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This 15-Minute Video Answers 4 Questions Every Options Trader Asks

NowPress play to follow along0:00 / 15:16
Chapters8 segments · tap to seek
ticker lesson

Breakdown

0:00lesson

Volatility spike — take advantage immediately

  • Volatility spike doesn't last long
  • VIX at 1665
  • 1660 not high IV
  • Don't wait for confirmation
  • Volatility contraction aggressive
1:47lesson

Market breath and volatility sources

  • Volatility expands with capital leaving
  • Check S&P 500 options
  • Look at orderly nature
  • Check dealer positions
  • Defense of 7700 in S&P
3:39lesson

Discipline vs. flexibility in trading

  • Rigid risk management
  • Flexible opportunity approach
  • Johnson & Johnson example
  • Risk-to-reward setup
  • Avoiding bad trades
5:21lesson

Rules-based trading and risk avoidance

  • Consistent signals for bad trades
  • Avoid idiosyncratic risk
  • Automate decisions in indexes
  • Selective in individual stocks
  • Check for upcoming events
7:33lesson

Managing butterfly trades

  • Butterflies are low probability
  • Take profits at 20% of max
  • Close if thesis is wrong
  • Roll or reestablish position
  • Low convexity, high risk
9:19lesson

Butterfly trade management

  • Take profits at 20% of max
  • Close if thesis is wrong
  • Roll or reestablish position
  • Low probability, negative theta
  • Waste 50-100 bucks
11:22lesson

Account metrics and focus

  • Focus on buying power
  • Net liquidity grows over time
  • Maintenance margin not critical
  • Settled cash for stock trading
  • Buying power determines capital
13:28lesson

Account metrics and focus

  • Buying power is most important
  • Net liquidity grows over time
  • Maintenance margin not critical
  • Settled cash for stock trading
  • Buying power determines capital

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