:11lesson

Rolling positions at 21 DTE

  • Roll to next month if IR is high
  • Gamma risk past 21 DTE
  • Take profit at 10-25%
  • Mechanical profit taking habit
9:04lesson

Gamma risk and profit targets

  • Gamma spikes in second half of trade
  • Take profit at 50% target
  • Avoid gaps on expiration
  • Roll to next month
10:52lesson

Market environments and trade rules

  • Trade rules depend on environment
  • Volatility risk increases past 50% profit
  • Roll to next month if not hit 50%
  • Back testing tools available

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