Smarter Trading

David Settle — Implied volatility is overrated - Options trading framework

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Hello everybody, our guest today is David Settle. David started in the investor education world in 2004 with Investools. He’s coached hundreds of individuals on how to invest and trade the stock, options and forex markets and he currently holds a CMT designation.

In this episode we dive into David’s options trading process and how he uses a top down market posture approach to inform his market bias and trade decisions. 

We discuss some contrarian views David holds about selling options that I really enjoyed hearing as a fresh perspective. 

We then get into some very practical advice on a lot of topics like: being willing to lose on trades, not getting attached to trades, selling options, volume profile, trading earnings, VIX term structure, and a whole lot more. 

Please enjoy this episode with David Settle.

Key learning points

  •  Don't get so attached to trades by keeping size small
  •  Know how much you are going to lose and be willing to lose it
  •  Directional strength using relative strength
  •  How David uses volume profile to spot opportunity
  •  High implied volatility stocks are high IV for a reason
  •  Let the market posture dictate how bullish or bearish you should be
  •  High probability trades equal high risk trades
  •  No one single strategy works all the time
  •  Every single strategy or setup has benefits and drawbacks
  •  How David uses VIX Term structure to gauge market expectations

    • Learn more & connect with David

    • Follow David on Twitter, LinkedIn, Facebook, YouTube
    • Visit Davd's website here

      • Learn more & connect with Evan & the Trade Risk

      • Browse the Smarter Trading podcast catalog for this episode's show notes and check out past guests
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        • Show Notes

        • 0:00 - Introduction
        • 1:45 - David’s background coming up in the 90s and investing
        • 5:50 - Advice to new traders starting out; make small trades; 
        • 9:05 - David's technical analysis approach to markets
        • 14:15 - Stock market sectors: weightings and rotation
        • 18:40 - What David looks for in directional trades
        • 21:45 - Why implied volatility is overrated
        • 28:45 - Managing a portfolio during changing market conditions
        • 34:00 - No one strategy or setup works all the time
        • 41:20 - The importance of VIX term structure 
        • 46:10 - Successful trading is about freedom to do what you want to do
        • 50:30 - Directional trading versus time based options trades

          • If you enjoyed this week's episode, we would really appreciate a rating and review on Apple Podcasts so that we can reach more traders and bring on more great guests.

          Please keep in mind, all opinions expressed by guests are solely their own opinions and do not reflect the opinion of Evan or the Trade Risk. This podcast is for informational purposes only. Please review our complete disclaimer which applies to the contents of this podcast.

          Thanks for listening!

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