You Can Try This Surprisingly Simple Options Trading Strategy For Monthly Income
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- čas přidán 24. 07. 2024
- Option Trading strategies for monthly income do not have to be complicated. In this video we give you the rationale behind a surprisingly easy and powerful options trading strategy that you can implement around earning reports. Register for our free intensive trading webinar smbu.com/seth
#MonthlyIncome #OptionsStrategies #OptionsTrading
SMB Disclosures www.smbtraining.com/blog/smb-...
I enjoy your ability to speak clearly and present the information in a way that's easy to follow and very engaging. Great content!
Thank you Chris. Keep working at the craft!
Well said
I agree. Teaching Options trading must be hard, it's hard for me to explain what I do. I bet he loves doing it xD
Thanks Seth. Finally tried this strategy for the first time yesterday with a small position to test on HPE (earnings Dec 1st) options, strike 11 and expiring next Friday, Dec 4th. I did also set up a follow-up order to yield ~15% gain and surprisingly, this order was filled today, within 24 hours of opening my positions!! I'm definitely a believer and fan of this earnings strategy.
Nice work! Starting out with small size is a great way to experiment with this strategy
I’m a Medical Doctor and I just learned about trading stocks before the pandemic. Because I could interpret the medical articles, I made decent money on the pharmaceutical stocks relating to COVID. Then I learned about options during my downtime through your videos and those of others. I’ve done 8 different options trades last week and won on all 8 making about $800 with $2,500 collateral. Learning today about the Greeks and in regards Theta and Vega here and it just added to my strategy that I’m back testing on ThinkOrSwim and making my own Excel stock journal. I record this data like I would a patient, very detailed. I’m pretty good and seeing patterns and trends in Medicine and it’s looking like in stocks as well. Hopefully this continues and want to thank you for continued tips! Thanks!
that's awesome!
This gentleman, and I use the term sincerely, is one, if not thee , most cogent, well spoken 'instructor', I have ever come across on the internet, regarding options.
Thanks Kevin! Seth knows his stuff
SMB Capital hey, what would you recommend for backtesting options strategies?
Yes, he explains the concepts very clearly but I wouldn't say he's unique. There are many other good CZcamsrs out there that are just as good and offer different perspectives. In my case, I prefer to listen to many different views in order to form my own strategy.
Just did this for NVDA. Bought it and immediately put in a close for 15% return. Got my 15% return! Bought it 11 May 20. It closed with 15% profit on 13 May 20!
Belated reply Ron. But excellenté
@@theccpisaparasite8813
When the move is great, like with Google this week, it is tricky, so a loss. But you have to expect some losses! However still hanging so maybe tomorrow will give me an opportunity to escape! But i don't want to chance assignment on Friday!
@@ronsexton3685 yeah my typical take is to sell premium right up to earnings and then dump right before them. Did that with Feb 5, put spreads on Amazon which I bought back today for next to nothing (100% profit is always good) and now we'll see what earnings bring. I'm mulling over buying an upside straddle on earnings but can't talk myself into it.
@@theccpisaparasite8813 Earnings Amazon are already out.
Good idea on selling premium out a little ways and approaching earnings possibly. Google and Amazon a bit tricky to play with. My GOOGL earnings play was a loser. It just moved way too much!
@@ronsexton3685 I only mess with stocks i understand or have traded awhile. For me that is tech stocks and, in this case Amazon. The one that surprised me was Qualcomm. I can speculate on the reasons for the reaction (delayed fall out from the Apple thing), but I believe they have radically overreacted. We'll see what tomorrow brings but I believe that some bull spreads are in order. I'll have to see. As a general rule, I don't like holding options through earnings. Maybe selling some skewed butterfly or something. Maybe I've got to look at some back testing.
This guy is right. One of the few long options trades that can be a good source of profit but the devil is in the details including choosing the right stocks. The concept itself of getting long volatility before the earnings announcement implied vol run up can be taken and tweaked much further but there is gold in this ground for the diligent. Good vid.
yea there was a lot missed in this video that was not covered, like the most important thing choosing the right stock
As always great content! Seth, what would be the percentage that we should be looking for a stock to move for the straddle to be profitable or it doesn't matter as long there is a movement? Thank you.
I ve watched some of your video ,the 2 hrs webenar . Your info appear to very credible. I m in the prosses of oppenning an trading acc. today and see if i can apply some of the strategy i think i ve learn from your video. It is not complicated but it must very clear in my head as i could take a position working agains me. Doing thing right is more important then being right.i ll keep watching your video as often as needed untill these stratagy become a reflex in execution
Seth, thank you so much. This is fantastic information. Can you do a video on how to handle an options trade that goes bad? When it happens to me, I freeze up. it would be nice to have some tools to be able to grab when that happens.
As a longtime option trader I honestly wish I can get a seat on your trading floor. I have been using this strategy for a while but pick solid companies making sure their EPS guidelines are consistent I am typically out few days before the earnings or when my 25% markup is in range.
I didn't realize other traders used the GTC order as well. My idea for using the GTC order was that as the stock moves throughout its range for the day, the position's price varies, so the platform/broker would sell the options when it hit my target profit.
This is a great strategy that can be very profitable leading into election. Direction of securities uncertain, election uncertain, covid uncertainty. This will be a play great. Awesome video.
thx Chris
Did the backtesting told you that 11 days till end is the best day for starting that strategy or is it just an example and the best time to enter differs heavily?
I just made 27% on this strategy last two weeks ago. It never made it to the week of earnings. IOT got very volatile the week before and blew right thru my planbed 15%, so I closed it out...in TWO DAYS! Great trade strategy. Thanks, Seth!
Not sure if you follow the Indian market. The stocks I would recommend are Asian paints (fut) and Pidilite Industries ( trades options). Have a look at the all time chart, stock price doubles every 2 to 3 years just because of sheer ROCE. how would you handle those to extract best output?
Fantastic trade idea with details. Many Thanks.
I'm really enjoying the video. Thank you for every good video. I have a question to ask you.
Should I understand that I take the Straddle position before the company's earnings are announced and liquidate my position immediately before the earnings announcement?
I employ a reverse strategy, as a seller of Iron Condors, with shorts at the same strike. But my profit taking strategy is the same...when Im at 25% of max profit, I look to cover. I enjoy your videos.
Are you doing options where there are no earnings coming up?
Hi, thank you for the video. Where can I find historical option price data for stocks? Is there a specific tool or website that you use? Thanks
Think or Swim offered by Ameritrade. They have historical data and simulated trading.
Thank you for sharing, i become a subscriber from your channel 3 weeks ago, and i love and fascinated with the strategy your are giving to your subscriber every week. Very well done video
Thx Rex!
Thank you Seth. Amazing video. You did incredible in explaining this trade.
Excellent strategy! One can also garner similar gains with Calendar (single or double) spreads too.
how does that work?
Informative video. Clearly explained. The Straddle is attractive only when closer to Earnings say 9 to 11 days away. In regular times, as you showed us, it just deteriorates with Time Decay rotting its legs (pun intended). Insightful. Thank you. I am still not clear as to the downside risk if the stock started going South in anticipation of bad earnings, rumors, etc.
if the stock goes south the put option gains value.
I think the downside comes if Iv of puts and calls didn’t raise as expected before earnings. Or may be if options are having wide bid ask or not priced correctly.
There can be any number of reasons. One big one is that often times the market has a good estimate on what the earnings for a company will be and so it gets priced in and IV doesnt do much. In other words the underlying price moves accordingly and the market doesn't perceive any surprise. Option sellers risk is low. This kills IV and This will kill your straddle. Its the uncertainty and likelihood of surprise that keeps IV increasing and your straddle alive.
Im confused if you exit before earnings are actually announced wouldn't you miss the move that occurs upon earnings being announced? or is the value in the assume volatility the price will have leading up to earnings. What if that volatility is already baked into the price because its a stock that usually beats earnings?
So many permutations of trading. As a novice, what hammers home is having the right trade to suit the right situation.
Thanks
The best thing I ever learned was "the pattern is the last thing you look at in trading".
Thanks for the video! I don't have a way look at option price history so I scanned for stocks that have had a big move immediately after earnings assuming that market makers would price in a "big" move for future earnings releases since these tickers have had "big" moves in the recent past. Here is my list: ROKU, TTD, AMD, COUP, CVNA, DKS, DRNA, FGEN, HAIN, IRBT, PLNT, RDFN, SFIX, SHOP, TSLA, ZEN.
Hi there, what kind of scanner program did you use?
Don’t forget we close before earnings. So it will be preferable to see stocks which instead make a big move before earnings
You want your straddle to expire the day after earnings and set your take profit at 15% with the hopes of it hitting that before earnings. Sometimes the 15% falls the day of
Thank you for all of your very helpful videos! Subscribed!
Wondering if selling short call and put outside would reduce outlay, but remain as effective. (Need to back test)
Hi, in this specific case, it wouldn't be equivalent because we are counting on (and positioned to benefit from) an increase in implied volatility. You would want to sell a call and a put just before IV is about to go down. Your potentiel max loss would also be higher because you are selling a call that may not be offset by the put...
Now, the optimum is to sell the straddle 2 days or 4hrs before the earnings, or once we reach 15% gains?
I wonder if you already capture gains with the call, why not close the call and leave the Put leg open for it to recover some losses?
Great video.
if it keeps going up you lose all your profit on the puts. so the key is to sell both once you get at or above 15% total on both
so is it best to buy when its closer to expiration or further away?
Man, that was a damn good lesson. I'll keep you updated.
Hello Seth, Awesome video
I've sign up your webinar training. What is MPST? Is that same as Pacific Standard Time? Typically how long is the training? Thank you
Message Processing Subscriber Terminal
Is there a trade to sell the large volatility run up?
I've been using this strategy for CPI data releases on SPX...But I use a strangle instead. The gains are insane and sometimes the losing leg will come back into profit like it did for me back on October 13th 2022 lol
Thank you for this! Great video on a great strategy
Should your expiration date be after earnings date and you just make sure you close it before release? Or should expiration be before earnings date? Thanks!
Great clear presentation.
what strategy would you use if you expect the ticker to decrease in value following earnings?
Does anyone have link to Seth's explanation of the Wheel Strategy using SPY?
You did show market prices. Not right side (bid or ask) ones. It’s very likely that buying at ask and selling at bid will cost those 15% or even more.
I"m trying this out in paper trading. I accidentally held it through earnings on CHPT. It looks like it may have worked to sell the put/call and hold through earnings to profit from the sharp move, because I got destroyed : ) Maybe that's not as consistently profitable as what you describe, but I was wondering if that is a strategy? I'm intrigued by options, and experimenting with paper money. Thx!!
Strategy is a Straddle around earnings. Simple straight forward
I wonder where I can obtain past options data for back testing.
nearly everywhere is teaching people to be options sellers to take advantage of time decay and over-exaggerated volatility which seems "Iron Condor" works. HOWEVER, for the past maybe 5 months, Iron Condor for ER not working anymore. Buy Strangles right before ER can make much more $. Have you noticed that? what do you think? Does that mean Black-Scholes Model not effective anymore? Or just last 5 months just a special time period.
Buying Calendar Diagonals is the only way to go. You have to have an edge and different Theta (Time decay) gives it to you right off the bat. Credit Spreads and Verticals in the same time chain is a losing proposition
Seth, your videos are so inspirational! thank you!
Thanks Greg1
Can you please share those stocks that are good for this strategy?
LOL. Hahaha
Seth,
Thank you for a fascinating video! Do you have any suggestions for stocks that might be suitable for a nonprofessional trader?
It would be also interesting to see as you mentioned if you buy straddle 11 regular days ( not prior to earnings)to exprire straddle price would drop approximately 50% 2 Days prior to expiration. What if you sell straddle 11 days to expire then what is the probability of you capturing 40 to 50 % primium captured of sold straddle 2 days prior to expiration
I watched this video several times and I still can't decipher if you make the trade 11 days in advance or 4 hours before the earnings report.
I just had this happen today. Stock did not move, simply bounced, but it did it fast and a Vega spike made my target so it sold both sides together 😂
Great content!
Thanks Hank!
Wow nice strategy!
Seth mentioned "a certain basket of stocks" and thats important. If liquidity isnt there the bid ask spreads can get far wider than your 15% profit target making this trade impossible.
@Galileo7of9 check out stock with high volume of daily trades
I was thinking the same exact thing.
Its more than simply liquidity that is required. In addition,, companies with a strong history of earning surprises is important. Think about it,, its the uncertainty that drives IV up going into an announcement. If there's little uncertainty then there's less risk to option sellers and the market prices everything in already.
Where can we get IV data? Just plot IV vs. time with an earnings date flag for each equity in question and see which ones consistently show the biggest increases in IV up to earnings? 🤷♂️
Did you ever do this?
@@christianmikha1172 they must be on a boat somewhere retired ;)
Most trading platforms have IV historical data.
I did it on last TWTR earning report, got success.
If you don’t mind me asking. What percent profit did you make on this trade? Also have you done this multiple times since?
@@Painfulwhale360 I got 15% exactly in 2 or 3 days. I did it 2 times, last and upcoming earnings reports.
@@senaol Do you have certain criteria for when you pick what company stock to do this strategy on? Obviously you would need a liquid stock
Would you mind sharing what software/tools are used for options backtesting?
TD Ameritrade has the Thinkorswim platform that allows you to practice using Paper Money, where you can enter simulated trades.
DAGenao I could be wrong but I hope prop firms would use a more decent tool to do back testing. Yes TOS has paper trading, OnDemand and ThinkBack but those methods are manual and would be time consuming for creating large backtesting results.
@@MrScalius as far as i know some big firms use the tradeideas robot. But its not free
@@MrScalius
You can back test entire trading strategies in TOS. Its very powerful,, just have to learn how.
@@scottsmith4145 do you have any resource you could share?
I liked very much does travel trading strategy for earnings is it possible if you can send me the basket of stocks that really qualifies for this strategy I will appreciate thank you
Thx Seth. Love your shit bro!!
Cheers for this, I've been looking for "options for income" for a while now, and I think this has helped. Have you ever come across - Winoorfa Option Olegroson - (do a search on google ) ? Ive heard some super things about it and my partner got amazing success with it.
SMB, would it be accurate to say that these trades aren't working right now (May 6) since IV has been decreasing since the late March (so far) bottom? I ran some simple back tests w/ AMZN, AAPL, and SHOP and none were profitable. Typically wouldn't IV be rising into the event which is needed for the trade to work? Appreciate the video though. In normal times, worth trying.
yea these so called gurus ALWAYS leave plenty of info out so it doesn't work on a regular basis. smh
Seth is such a zaddy
Excellent!
Great video!
You mentioned basket of stocks feasible to this strategy. So... Where is other ones?
Hey seth. Im Kenneth and Im giving you an update with my bread and butter strategy I have been green for the past 4 weeks now. I dont make money every day but my equity curve is going up.
What strategy are you using?
rahsta106 he just told you! He is selling bread and butter...
At 12.11 you mention that the trade is 16 points up but really I see the trade is only 11 points worth, am I missing something?
Excellent video. Thank you.
Good video Seth. Jim C
thx!!
Can i intern for your company? Ill work for free as long as i get to learn..I walk right by your building on 5th Ave. almost every day. When i do i always look and think man i wish i was up there making money and learning the ins and outs. But thanks for taking the time to make these vids..
OK, I didn’t hear what the maximum profit would be with this straddle? It sounds like it’s unlimited if the stock goes up really high? And the other question is here putting at risk $1000 for a week. And your profit is very small compared to that outlay it doesn’t seem like it’s the most promising strategy. $100 in a week?
How does 4 hours before earnings work? I thought you can only trade options during market hours, not 24/7 and earnings result is released either pre market or after market hours
Thanks
Welcome
Like the way you explained. But can you make more interactive so it will be easy to understand. BTW...l like the strategy. I will give a try
I did this strategy on alibaba but only a call option 1 week before earnings. On the day prior to earnings, my call is 70% up..... i waited the next day for the earning to come out. I ended up break even lol
Didnt he said to sell the option before the earnings come out?
Straddles are good for earnings because as Ive learned from real experience,, it doesnt matter what a companies earnings are,, ive seen stocks sell off with spectacular earnings. No explanation at all. Its critical to be direction neutral.
Options trading sounds like an alien language
This guy sucks at explaining this tbh
@@Lestergreen77 These videos are not for newbies. It is for people that already have a deep knowledge of options
you never gave the list of backtested stocks for this earning trade strategy as you mention in the beginning of the video .
That is proprietary information. Did you really expect to get it free of charge?
What about IV crush?
You needed to use the cycle that included the earnings release to analyze how earnings impact the options on the Friday AFTEE the earnings release.
that's not the point of this video though, since he closes before the release. he's got another video for that trade
So the idea is that you open a straddle where you go ITM if it goes done below the trike price or above the strike price. Then select an exp date near an earning report expecting the stock to move one way or the other creating a win?
but isn't this strategy dangerous in highly volatile times like this?
What is the process of visiting your midtown office and also to become a trader in your company? I think i have a skill and potential to make you money and make myself money also
Find the contact on our website and you can reach out and let them know you'd like to sit on a training session in the office
Got a discord?
Wow.😌🙏🏻
This is a great strategy! I was successful literally 17 trades in a row doing just this. Just be careful that you choose the right expiration date. I picked the wrong one once and got KILLED.
I've been entering these trades about 4-5 weeks from earnings date, sometimes selling within a week (once the very next day). What time frame do you suggest? Is this too much time? Not enough time?
With 15-20% OTM combo, the profit would be 50%.
Did you ever try this?
@@christianmikha1172 No, as this is not a strategy I use. However for the conditions explained in this video 15-20% out of money options would bring more yield.
6:16
Their site offers a free 2 hour options training session .I just made the mistake of listening to it. Or, at least trying to listen to it. I gave up after 20 minutes since those 20 minutes were just a pure sales pitch telling you how great they are and that you should sign up with them. The winney guy giving the presentation must have made the same few points about 15 times, over and over.
Utter waste of time.
This video is great, but realize their 2 hour seminar is really a 40 minute seminar with 80 minutes of advertisement for the firm trying to sell you a $2,000 program. So just go into the seminar with your eyes open. The 40 minutes is very informative however.
🍺🍺🍺🍺🍺🍺🍺
I tried your dumb suggestion for trading SPX. Made a little for 2 days and then lost big today. Agreed I probably didn't implement it with the same rigor as you would have but that still doesn't take away from the fact that trading that thing daily just doesn't make sense
all the trying to do is sell you a course he really tells you nothing significant
My personal opinion is that all these strategies will lose in the long run. If someone really has a winning strategy then why would they broadcast it on youtube vs capitalizeing on it for themselves. ONce everone knokw's the strategy then how would it work anymore?
it's the basket of stocks that is the critical factor
picking pennies before steam roller stradegy
The B in SMB stands for beggars
All this guy does is try to sell courses he really tells you nothing of importance
This was great, I been tryin to find out about "simple explanation of options trading" for a while now, and I think this has helped. Have you ever come across - Winoorfa Option Olegroson - (should be on google have a look ) ? Ive heard some super things about it and my mate got amazing results with it.