Options Boot Camp

Basic Training: We present two choices for using options in lieu of stock:

Stock Replacement Strategy.

• How does it work? Examples include:
• An ITM leaps call purchase - requires premium over parity payment
• Selling a one month ITM put - for the more options savvy trader.
• By swapping out a LEAPS for an underlying, you get a much more preferable position from a Greeks perspective.

Stock Repair Strategy

Under the right set of circumstances, it can be very useful and practical. Appropriate for stocks that fall in value of 20-30%, that you feel within a few month can recoup half of it losses. How does it work?

Mail Call: Bootcampers get their questions answered.

• Question from M Higgins: My financial advisor is not a big fan of options. He keeps trying to steer me into annuities and life insurance policies instead. What do you guys of those products as investment vehicle instead of using options?
• Question from Mr. Anonymous: I've heard a number of options traders, including hosts on this network, use the term "legging" when referring to options trading. What does this term mean? Thanks for your help and for all of your fine options content. The Options Insider Radio Network is truly a unique options content destination for options traders.
• Question from T Biz: What do the drill instructors think of the potential jumbo/max S&P contract?

Basic Training: We present two choices for using options in lieu of stock:

Stock Replacement Strategy.

Stock Repair Strategy

Under the right set of circumstances, it can be very useful and practical. Appropriate for stocks that fall in value of 20-30%, that you feel within a few month can recoup half of it losses. How does it work?

Mail Call: Bootcampers get their questions answered.

Basic Training: The topic this week is margin

• What is margin?
• If I have leverage in my options, why do I need margin?
• Is it possible to not qualify for margin?
• Why do you need a cash account? What can/cannot you do with a cash account?
• What are some of the most common risks, mistakes or problems customers run into when implementing margin in their account?
• What are the benefits of portfolio margin over other, different types of margin?

Mail Call: Let our drill instructors answer your questions.

• Question from Jason Cruz, heyojayo: Would Bootcamp be able to detail the pros and cons of buying two 50 delta calls vs. one 100 delta call, or point me to an episode if there is one already?
• Question from Tad Briggs: What does the term "risk reversal" mean? What risk am I reversing? How should I use this strategy in my training?

Basic Training: The topic this week is margin

• What is margin?
• If I have leverage in my options, why do I need margin?
• Is it possible to not qualify for margin?
• Why do you need a cash account? What can/cannot you do with a cash account?
• What are some of the most common risks, mistakes or problems customers run into when implementing margin in their account?
• What are the benefits of portfolio margin over other, different types of margin?

Mail Call: Let our drill instructors answer your questions.

• Question from Jason Cruz, heyojayo: Would Bootcamp be able to detail the pros and cons of buying two 50 delta calls vs. one 100 delta call, or point me to an episode if there is one already?
• Question from Tad Briggs: What does the term "risk reversal" mean? What risk am I reversing? How should I use this strategy in my training?

Options Bootcamp 18: The Joys of Synthetics

Basic Training: Today's topic is Synthetics

• What is put/call parity?
• Example of put/call parity.
• What does it mean for your options trading?
• What are synthetics?
• What is a married put?
• Why knowledge of synthetics is important for successful options trading.

Mail Call: Fall in for listener questions.

• Question from EonJ: Does portfolio margin matter if I am just trading long verticals and ratio spreads?
• Question from Phil S., Santa Fe, NM: I attended an options seminar recently where they promoted the selling of credit spreads in Apple and Google. I'm still somewhat unclear on the concept however. What exactly is a credit spread and how does it differ from other spreads like straddles, call spreads, etc.? Thank you for your time. I just discovered your program and I'm looking forward to listening to your earlier episodes.
• Question from Ephram J.: I'm a CFP and I'm starting to add options to my asset mix. Does Sogotrade offer a platform and/or specialized tools for institutional/advisor customers?
• Question from Timtim409: What is meant by a "stock replacement strategy?"

Options Bootcamp 18: The Joys of Synthetics

Basic Training: Today's topic is Synthetics

Mail Call: Fall in for listener questions.

Options 101: The quintessential options debate -- buy options or sell them?

• Many options professionals lean toward "when in doubt palms out."
• Simplify the options universe into two segments of risk: directional risk and volatility risk.
• The use of delta and other Greeks when deciding or analyzing when to buy or sell options.
• Short premium pros and cons
• Long premium pros and cons

Mail Call: Recruits are asking a lot of questions.

• Question from Tim Nagerty:Mark and the other drill instructors have repeatedly stressed portfolio margin on this program, but I'm somewhat confused by this concept. Can the hosts explain the benefits of PM for an options trader? I have about $70k in my trading account right now. Is it worth it for me to transfer in the extra $30k to me the $100k limit to qualify for PM? Lastly, does SogoTrade/Wang Investments offer PM for its customers? Thanks, love the show!
• Question from Allison S., Spokane, WA: I thank you all for this wonderful program. Do you have any plans to take Options Bootcamp "on the road?" I'd love to meet you all in person.
• Question from Joey Beltran: I've heard the term "backspread" a few times. Where do it come from? What does it mean? How do you use them?

Options 101: The quintessential options debate -- buy options or sell them?

• Many options professionals lean toward "when in doubt palms out."
• Simplify the options universe into two segments of risk: directional risk and volatility risk.
• The use of delta and other Greeks when deciding or analyzing when to buy or sell options.
• Short premium pros and cons
• Long premium pros and cons

Mail Call: Recruits are asking a lot of questions.

• Question from Tim Nagerty:Mark and the other drill instructors have repeatedly stressed portfolio margin on this program, but I'm somewhat confused by this concept. Can the hosts explain the benefits of PM for an options trader? I have about $70k in my trading account right now. Is it worth it for me to transfer in the extra $30k to me the $100k limit to qualify for PM? Lastly, does SogoTrade/Wang Investments offer PM for its customers? Thanks, love the show!
• Question from Allison S., Spokane, WA: I thank you all for this wonderful program. Do you have any plans to take Options Bootcamp "on the road?" I'd love to meet you all in person.
• Question from Joey Beltran: I've heard the term "backspread" a few times. Where do it come from? What does it mean? How do you use them?

Options Drills: How to play earnings through options plays. There are two basic approaches to earnings trading: long premium and short premium.

• Long Premium - PROS: Advantageous because you essentially receive free or dramatically reduced gamma with little decay in the weeks leading up to earnings. CONS: All of that decay comes out, and more, after the announcement. Also, much of the movement in the underlying occurs after-hours and is unavailable to options traders.
• Short Premium - PROS: Higher probability of success, need a substantial move post-earnings to lose money. CONS: Doesn't collect decay until earnings event, potentially losses can be catastrophic can make it hard to sleep at night.
• How to analyze Greeks during earnings week.
• Different strategies to employ during earnings: Calendars, Straddles, Strangles & Butterflies

Mail Call: Our drill Sergeants show their softer side.

• Question from Stock Doctor: Why can't I trade options after hours? I'm missing most of the stock movement if I wait until the next open.
• Question from Timothy Stephens, Tulsa, OK: If I buy a 3-month ATM calendar spread prior to earnings, am I correct in saying that I'm net long vega and short gamma? If so, what type of earnings announcement would benefit me the most - an as-expected announcement where the stock stays at the ATM strike for my short gamma or a wildly unexpected announcement where the stock moves dramatically for my long vega? Which risk metric is king in the time spread equation - gamma or vega? Thank you very much for you insight and for producing this informative program.
• Question from Rich T: Does Sogo offer reduced commissions to close out short options trading for a nickel or less?

Options Drills: How to play earnings through options plays. There are two basic approaches to earnings trading: long premium and short premium.

• Long Premium - PROS: Advantageous because you essentially receive free or dramatically reduced gamma with little decay in the weeks leading up to earnings. CONS: All of that decay comes out, and more, after the announcement. Also, much of the movement in the underlying occurs after-hours and is unavailable to options traders.
• Short Premium - PROS: Higher probability of success, need a substantial move post-earnings to lose money. CONS: Doesn't collect decay until earnings event, potentially losses can be catastrophic can make it hard to sleep at night.
• How to analyze Greeks during earnings week.
• Different strategies to employ during earnings: Calendars, Straddles, Strangles & Butterflies

Mail Call: Our drill Sergeants show their softer side.

• Question from Stock Doctor: Why can't I trade options after hours? I'm missing most of the stock movement if I wait until the next open.
• Question from Timothy Stephens, Tulsa, OK: If I buy a 3-month ATM calendar spread prior to earnings, am I correct in saying that I'm net long vega and short gamma? If so, what type of earnings announcement would benefit me the most - an as-expected announcement where the stock stays at the ATM strike for my short gamma or a wildly unexpected announcement where the stock moves dramatically for my long vega? Which risk metric is king in the time spread equation - gamma or vega? Thank you very much for you insight and for producing this informative program.
• Question from Rich T: Does Sogo offer reduced commissions to close out short options trading for a nickel or less?