Options Boot Camp

Options Bootcamp 55: Going Naked in IRAs

Basic Training: Using Options in an IRA Account. Can you trade options in a retirement account? What are the limitations? What strategies can you utilize? What are the benefits of writing covered straddle vs calls? What is a stock replacement strategy? When should someone consider this strategy? Using options as an investment tool. What are any other investment strategy?

Mail Call: Listener questions and comments

• Question from Hector - Can I still trade mini options or are they no longer available?
• Question from Neil Cerone - What are the most common mistakes you see from "stock guys" who try to become "options guys?"
• Question from Steve: First off, I love ALL the shows. They fill my daily commute with wit AND wisdom. Thanks! Also, better late than never, it was great meeting you all at Benny's Chophouse back in Sept. I am one of the Lobster and Meatballs trainees (thanks to your shows). I had the pleasure of sitting right next to you and across from Uncle Mike as we devoured steaks on The Greasy Meatballs tab. That would be Extra pleasure as Sebastian was paying for them! However, I gotta tell you that you blew it big time the other day when trying to describe why a Leap Call Diagonal is called the "Fig Leaf". Brian named it the "Fig Leaf" because you are "kinda covered but not exactly" due to the curves in the profit graph. I think that makes perfect sense and is pretty funny to boot. Finally, on a side note I would love to hear Uncle Mike explain what is and what is not considered holding in the NFL. It boggles my mind to see play after play of inconsistent enforcement. I understand if that's out of scope, but what the hell I thought I would ask anyways. It is not too often you meet a Pro Lineman. Best regards - Steve aka "Hawkeye".

Options Bootcamp 55: Going Naked in IRAs

Basic Training: Using Options in an IRA Account. Can you trade options in a retirement account? What are the limitations? What strategies can you utilize? What are the benefits of writing covered straddle vs calls? What is a stock replacement strategy? When should someone consider this strategy? Using options as an investment tool. What are any other investment strategy?

Mail Call: Listener questions and comments

• Question from Hector - Can I still trade mini options or are they no longer available?
• Question from Neil Cerone - What are the most common mistakes you see from "stock guys" who try to become "options guys?"
• Question from Steve: First off, I love ALL the shows. They fill my daily commute with wit AND wisdom. Thanks! Also, better late than never, it was great meeting you all at Benny’s Chophouse back in Sept. I am one of the Lobster and Meatballs trainees (thanks to your shows). I had the pleasure of sitting right next to you and across from Uncle Mike as we devoured steaks on The Greasy Meatballs tab. That would be Extra pleasure as Sebastian was paying for them! However, I gotta tell you that you blew it big time the other day when trying to describe why a Leap Call Diagonal is called the "Fig Leaf". Brian named it the "Fig Leaf" because you are "kinda covered but not exactly" due to the curves in the profit graph. I think that makes perfect sense and is pretty funny to boot. Finally, on a side note I would love to hear Uncle Mike explain what is and what is not considered holding in the NFL. It boggles my mind to see play after play of inconsistent enforcement. I understand if that’s out of scope, but what the hell I thought I would ask anyways. It is not too often you meet a Pro Lineman. Best regards - Steve aka "Hawkeye".

Mail Call: Listener questions and comments

• Comment from Max_p24 - One of the best podcast for option trading. They have amazing Bootcamp for option beginners.
• Question from Brian Collamer - Back in October I sent this question and I see you ran with it in a couple of other shows: "You mentioned that when selling options the fastest theta decay occurs in the 45-30 day range. I thought that was only true for ATM options? Do OTM options decay the fastest at 60-70 days and then kind of flatten out?" In each show you had asked where I had seen/heard this. LiveVol blog and forum. Thanks for the great content! PS: Futures Roundtable needs to be twice a month IMHO.
• Question from Imbroglio - If I exercise a call option what happens - do I just hit a button and the stock hits my account? Or does it take some time? When do I actually get the stock? If I want to collect a dividend do I need to exercise a few days early in order to get the stock in time to collect the dividend?
• Question from Angry Bunny - What the hell is a front spread? How does it differ from a back spread? Who the hell comes up with these names? They seem to make no sense.
• Question from Neal Tompkins - How do I know when an option is going to be less liquid? What are some good suggestions for dealing with less liquid options?
• Question from Jason Dague - I am long AAPL from about $99, and have a protective put on right now at $105 for July. When do you know whether to roll your put up? I am obviously down on the put by ~%70% from where I bought it in November.
• Question from Jay - If the market is really falling out of bed what are some good strategies to take advantage of that movement while also minimizing option decay?
• Question from Matt Dilks - Hi, I have just listened to Mark on Topstep trader, and missed the questions. But could you recommend which company/broker to get a sim/demo account to get to grips with trading options? Any advice would be greatly appreciated.
• Question from John D. - Hi, Love your show. You guys do a great job. Keep up the good work. My question...If I am looking at a pair trade (e.g. long Facebook, short Twitter), obviously I can do it by buying/shorting the stocks. I was trying to figure out if there is any way to effective do the same thing with options what the advantages might be, if any. I thought of doing a synthetic long/short, but did not see any advantage since I will be naked short an option for both names... but maybe margin treatment is different? Long call on one and log put on the other does not seem to make sense since I am pretty much guaranteed to lose the premium on both those positions. Is there another or better way to structure this type of trade using options? Thanks.

Mail Call: Listener questions and comments

• Comment from Max_p24 - One of the best podcast for option trading. They have amazing Bootcamp for option beginners.
• Question from Brian Collamer - Back in October I sent this question and I see you ran with it in a couple of other shows: “You mentioned that when selling options the fastest theta decay occurs in the 45-30 day range. I thought that was only true for ATM options? Do OTM options decay the fastest at 60-70 days and then kind of flatten out?” In each show you had asked where I had seen/heard this. LiveVol blog and forum. Thanks for the great content! PS: Futures Roundtable needs to be twice a month IMHO.
• Question from Imbroglio - If I exercise a call option what happens - do I just hit a button and the stock hits my account? Or does it take some time? When do I actually get the stock? If I want to collect a dividend do I need to exercise a few days early in order to get the stock in time to collect the dividend?
• Question from Angry Bunny - What the hell is a front spread? How does it differ from a back spread? Who the hell comes up with these names? They seem to make no sense.
• Question from Neal Tompkins - How do I know when an option is going to be less liquid? What are some good suggestions for dealing with less liquid options?
• Question from Jason Dague - I am long AAPL from about $99, and have a protective put on right now at $105 for July. When do you know whether to roll your put up? I am obviously down on the put by ~%70% from where I bought it in November.
• Question from Jay - If the market is really falling out of bed what are some good strategies to take advantage of that movement while also minimizing option decay?
• Question from Matt Dilks - Hi, I have just listened to Mark on Topstep trader, and missed the questions. But could you recommend which company/broker to get a sim/demo account to get to grips with trading options? Any advice would be greatly appreciated.
• Question from John D. - Hi, Love your show. You guys do a great job. Keep up the good work. My question...If I am looking at a pair trade (e.g. long Facebook, short Twitter), obviously I can do it by buying/shorting the stocks. I was trying to figure out if there is any way to effective do the same thing with options what the advantages might be, if any. I thought of doing a synthetic long/short, but did not see any advantage since I will be naked short an option for both names... but maybe margin treatment is different? Long call on one and log put on the other does not seem to make sense since I am pretty much guaranteed to lose the premium on both those positions. Is there another or better way to structure this type of trade using options? Thanks.

Options 101: Income Trade Adjustments

• An overview of income trades: Covered call, short put, short straddle, etc.
• What do we mean by adjustments? When to or not to adjust?
• Previous episodes that will be helpful: Options Bootcamp 41: Advanced Adjustments & Options Bootcamp 40: Trade Adjustments.
• Basic adjustments, partial adjustments and adjusting into spreads.

Mail Call: Listener questions and comments

• Comment from Dmitry Shesterin - @Options There is no V in the Greek alphabet, so how come Vega is considered a "Greek"? Who started this madness?
• Question from Brian Collamer - Do OTM options decay the fastest at 60-70 days and then kind of flatten out?? Great show, wish it was longer! Thanks, Brian
• Question from Charles Patterson - Is it accurate to describe delta as the probability of an option expiring in the money?
• Question from Rohan - Do you think it is viable for an active retail trader to become a professional retail trader using primarily the freely available tools from OX and other retail brokers? How viable is that in the current environment? Would I always be at a disadvantage from the pros picking me off? Is this just a pipe dream? How much would you say the average pro trader needs to make to be viable? Thanks again for all of the great programs you guys have put out for free.
• Question from AVG - I heard Dan Passarelli talking about Goldman telling people it's not worth it to sell S&P puts anymore. Do you guys agree with that sentiment?

Options 101: Income Trade Adjustments

• An overview of income trades: Covered call, short put, short straddle, etc.
• What do we mean by adjustments? When to or not to adjust?
• Previous episodes that will be helpful: Options Bootcamp 41: Advanced Adjustments & Options Bootcamp 40: Trade Adjustments.
• Basic adjustments, partial adjustments and adjusting into spreads.

Mail Call: Listener questions and comments

• Comment from Dmitry Shesterin - @Options There is no V in the Greek alphabet, so how come Vega is considered a "Greek"? Who started this madness?
• Question from Brian Collamer - Do OTM options decay the fastest at 60-70 days and then kind of flatten out?? Great show, wish it was longer! Thanks, Brian
• Question from Charles Patterson - Is it accurate to describe delta as the probability of an option expiring in the money?
• Question from Rohan - Do you think it is viable for an active retail trader to become a professional retail trader using primarily the freely available tools from OX and other retail brokers? How viable is that in the current environment? Would I always be at a disadvantage from the pros picking me off? Is this just a pipe dream? How much would you say the average pro trader needs to make to be viable? Thanks again for all of the great programs you guys have put out for free.
• Question from AVG - I heard Dan Passarelli talking about Goldman telling people it's not worth it to sell S&P puts anymore. Do you guys agree with that sentiment?

Basic Training: 2014 Year-in-Review/2015 Preview

• What option strategies worked in 2014: put credit spreads, IV overpriced throughout the year, "Wheel of fun."
• Things to learn from 2014 - Do not get married to a single strategy.
• Misperceptions of 2014 - VOL/VIX was cheap. Despite "low volatility" options volume was still very strong in 2014. Tempting to believe that OTM call buyer did well in this extended market.
• Fed tapering - When is it likely to happen? What is likely to happen in the market when the Fed tapers?
• Things to keep in mind for 2015 - It might be time for a smart hedge. The return of Rho. Volatility has a volatility. Exchange fragmentation will continue. Expand your horizons.

Basic Training: 2014 Year-in-Review/2015 Preview

• What option strategies worked in 2014: put credit spreads, IV overpriced throughout the year, "Wheel of fun."
• Things to learn from 2014 - Do not get married to a single strategy.
• Misperceptions of 2014 - VOL/VIX was cheap. Despite "low volatility" options volume was still very strong in 2014. Tempting to believe that OTM call buyer did well in this extended market.
• Fed tapering - When is it likely to happen? What is likely to happen in the market when the Fed tapers?
• Things to keep in mind for 2015 - It might be time for a smart hedge. The return of Rho. Volatility has a volatility. Exchange fragmentation will continue. Expand your horizons.

Basic Training: Futures Options vs. Equity Options

We've talked about how to use options to mitigate your portfolio risk, but many traders also rely on commodities diversification as a way to mitigate portfolio risk.

Futures options strategies: All of the options strategies we've discussed on this program in the past are applicable to futures options as well with a few exceptions

Covered call & protective puts both require underlying futures positions - something most traders prefer to avoid.

Most traders looking for diversification typically want bullish exposure to the underlying. Some great options strategies for this include:

• Stock/futures replacement strategy
• Vertical call spread
• Spreads with wings

Futures are useful for traders who want to establish sizable positions with a minimum of outlay

Options on futures can be useful for traders and asset managers who want exposure to alternative asset classes but can't or won't trade futures. You'll need a futures account to trade futures options - but if you use risk mitigated strategies such as spreads and don't get net short units and close out positions near expiration you don't have to worry about dealing with the underlying.

Mail Call: Listener questions and comments

• Question from Jim Horn: Hey boot campers! I keep hearing about a spread called a onebytwo. What the heck is that? Am I even saying it right? Great show. Thanks for educating poor slobs like me.
• Question from Tom Evans, St. Louis, MO: What does more volume futures or options? Also does one do more electronically than the other? If I'm looking to dive into one am I better off going with the futures or the options? Lastly can you clarify the difference between CBOE and CME and CBOT? They all sound the same to me.
• Question from Anon: On several of your programs you mention that it is important to understand the VIX cash level at a given SPX level. Can you please explain this further? As an example, what are the implications of a 12 VIX at 1800 vs. a 9 VIX at 1800? Likewise, how does a 15 VIX at 1800 compare?

Basic Training: Futures Options vs. Equity Options

We've talked about how to use options to mitigate your portfolio risk, but many traders also rely on commodities diversification as a way to mitigate portfolio risk.

Futures options strategies: All of the options strategies we've discussed on this program in the past are applicable to futures options as well with a few exceptions

Covered call & protective puts both require underlying futures positions - something most traders prefer to avoid.

Most traders looking for diversification typically want bullish exposure to the underlying. Some great options strategies for this include:

• Stock/futures replacement strategy
• Vertical call spread
• Spreads with wings

Futures are useful for traders who want to establish sizable positions with a minimum of outlay

Options on futures can be useful for traders and asset managers who want exposure to alternative asset classes but can't or won't trade futures. You'll need a futures account to trade futures options - but if you use risk mitigated strategies such as spreads and don't get net short units and close out positions near expiration you don’t have to worry about dealing with the underlying.

Mail Call: Listener questions and comments

• Question from Jim Horn: Hey boot campers! I keep hearing about a spread called a onebytwo. What the heck is that? Am I even saying it right? Great show. Thanks for educating poor slobs like me.
• Question from Tom Evans, St. Louis, MO: What does more volume futures or options? Also does one do more electronically than the other? If I'm looking to dive into one am I better off going with the futures or the options? Lastly can you clarify the difference between CBOE and CME and CBOT? They all sound the same to me.
• Question from Anon: On several of your programs you mention that it is important to understand the VIX cash level at a given SPX level. Can you please explain this further? As an example, what are the implications of a 12 VIX at 1800 vs. a 9 VIX at 1800? Likewise, how does a 15 VIX at 1800 compare?