Options Boot Camp

Basic Training: A Review of How to Protect Your Profits

• Easiest method: Buy a 2-3 month put ATM or slightly an OTM put. Protect just those gains.
• What do you do if you have a broad portfolio?
• Hedging Rule of Thumb. Expect to spend about 2% of your portfolio for effective 3-6 month protection.
• How do you reduce the cost of protection?
• Buy a spread instead of an outright put, set up a collar, or set up a collar with a kicker.

Mail Call: It's time for listener questions

• Question from Ariell - Why should I ever buy puts? I can use a stop order in the stock for free and then put that extra capital to work in my trading account. By my math using stops instead of puts can boost your account 5-10% per year. That's a lot of cheese.
• Question from S_Warz - Do you trade options through dark pools
• Question from Thankfulness - Do you have dark pool access?
• Comment from H. Schwartz‏ - Who said option traders don't celebrate holidays!
• Question from L. Penguin - I have a question for the Options Bootcamp. I'm a new options trader and I want to buy a LEAP call because it looks like the stock is going to go to up in the next 12 months, but I don't want to commit yet. I also want to generate income while I hold that position. What are your thoughts on selling the call while I have the leap? Also, this stock has an attractive dividend that I'd like to capture. Is this even possible? Interested in your thoughts, thanks!...I was thinking about buying a deep in the money call for the LEAP, and then depending on where the stock is trading at the time, sell closer to the money.

In this episode, Mark, Dan Passarelli and Jill Malandrino take on listener questions.

Options Drills: Today's topic was inspired by this listener question:

Question from MarkLitwin: How do you lose money in options in the most effective way?

• Don't by ATM straddles
• Don't load up on far OTM options because they're cheap
• Don't trade earnings
• Be careful with trading weeklies
• Watch out when selling options going into weekends or holidays

Mail Call: Listeners take over

• Question from ejh4isu: IF I buy/sell a vertical on SPX (or any equity stock for that matter) and hold until expiration, and SPX settles between the strikes, what happens? Example: sell 2395/2400 and SPX settles at 2397.
• Question from Darqane: Assigned on short SPX puts means getting long the underlying? But how does that work if it's cash settled?
• Question from Lesnod: How do you get out of the straddles? One side of a straddle is always a loss correct?
• Question from Bobster: Can you trade options outside of U.S. trading hours?
• Question from ejh4isu: Let's say you're short naked a bunch of puts and the trade goes against you, and you don't have the money to pony up? What can your broker do?
• Question from BULZEYE7: Are options worth it for day-traders? Or just for swing-traders?

Mark, Dan, and Jill were all in the Options Insider studio to record this session. Education, and hilarity, ensued.

Options Drills: What are options trading ideas that an active stock trader can use in their portfolio?

• Getting paid to take on risk, cash-secured put
• The wheel trade
• Stock replacement strategy; what about using LEAPS?
• Using a diagonal spread to generate income

Mail Call: Fall in for listener questions and comments

• Question from Tiim: Why isn't it standard or maybe required to let people close out shorts for free below $.10?
• Question from USA Patriot: What is ADV??
• Question from Richard D: Are there any trades that if you did not have to pay brokerage fees would be excellent types of trades? I recently have been given the opportunity to trade options and equities for a near zero trading costs for about a year. I had in the past found some multi-leg spreads or underlyings with a really low prices unworkable because the trading costs made the potential gains or expected value too low. Thank you for your time and for the great shows you consistently point out! Best, Richard
• Question from Ascentaa: What can happen to the current options being held of KITE which is acquired by GILD and is being delisted?
• Question from Yieldhawk: What is the biggest size one could buy in options? If one had a long position of $1B and want to hedge w $10 million worth is that ok?
• Question from Lonesome: Could you explain Theta and how it helps/hurts options traders? Should anyone ever buy OTM options?
• Question from Butcherboyz: What options trading strategy would you say is best suited to people with absolutely zero knowledge of options? Thanks.

Mark, Dan, and Jill were all in the Options Insider studio to record this session. Education, and hilarity, ensued.

Options Drills: What are options trading ideas that an active stock trader can use in their portfolio?

• Getting paid to take on risk, cash-secured put
• The wheel trade
• Stock replacement strategy; what about using LEAPS?
• Using a diagonal spread to generate income

Mail Call: Fall in for listener questions and comments

• Question from Tiim: Why isn't it standard or maybe required to let people close out shorts for free below $.10?
• Question from USA Patriot: What is ADV??
• Question from Richard D: Are there any trades that if you did not have to pay brokerage fees would be excellent types of trades? I recently have been given the opportunity to trade options and equities for a near zero trading costs for about a year. I had in the past found some multi-leg spreads or underlyings with a really low prices unworkable because the trading costs made the potential gains or expected value too low. Thank you for your time and for the great shows you consistently point out! Best, Richard
• Question from Ascentaa: What can happen to the current options being held of KITE which is acquired by GILD and is being delisted?
• Question from Yieldhawk: What is the biggest size one could buy in options? If one had a long position of $1B and want to hedge w $10 million worth is that ok?
• Question from Lonesome: Could you explain Theta and how it helps/hurts options traders? Should anyone ever buy OTM options?
• Question from Butcherboyz: What options trading strategy would you say is best suited to people with absolutely zero knowledge of options? Thanks.

Mail Call: Fall in while your drill instructors answer your questions.

• Comment from Andrew McNichol - Big fan of your podcast. I appreciate how you start at square one and then walk listeners through every element of options and options trading. Thanks.
• Question from Tim D. - How high do rates need to be before I need to worry about rho?
• Question from Kraken1975 - Which of the Greeks do you utilize the most and why?
• Question from Meatz - Would you describe successful options trading as primarily singles and doubles or more swing for the fences home runs?
• Question from LCB - This is a challenging time to sell options due to low volatility. So does it stand that the opposite is true? Is it a good time to buy options? Particularly protective puts?
• Question from Mary - What's the shortest expiry available for plain vanilla options?
• Question from Ejh4isu - What qualifications do I need to work in the industry as a professional, i.e. as a trader? Is that a career path I'd even want to consider?
• Question from Privateer - Permission to speak freely sirs! Hi guys, Love the show and the entertaining military themed education. I've recently been learning about an exciting strategy called writing call options with CFDs. The claim by the teacher is that CFDs can leverage the return on premium selling by ten times, and reduce your break even significantly. I'm very invested in how this could apply in selling both legs i.e. covered strangles or straddles. Can you discuss the downsides, upsides and hedging strategies used in this scenario,and how to mitigate risk especially on the put leg. Sirs yes sir!
• Question from Axel D. - Why does open interest only update once a day?

Mail Call: Fall in while your drill instructors answer your questions.

• Comment from Andrew McNichol - Big fan of your podcast. I appreciate how you start at square one and then walk listeners through every element of options and options trading. Thanks.
• Question from Tim D. - How high do rates need to be before I need to worry about rho?
• Question from Kraken1975 - Which of the Greeks do you utilize the most and why?
• Question from Meatz - Would you describe successful options trading as primarily singles and doubles or more swing for the fences home runs?
• Question from LCB - This is a challenging time to sell options due to low volatility. So does it stand that the opposite is true? Is it a good time to buy options? Particularly protective puts?
• Question from Mary - What's the shortest expiry available for plain vanilla options?
• Question from Ejh4isu - What qualifications do I need to work in the industry as a professional, i.e. as a trader? Is that a career path I'd even want to consider?
• Question from Privateer - Permission to speak freely sirs! Hi guys, Love the show and the entertaining military themed education. I've recently been learning about an exciting strategy called writing call options with CFDs. The claim by the teacher is that CFDs can leverage the return on premium selling by ten times, and reduce your break even significantly. I'm very invested in how this could apply in selling both legs i.e. covered strangles or straddles. Can you discuss the downsides, upsides and hedging strategies used in this scenario,and how to mitigate risk especially on the put leg. Sirs yes sir!
• Question from Axel D. - Why does open interest only update once a day?

Your hosts for this episode are:

• Mark Longo, Founder, Options Insider Media Group
• Andrew Giovinazzi, Chief Education Officer, Option Pit
• Jill Malandrino, Global Markets Reporter, Nasdaq

Introduction Segment: What are Nasdaq's options education initiatives? Why are options and options education so important to Nasdaq going forward? Creating content for RIAs.

Options 101: Going back to the Basics

Basic Options Primer

• What are options?
• Basic options terms
• Why trade options instead of stocks?
• What are the Greeks?
• Why should traders care about volatility?
• Buying options versus selling options
• Start with paper trading
• Know where you are going to get out before you get in

Your hosts for this episode are:

• Mark Longo, Founder, Options Insider Media Group
• Andrew Giovinazzi, Chief Education Officer, Option Pit
• Jill Malandrino, Global Markets Reporter, Nasdaq

Introduction Segment: What are Nasdaq's options education initiatives? Why are options and options education so important to Nasdaq going forward? Creating content for RIAs.

Options 101: Going back to the Basics

Basic Options Primer

• What are options?
• Basic options terms
• Why trade options instead of stocks?
• What are the Greeks?
• Why should traders care about volatility?
• Buying options versus selling options
• Start with paper trading
• Know where you are going to get out before you get in

Options Drills: What is a calendar? How do we set them up for earnings? Strike/Month selection? Should we carry them through the event? When do we take off? Calendars vs. Diagonals?

Mail Call: Fall in recruits and get your questions asked.

With $VIX giving up the ghost - which products are you hoping will provide new sources of #Volatility for your #options trading?

• 33% - Crude Oil (WTI, etc)
• 20% - Metals ($GLD, $SLV, etc)
• 20% - FX (GBP/USD, etc)
• 27% - Indv. Equities-$TSLA, etc

VIX Limbo: Last Month 40+% of you said $VIX wouldn't break 9 in 2017. But recent events have us asking again: How low will $VIX get in 2017?

• Still Won't Break 9
• Won't Break 8.5
• Won't Break 8.0
• Lookout - 7 Handle in '17

Listner Questions and Comments: What is on your mind?

• Question from Lesnod - How do you get out of the straddles? One side of a straddle is always a loss correct?
• Question from Meatz - Would you describe successful options trading as primarily singles and doubles or more swing for the fences home runs?
• Question from Bulzeye7 - Are options worth it for day-traders? Or just for swing-traders?
• Question from Axel D - What does open interest only update once a day?
• Question from Mary - What is the shortest expiry available for plain vanilla options?
• Question from Lincan - My go to options strat is to sell covered puts on stocks that I want to buy then get paid to wait. If the stock comes my way I eventually trade out of it using a covered call. What do you think? Savvy or stupid?
• Question from Steve: With the VIX so low, I am not selling a lot of options anymore, because I am afraid that I will not collect enough premium. Am I thinking of this incorrectly?

Options Drills: What is a calendar? How do we set them up for earnings? Strike/Month selection? Should we carry them through the event? When do we take off?
Calendars vs. Diagonals?

Mail Call: Fall in recruits and get your questions asked.

With $VIX giving up the ghost - which products are you hoping will provide new sources of #Volatility for your #options trading?

• 33% - Crude Oil (WTI, etc)
• 20% - Metals ($GLD, $SLV, etc)
• 20% - FX (GBP/USD, etc)
• 27% - Indv. Equities-$TSLA, etc

VIX Limbo: Last Month 40+% of you said $VIX wouldn't break 9 in 2017. But recent events have us asking again: How low will $VIX get in 2017?

• Still Won't Break 9
• Won't Break 8.5
• Won't Break 8.0
• Lookout - 7 Handle in '17

Listner Questions and Comments: What is on your mind?

• Question from Lesnod - How do you get out of the straddles? One side of a straddle is always a loss correct?
• Question from Meatz - Would you describe successful options trading as primarily singles and doubles or more swing for the fences home runs?
• Question from Bulzeye7 - Are options worth it for day-traders? Or just for swing-traders?
• Question from Axel D - What does open interest only update once a day?
• Question from Mary - What is the shortest expiry available for plain vanilla options?
• Question from Lincan - My go to options strat is to sell covered puts on stocks that I want to buy then get paid to wait. If the stock comes my way I eventually trade out of it using a covered call. What do you think? Savvy or stupid?
• Question from Steve: With the VIX so low, I am not selling a lot of options anymore, because I am afraid that I will not collect enough premium. Am I thinking of this incorrectly?