Smarter Trading

Sean McLaughlin — Options trading, implied volatility, & trading truths

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Hello everybody, our guest today is Sean McLaughlin, aka @chicagosean on social media.

Sean is the chief options strategist for All Star Charts and Senior Market Strategist at Trade Ideas. He’s been trading for over 20 years starting out as a prop trader during the late 90s, founded a hedge fund shortly thereafter, and since transitioned primarily to trading options.

In this episode we talk about the tech boom of the 1990s, some of the bad habits Sean picked up during those years, and also some of the similarities between those markets and the present day. 

We then geek out on options, and discuss Sean’s framework for placing option trades, how equity traders can start using options, gamma squeezes and a whole lot more.

Please enjoy this conversation with my friend, Sean McLaughlin.

Key learning points

  • Message volume on Stocktwits tends to get very loud at turning points
  • Level II quotes aren’t as telling and powerful as they used to be
  • 2021 markets do resemble the euphoria in the 1990s, just in smaller pockets, and not quite as widespread
  • Trading is really hard, the majority of people who attempt to make a living at trading cannot
  • The mechanics of trading is pretty easy, what’s hard is that your brain conspires against you to make it harder than it needs to be
  • Don’t quit your day job if you’re looking to full time trade
  • You need to find a strategy that fits your temperament
  • Starts with implied volatility for a stock before you actually place a trade
  • Options trading offers greater capital efficiency
  • Gamma squeezes, why they occur, and why they’ll continue to see them
  • The faster the markets get the slower Sean wants to trade

    • Learn more & connect with Sean

    • Follow Sean here
    • Visit Sean 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
      • Watch this episode live on our YouTube channel
      • Follow @evanmedeiros on Twitter
      • Follow @TheTradeRisk on Twitter
      • Join the Trade Risk's weekly newsletter

        • Show Notes

        • 0:00 Introduction and about the episode
        • 1:50 Sean’s background Stocktwits 
        • 5:40 Sean’s experience from the late 1990s prop trading
        • 4:20 Lessons and bad habits learned from the 1990s
        • 12:00 Similarities of retail traders and euphoria between 2021 and 1990s
        • 14:40 The truth about trading - it’s hard 
        • 21:10 The transition to trading options
        • 24:20 Delta neutral portfolios and option strategies
        • 31:15 Using implied volatility to decide when to buy or sell options
        • 39:20 Swing trading using options
        • 45:40 Gamestop, gamma squeezes, and market structure
        • 50:55 Book recommendations
        • 57:20 Successful trading and final advice to traders

          • 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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