Options Boot Camp

Options Bootcamp 25: Using Options in Retirement Accounts

Basic Training: What can and can't you do with options in a retirement account. Retirements accounts do not let you use margin. Stick to the covered calls.

Mail Call: Listener questions are filling up our inboxes

• Question from Aman16 - Where does the "Iron" part of Iron Fly and Condor originate from?
• Question from Tim Phillips, Boston, MA - What is your referred way to express a near-term bullish outlook on a stock? Write an ATM or near ATM put or use a stock replacement strategy (deep ITM call)?
• Question from T_BO - When should I use a stock replacement strategy vs. call or call vertical?
• Question from Anaz9 - If I buy 1 ATM, sell 2 OTM calls in a ratio spread, how is the margin calculated on the naked portion? Is it the same as selling naked OTM?

Options Bootcamp 25: Using Options in Retirement Accounts

Basic Training: What can and can't you do with options in a retirement account. Retirements accounts do not let you use margin. Stick to the covered calls.

Mail Call: Listener questions are filling up our inboxes

Basic Training: Alternative Income Strategies: Writing covered straddles vs. covered calls. What are the benefits of writing covered straddle vs. calls? What are the drawbacks? Remember your synthetics: Covered straddle = short two puts.

Some additional pros and cons of this strategy.

Mail Call: Listeners Take the Mic

• Comment from Ronald Yuravich: I heard your podcast of the Option Boot Camp episode talking about straddles. I don't like straddles because I would have a gain on one side, but it didn't cover the loss on the other side. I prefer strangles better, but only when vol is high, like in 2008. On September 15 I placed a trade on XOM after I got home from work that would be placed for the opening of the next day. I bought 3 JAN 09 90.00 strike calls and I bought 2 JAN 09 45.00 strike puts. XOM was trading around 65.00 a share at that time. The next morning when the markets had opened, I checked to see if my trades were placed, and they were. I was watching Bloomberg around 11:00 AM and saw that XOM was trading around 58.00 a share. I went online and closed the put side for an 18% gain. Later, when I was at work I received a text message that told me that my call side was in money, so I went online and sold the call side for a 34% gain, altogether I made 42% in less than a day. Ron
• Question from Theodore Roland - To what do the hosts attribute the rise in popularity of the VXX ETF? How can an ETF based off the implied volatility of the VIX be such a popular product? Do you think retail traders should be using options on this product versus the actual VIX options?
• Question from Alex K- What is a risk reversal and when should a trader use this strategy?

Basic Training: Alternative Income Strategies: Writing covered straddles vs. covered calls. What are the benefits of writing covered straddle vs. calls? What are the drawbacks? Remember your synthetics: Covered straddle = short two puts.

Some additional pros and cons of this strategy.

Mail Call: Listeners Take the Mic

• Comment from Ronald Yuravich: I heard your podcast of the Option Boot Camp episode talking about straddles. I don't like straddles because I would have a gain on one side, but it didn't cover the loss on the other side. I prefer strangles better, but only when vol is high, like in 2008. On September 15 I placed a trade on XOM after I got home from work that would be placed for the opening of the next day. I bought 3 JAN 09 90.00 strike calls and I bought 2 JAN 09 45.00 strike puts. XOM was trading around 65.00 a share at that time. The next morning when the markets had opened, I checked to see if my trades were placed, and they were. I was watching Bloomberg around 11:00 AM and saw that XOM was trading around 58.00 a share. I went online and closed the put side for an 18% gain. Later, when I was at work I received a text message that told me that my call side was in money, so I went online and sold the call side for a 34% gain, altogether I made 42% in less than a day. Ron
• Question from Theodore Roland - To what do the hosts attribute the rise in popularity of the VXX ETF? How can an ETF based off the implied volatility of the VIX be such a popular product? Do you think retail traders should be using options on this product versus the actual VIX options?
• Question from Alex K- What is a risk reversal and when should a trader use this strategy?

Basic Training: Getting to know the fundamentals

• What is a Straddle? Why would you want to use it?
• Straddle pros and cons.
• Iron Butterflies and Iron Condors are straddles and strangles with protection.
• Gamma scalping is the only way to really make long straddles profitable over the long run.
• Exiting straddle positions is difficult to do effectively. Using straddles pre-earnings

• Scammers love to pitch straddles, saying "Make money in any market condition." Be careful.

Mail Call: Even bootcampers get mail privileges.

• Question from Alan Utchins, Baltimore, MD - I read with great interest the recent article about options trading in the New York Times. The article seemed to contradict everything you've discussed on this fine program. They highlighted several studies that they claimed prove that most options traders lose money. What is your response to this? Is this essentially a hit piece on the options market or does this author have some valid points?
• Question from Optrader - What books would you recommend about options trading (aside from Mr. Passarelli's, of course)?

Basic Training: Getting to know the fundamentals

• What is a Straddle? Why would you want to use it?
• Straddle pros and cons.
• Iron Butterflies and Iron Condors are straddles and strangles with protection.
• Gamma scalping is the only way to really make long straddles profitable over the long run.
• Exiting straddle positions is difficult to do effectively. Using straddles pre-earnings

• Scammers love to pitch straddles, saying "Make money in any market condition." Be careful.

Mail Call: Even bootcampers get mail privileges.

• Question from Alan Utchins, Baltimore, MD - I read with great interest the recent article about options trading in the New York Times. The article seemed to contradict everything you've discussed on this fine program. They highlighted several studies that they claimed prove that most options traders lose money. What is your response to this? Is this essentially a hit piece on the options market or does this author have some valid points?
• Question from Optrader - What books would you recommend about options trading (aside from Mr. Passarelli's, of course)?

Options Bootcamp: Exit Strategy

Basic Training:

Why is it so important to have an exit strategy? What are the rules of thumb when closing out positions? Should you be more aggressive when closing out long or short positions? What are the rules of thumb regarding when to roll you positions vs. closing?

Mail Call: Boot campers have so many questions.

Question from Teddy Z: Mark - Love the show! I've listened to every episode. I think I'm getting a handle of this stuff now. Just wanted to ask - What do you guys think about ETF options? Are there any you prefer over others? Perhaps that's a good topic for a future show.

Question from Alexander Gustaffson, Stockholm, Sweden: Guys, just want to let you know that you have a big following in Sweden. Maybe you should plan a live show in Stockholm one of these days? My question regards single stock futures. They are very popular in Europe but don't appear to have caught on very much in the U.S. I wonder why that is? Can you discuss the hedging of option positions with single stock futures - the pros & cons? Thank you!

Options Bootcamp: Exit Strategy

Basic Training:

Mail Call: Boot campers have so many questions.

Question from Teddy Z: Mark - Love the show! I've listened to every episode. I think I'm getting a handle of this stuff now. Just wanted to ask - What do you guys think about ETF options? Are there any you prefer over others? Perhaps that's a good topic for a future show.

Question from Alexander Gustaffson, Stockholm, Sweden: Guys, just want to let you know that you have a big following in Sweden. Maybe you should plan a live show in Stockholm one of these days? My question regards single stock futures. They are very popular in Europe but don't appear to have caught on very much in the U.S. I wonder why that is? Can you discuss the hedging of option positions with single stock futures - the pros & cons? Thank you!

Options Bootcamp 21: Playing Defense

Basic Training: Playing defense with options: it’s very important right now!

• Basic Defense: Protective Puts (full overview in Ep. 3)
• How do you hedge your position with protective puts?
• Intermediate Defense: Put Spreads and Ratio Put Spreads.
• Covered Calls - (full overview in Ep. 4) How do you generate income with a modest hedging impact?
• The Power of the Collar: combining the put and the call into a beast of an option. This is the favorite defensive strategy of most financial advisors who use options.
• The pros/cons of repeatedly doing zero cost collars.
• Volatility Defense: VIX Options/Futures. The myth of VIX's perfect inverse correlation- there are problems with relying on volatility as your only hedge, i.e. black swans, days when VIX outperforms, etc.
• The pros/cons of direct defense vs. indirect defense.

Mail Call: Hey recruits, what do you want to know?

• Question from Tina K. - When (if) should I consider volatility products as a hedge?
• Question from Mr_Zen - Can you explain the difference between iron condors and iron butterflies?
• Question from Alan O - What do the drill instructors think of the Minis so far? Are they worth exploring for basic options traders?

Options Bootcamp 21: Playing Defense

Basic Training: Playing defense with options: it’s very important right now!

Mail Call: Hey recruits, what do you want to know?