Hi Chris, great explanation. Currently I trade The Wheel strategy, can you tell me what you think of this strategy?
I was assigned on all my positions and stocks have dropped significantly on these positions leaving me with little premium. Yesterday I was planning to buy a bull put spread(is that the right name?) TSLA, selling a put at a strike price below current stock value and buying a put little bit further out of the money. But in the end I couldn't sell.
The Wheel strategy, big fan of Markus H? Pay special attention to the delta when selling cash covered puts; it is the probability in % that your short option ends ITM and so you will be assigned; e.g. the TSLA Jan 21, 2022 1000P has a delta of -0,22 (nov. 3th) and thus a probability of 22% for ending up ITM; this istoo high to be comfortzable, unless you have 100x$1000 in cash available :-). Delta should keep you out of trouble and let your wheel turning without being stucked in low premium far OTM short calls on your assigned shares. Good luck! And for Chris, keep up the great work; you are great in explaining things easy and understandable. I owe you!
I thought the delta indicates the change of the option value related to 1$ change in the stock price I think. So when you've got a delta of off 22% the value of the option changes with 22% of the value of the stock changes 1$.
Hi Matthijs, indeed, this is exactly what delta indicates, therefore an ATM option always has a 0,5 delta since it's underlying stock has equal probability to go up or to go down; a 50/50 chance. Delta is therefore also a good indicator for the chance an option ends ITM at a given strike and time. For my wheel strategy I use week options (short puts) with a delta of max 0,06 (6% chance of being assigned). I think Chris explained in one of his great video's 30-45 days to expiration options are a better choice but I like to keep things simple and profit from time decay at the maximum. Like Markus H showed :-)
Hi there Chris, just wanna shout out to you that I'm a fan yours. Thank you very much! After countless videos of learning options trading.. none of them really sink in until I watched your "options trading for beginners ultimate guide (almost 3hr long)" video. Having say that, your video definitely explain it better than this newsletter did haha. However, I still have trouble with learning them Greeks within options; not that I don't know what they are. But would like to understand more about them in terms of how and what affects it has to do when looking at options. For example, I see this stock I like with great balance sheet and news and etc, so i go buying a call options regardless of what the Greeks tells me because my conviction is that i believe it will continue to go up and I'll have set myself a stop lost if anything. How does looking at them Greeks matter to my conviction of buying a call (short term or long term)? Sorry for any confusion.. Perhaps, maybe you can tell us more about it from your perspective in one of your newsletter talking about Greeks~ like how to put them into the effect of trading options. Thx again!
Chris can you leg in/out on a vertical spread; meaning if I am in a long call vertical spread can I get out of one leg first and later get out of the other?
Excelent and easy to understand. Thanks
Hi, Chris,
Thanks for the explanation. Will you be sharing also for put options? I'm interested in sell put as you can collect premiums for doing that. Thanks
Hi Chris, great explanation. Currently I trade The Wheel strategy, can you tell me what you think of this strategy?
I was assigned on all my positions and stocks have dropped significantly on these positions leaving me with little premium. Yesterday I was planning to buy a bull put spread(is that the right name?) TSLA, selling a put at a strike price below current stock value and buying a put little bit further out of the money. But in the end I couldn't sell.
Could you explain the risks and the way to exit.
For me it just looks like a gamble.
Regards
Matthijs
The Wheel strategy, big fan of Markus H? Pay special attention to the delta when selling cash covered puts; it is the probability in % that your short option ends ITM and so you will be assigned; e.g. the TSLA Jan 21, 2022 1000P has a delta of -0,22 (nov. 3th) and thus a probability of 22% for ending up ITM; this istoo high to be comfortzable, unless you have 100x$1000 in cash available :-). Delta should keep you out of trouble and let your wheel turning without being stucked in low premium far OTM short calls on your assigned shares. Good luck! And for Chris, keep up the great work; you are great in explaining things easy and understandable. I owe you!
a fan..hmm little bit maybe 😁.
I thought the delta indicates the change of the option value related to 1$ change in the stock price I think. So when you've got a delta of off 22% the value of the option changes with 22% of the value of the stock changes 1$.
Hi Matthijs, indeed, this is exactly what delta indicates, therefore an ATM option always has a 0,5 delta since it's underlying stock has equal probability to go up or to go down; a 50/50 chance. Delta is therefore also a good indicator for the chance an option ends ITM at a given strike and time. For my wheel strategy I use week options (short puts) with a delta of max 0,06 (6% chance of being assigned). I think Chris explained in one of his great video's 30-45 days to expiration options are a better choice but I like to keep things simple and profit from time decay at the maximum. Like Markus H showed :-)
By the way, I got htis 'delta' tip from the Benelux option master; Piet Vanoppen! He is 'our' Chris Butler'!
Aha, dank je.👍
Welkom, zat jij ook bij Rockwell? Ik ben zo op Tastytrade terecht gekomen en uiteraard op TastyWorks. Veel geleerd :-)
Hi there Chris, just wanna shout out to you that I'm a fan yours. Thank you very much! After countless videos of learning options trading.. none of them really sink in until I watched your "options trading for beginners ultimate guide (almost 3hr long)" video. Having say that, your video definitely explain it better than this newsletter did haha. However, I still have trouble with learning them Greeks within options; not that I don't know what they are. But would like to understand more about them in terms of how and what affects it has to do when looking at options. For example, I see this stock I like with great balance sheet and news and etc, so i go buying a call options regardless of what the Greeks tells me because my conviction is that i believe it will continue to go up and I'll have set myself a stop lost if anything. How does looking at them Greeks matter to my conviction of buying a call (short term or long term)? Sorry for any confusion.. Perhaps, maybe you can tell us more about it from your perspective in one of your newsletter talking about Greeks~ like how to put them into the effect of trading options. Thx again!
Another good one from a prolific writer/instructor! Thanks Chris!
Chris can you leg in/out on a vertical spread; meaning if I am in a long call vertical spread can I get out of one leg first and later get out of the other?