Stock Options Trading Questions/General

[Anonymous No.18957440]

Hello, I'm the anon who made quite a few threads here regarding stock options questions about methodology a few months ago, since the audience of the threads disappeared (possibly to some taking it upon themselves to make the effort to actively paper trade/practice which I appreciate) I've decided to wait a bit to create another thread, and here we are. Regardless, I trade stock options currently for a living independently, and if you'd like to know anything that could help you in your efforts please feel free to ask. I don't believe I know everything, I'm only here to help since I've found what I've done to be quite successful.

I'll try to be more consistent with these threads and answering more questions if it's received well by you guys.

Thank you.

[Anonymous No.18957481]

>>18957440
im new to Etrade, how do you put stop losses in?

[Anonymous No.18957643]

>>18957481
I personally use the Think or Swim application, however Stop Losses are built into the type of order than you are placing on a security. This is more of a technical questions regarding Etrade's User Interface and placing trades so I'd recommend you'd check that out online, (I just don't have it nor do I know how to navigate to it) since I don't use that platform.

For a brief over view of definitions and technicalities regarding different order types....

> https://www.youtube.com/watch?v=wUAYBMMpH6Q

Would be your best bet

Realistically it should be available when you are purchasing/selling contracts from a security and setting up your order (at least on Think or Swim) and choosing what type of order you are placing.

I hope that answered your questions.

[Anonymous No.18958375]

Shameful Bump

[Anonymous No.18958436]

>>18957440
I'm not really into options, 1) because I'm a europoor and 2) not confortable with the higher risks (and 3) no idea which plateform to use), but great topic OP it's a shame it'll be ignored in a sea of that's a man posting. Keep trying to educate this autistic communitt one day someone else is going to give it back to you in a way or another

[Anonymous No.18958605]

>>18957440
Fuck it op i don't want your thread to 404, please educate a non-believer and explain a somple yet efficient strategy onegaishimasu

[Anonymous No.18958742]

>>18958436
Options trading doesn't have a higher risk if you're practicing a methodology that works around a large number of small trades (position size wise) to average out to a winning position over time and then so. You should definitely check out probability trading using the greeks and all of the benefits and manipulative aspects contracts have over normally purchasing shares of a security. It's pretty much better in every way except for the complexity that might be associated (though being beneficial if you can work with it). If you're interested in probability trading I can link you a few videos that go over the reasoning behind it, and of course I'll gladly go over it with you. I've never had more success with a methodology of trading, though there's not a lot of flexibility since it's all about averaging around a Delta value/ properly pricing contracts (another amazing thing to learn about) a contract has, as well as beta - weighting a portfolio. Learn about Beta - Weighting a portfolio, and probability trading, and you'll see what I mean. It's honestly the best means of trading I've found or believe exists.

As well, thank you for your kind words, It seems most people on /biz/ don't appreciate the shitposting and actually want business / educational threads that can help. Suprising?

[Anonymous No.18958777]

I know very little about options and stocks in general.

Is the only way to make good money in stock options by using margins if you don’t have a lot of free cash?

Is it worth it to buy options if you only have about say $500 to invest every month?

What makes a stock more attractive to buy on a call or put rather than immediately buying or short selling the same stock?

[Anonymous No.18958835]

>>18958605
Check out Option Alpha, he's a great guy and I've talked to him a few times. We share pretty much the same ideology when it comes to trading.

Here's a good video to give you a justification of what I'm talking about

https://www.youtube.com/watch?v=ej_6uiQCjRE&t=343s

As well, please go over his videos explaining the basics ( a playlist he has )

Also if this thread goes down due to lack of interest (which is hopefully won't) I'll gladly make another for you anon. I only wish to help you friend. After you understand the basics, I'll be able to answer your questions with more accomplishment rather than confusion. Of course, if something you learn doesn't make sense, just feel free to ask, there is no judgement, only answers for those who wish to learn. Thank you brother.

[Anonymous No.18959393]

B u m p.

[Anonymous No.18959641]

Bump

[Anonymous No.18960127]

>>18958742
Do link those videos anon. Also, say you want to trade a stock you suspect will have volatility. Do you check for skew, IV or other data? Where do you do it? And how do you decide between ITM or OTM options? What about mixing maturities?

[Anonymous No.18960349]

>>18958742
>>18958835
Thanks Anon, I'm going to check it , but I can't go into it right now (europoor so bed time for me). Any more general advices ? Maybe I can pop a thread another day to ask questions

[Anonymous No.18960428]

>>18958835
Hey man thanks, I’m going to check out the videos. Looking to get into options. What are your usual timeframes u like to trade? Like are we talking days or weeks or months? Or do u spread your trades out to capture different points in the market? Do you find yourself doing more calls or puts?

[Anonymous No.18960503]

>>18960127

Regarding your first question(s), I'm primarily an options seller (and by that I mean almost in every aspect) since they have an advantage over options buyers in pretty much every instance, which is some I can link for you here

> https://www.youtube.com/watch?v=d1aw6SEdpUQ&t=1330s

IV plays a huge factor regarding the security I'm going to be trading, and even more so the type of spread (Condor, Credit, Strangle, Straddle, etc) It's well known that higher IV levels regarding a security will benefit an option seller more than an option buyer based off of IV overstatement, as well as the fact that a security with an already high IV value has a much higher probability of lowering in value than increasing in value, since it already having a high IV value is an oddity and on the lower side of probability, in simpler terms, since It's already high, it makes more sense for it to fall in value, than to raise. And since my methodology regards option selling, the contracts that I sell (which have a high IV value) will devalue, which credits my account when I buy back the contract at a lower premium than which I had sold it

Regarding other data, measurements of all the Greeks help tremendously, though there hard to grasp at first, they become quite simple since they all relate to one another. It's all about putting probability on your side. Delta is my main concern since it contains a value similar to something created by the think or swim platform such as Prob.ITM which both give you a realistic measurement of the probability of the contract you are looking at selling/buying expiring ITM (something you as an option seller do not wish to happen.)

Think or Swim regarding where I actually trade, as well I have spreadsheets referencing the correct spread to use at certain IV levels to leverage probability. There's more of course, not that it's all "necessary."

[Anonymous No.18960545]

>>18960127

Also mixing maturities is fine, it's pretty much a rolling effect so you can have a consistent amount of trades expiring over and over so you're not left dead in the water for a month or so. Then again, you have to spread maturities properly, and you can't do that without a true methodology that you can read and perform without emotion, since it won't be consistent.

[Anonymous No.18960584]

>>18960349
I'll make another thread tomorrow, and you have to listen to a lot of videos online haha, that's the advice. It grows on you and it feels great to understand options trading. Do come back friend.

[Anonymous No.18960641]

What are your typical returns on average ?

[Anonymous No.18960727]

>>18957440
1. What is a good options strategies for penny stocks
2. What strategies would you suggest for poorfags like me to know. To poor to be selling options so I can only buy

[Anonymous No.18960827]

>>18960428

45-30 Days till expiry (Again I'm an options seller primarily so have that in mind) with an average holding period of 22-27 days, and sold before 15~ days till expiry to capitalize on time decay. And yes weeks and months, I place multiple trades with different expiry dates to have a consistent amount of contracts expiring (since It's my means of living this has to be a part of it) It's a "rolling effect" that most people who trade options for a living do.

Regarding Calls/Puts, Balanced.

https://www.youtube.com/watch?v=A-nTVuOaAjo&t=1292s

This video explains the balance you're questioning with calls or puts, when you read a options contract table you'll see how Calls/ Puts are reflective of one another pricing wise, so it's only in your best interest to put yourself in the middle of the market with balance. Staying in the middle of the market it key, which is defined by Beta - Weighting.

[Anonymous No.18960905]

Optionanon, how do you look up past option prices? Haven't found a single cheap and reliable source. Thanks, brother

[Anonymous No.18960970]

>>18960727

Never trade penny stocks, just go gamble.

Save your money and learn about the Greeks, Options trading basics, and how to properly create a method to trade with. It's what I did, and it's honestly the only way to actually trade In my mind. You can make a ton of money, no doubt, but it's not the lottery, so pace yourself and you'll appreciate the reward.

Check out the previous video I linked about consistent income while trading options.

[Anonymous No.18960973]

>>18960727
More and I’ll tell you all you need to know

[Anonymous No.18961031]

>>18960973
Sure, she's some random thotty on my ig but I gotchu coomer

[Anonymous No.18961079]

>>18960905

What exactly do you mean by options pricing, the premium? You can check the IV rank of a security and it's past to compare if the current IV level is actually considered high or not. In essence, even if the IV value seems high, it could have been at that level for sometime which has normalized it so it's not considered high (Like a IV level of 85 for 2 years straight). (Basically it's just a number and you have to reference historical data) and That's IV rank or IV percentile, both very useful, I prefer IV rank. Really the IV value you see on a security is pointless unless you know its historical value. Great questions though. I hope that helps.

[Anonymous No.18961186]

>>18961079
Also what are the chart patterns that you look for when making a call/put? Any strategy that you recommend the most or is it a mix?

[Anonymous No.18961277]

>>18957440
Is it irresponsible to trade only 3+ SD options?

[Anonymous No.18961331]

>>18961186

I honestly don't use Technical Analysis anymore, It's all based off of probability, Greeks, my portfolio, Hedging, Laddering. Also I don't trade any naked Call's / Put's since they don't conform to my methodology and I've never felt the Risk/ Reward to be attractive.

Honestly Ichimoku and a few other indicators have proven valuable to me, and there's a youtuber that goes over backtesting and how valuable it can be and he has fair points, but it's so much more difficult than just trading options using my previous points. Indicators adjusted that collaborate with other indicators is the only real way too use TA, and even then I don't like it. So I guess Ichimoku would be about it off the top of my head from when I used TA when I was younger.

[Anonymous No.18961366]

>>18961277

What exactly do you mean by "3+ SD options" ?

[Anonymous No.18961389]

>>18961331
Thanks for dropping this knowledge anon. Another question I'd like to ask is what mistakes did you do as a young trader. Or just in life that you would advise against. Need some guidance rn with how the world is at the moment

[Anonymous No.18961720]

So optionanon, if you're mostly a seller and don't sell naked calls/puts then you must hold the underlying asset, right? I also meant to find a website that has historical data for IV or skew like skew.com has for crypto options. And thanks for all the insights!

[Anonymous No.18961850]

>>18961389
I made quite a few, mostly regarding TA and thinking I had something that worked but really didn't in practice (Or at least consistently lol) but honestly I discovered options trading not too long after and everything pretty much changed from there. I'd advise against not having a written down strategy. It's all about having something you can base your trading off of the doesn't rely on emotion whatsoever. That's the main key to success.

[Anonymous No.18961939]

>>18961720
Yes I do hold the contracts from the underlying asset for a somewhat lengthy period of time which I mentioned in a previous post,

>"45-30 Days till expiry (Again I'm an options seller primarily so have that in mind) with an average holding period of 22-27 days, and sold before 15~ days till expiry to capitalize on time decay."

Which is entirely based off of probability trading so it's not a universal rule of course.

>I also meant to find a website that has historical data for IV or skew like skew.com

Why not just use a measurement inside a trading platform like IV rank or IV percentile? It's pretty much an indicator regarding IV's historical data for a security.

Anytime <3

[Anonymous No.18962690]

>>18958742
How do you get approved for options trading on Think or Swim? I've had a mostly inactive account with them for a few years (with no options permissions) and have recently funded it with a few thousand with the intention of trading credit spreads. I'm thinking of switching to tastytrade if ToS doesn't work out.

>I've never had more success with a methodology of trading, though there's not a lot of flexibility since it's all about averaging around a Delta value/ properly pricing contracts

I understand/like the idea of riding the market, collecting premium via theta burn, and consistently rolling/placing new trades. Can you explain more about "averaging around a delta value"? Is that similar to always selling at a strike at least a standard dev away from the current price when the trade is placed?

[Anonymous No.18962786]

>>18961939
Do u play wow

[Anonymous No.18963747]

What are some good exchanges? Do I need to be verified and the exchange to support my bank or I can use crypto?

These notions confuse me. What is expiration? What's the difference between futures, options, stocks, shares?
Can I trade during the weekend?

Can I Buy and sell whenever I want to or I have to set a time for when?
How are penny stocks compared to low-volume crypto?

Is marketcap is even more important for stocks or it's just as useless as in crypto and I have to look for low volume and low holders?

How do I margin trade without getting murdered on daily fees for loaning?

[Anonymous No.18964301]

>>18962690
*sorry was eating dinner.

Tasty trade is another great platform to use, you can't go wrong, I just prefer Think or Swim, Regarding an inactive account I have no idea honestly sorry.

Well you've got the idea alright, regarding theta and rolling trades. Regarding averaging a Delta value (Prob.ITM), the contracts that you would sell in a credit spread would have a Prob.ITM / Delta value of 25-35, giving them a 70% average probability of expiring worthless. In essence, I never create spreads that stray from said 70% probability of profit.

As well, all spreads that I trade have to follow an equation for justify the probability of the trades probability vs the credit received, if the spread doesn't work with the equation, you have to choose a different security. I actually have a list steps in order to follow deciphering if a security is actually good enough to trade.

Credit Received = / + Delta/Prob.ITM value X Spread Width

You can try this with any simple credit spread on a security, I use this calculation for ever trade I've pretty much ever made.

Also don't trade security's with high slippage, just an additional piece of advice.

[Anonymous No.18964330]

>>18957440
don't trade stock options

[Anonymous No.18964344]

i bought an at the money put option, i left it expire and now the brokerage is asking me to complete the contract. I thought i had no obligationz?

[Anonymous No.18964388]

>>18958777
I don't have answers for you, but nice trips

[Anonymous No.18964466]

>>18958605
this please? why did my call go down 90% when price went down 10% and its only been 1 month on a 6 month contract..

[Anonymous No.18964476]

>>18963747

Honestly that's a lot of questions you'd be better off with google / investopedia since those are really fundamental basic questions, however just a quick answer regarding what you asked.

>What is expiration?
Expiration regarding a contract is the amount of time that a contract has till its value is "realized". It becomes realized since there is not more time left for the contract to exist, so its pretty much worth face value (Like buying shares of a security/stock ) Contracts expiration can influence the price of said contract since more time allows more things to happen to a security either it going up, down, or sideways to put it simply.

>What's the difference between futures, options, stocks, shares?
Go to google for that, those are just definitions, and long ones at that.

>Can I trade during the weekend
Standard market rules apply.

>Can I Buy and sell whenever I want to or I have to set a time for when?
You can do either, you can create an advanced order like a Stop loss or Limit order to manage trade automatically, or manage them yourself. Again, standard market rules apply.

How are penny stocks compared to low-volume crypto?
Probably better, I don't know much about crypto. Don't gamble your money on penny stocks, it's really not worth it. You'd honestly have more luck making a huge bet with a contract anyways. Learn about the basics of options contracts and you'll appreciate them more since they have so many moving parts which you can use to your advantage.

>Margin

Cash account my friend, I don't trade on margin, adds complexity to complex. Stick to using your own money after PAPER TRADING.
Hope this helps some friend, It's getting late but I'll try to stay on a bit more. Regardless I'll throw another thread up and give it a few shameful bumps.

[Anonymous No.18964497]

>>18964330
Are you telling me not too or did you forget the " I " in the beginning of your sentence? Regardless I could care less if you don't enjoy options trading.

[Anonymous No.18964575]

I like to buy yolos. I’ve lost half my portfolio but goddammit it’s fun when you get one that goes 300+%

[Anonymous No.18964598]

>>18958777

Sorry for the late response friend

Don't trade with margin unless you really have to (again just don't) Use a cash account. Free cash is kinda part of investing.

If you only have 500$ a month to invest, I'd honestly just save it until you've amassed a decent amount of liquid to work with and with that you can go ahead an trade. Of course don't lay down any money until you've done paper trading and understand what you're doing and if it actually works consistently.

IV rank pretty much is one of the main factors in me deciding which security I'm going to be trading since a relatively high IV level grants me more premium, and already puts me on the winning side of the trade which I talked about in a previous post.

This is also relative to what type of trader you are. I don't switch between buying securities/swing trading and trading options, it just stays options trading.

[Anonymous No.18964615]

>>18960827

Please contact me anon at my throwaway email. I have a proposal for you.

[e-mail]

[Anonymous No.18964616]

>>18964575

Don't tempt me...

It's fun, you're right. But actually winning at the end long term is more rewarding, though harder to visualize and enjoy doing since it's not instantaneous.

[Anonymous No.18964650]

>>18964466

It's very possible you didn't take into account IV rank and IV in general, as well as Greek values.

If you didn't know, IV's value changing affects the price of a contract much more than the underlying security's price action.

Here

https://www.youtube.com/watch?v=ej_6uiQCjRE&t=343s

Skip to 18:00 minutes

[Anonymous No.18964657]

>>18964615
Sure friend, I might not be able to tonight, but tomorrow for sure, I as well need a throw away email.

[Anonymous No.18964817]

>own calls on a stock that expired today ITM
>couldn’t sell them because stupid jew feds and their PDT rules
>don’t have enough money to exercise them
wat do?

[Anonymous No.18965527]

>>18964817

Definitely a lack of management on your part, waiting till expiry isn't always the favorable choice, but then again, that's relative to how I trade and what I do. As well, I don't trade with margin, nor do I trade naked Calls/ Puts. If you're finding it difficult to get around PDT rules, change your trading style up (which you should have one). All my trading done is coordinated and organized, which makes it a whole lot less stressful. I'd very much recommend you don't trade with margin, and try to save money and paper trade in the mean time to understand what works, and create a methodology. It's not the fun answer sure, but the alternative really isn't practical. Reward yourself with practice. Sorry for the situation though friend, there isn't much I can do if you're pretty much frozen regarding making adjustments.

[Anonymous No.18965542]

>>18962786

Sorry friend I don't. I do enjoy a few games but even then It's always hard to stay interested for long.

[Anonymous No.18966073]

>>18957440
finally a thread i can use this

[Anonymous No.18966396]

Bump

[Anonymous No.18966458]

Thank you for this thread and info. I myself have been focusing on learning option trading and using my own real money with thinkorswim. There's definitely a learning curve, but I'm getting there.

[Anonymous No.18966686]

>>18961079
what do you think he means by price?

[Anonymous No.18967296]

Do you know if GARCH or APARCH models produce reliable enough volatility estimates to price relatively short term options?

Several years ago, one of my professors told me that when he worked in quant finance in the early 2000’s, GARCH models was all that was necessary. I am still trying to figure out how they could be....

[Anonymous No.18967450]

>>18957440
Question for (You) anon...if everyone uses the black shole formula to price options... then doesn't this make it worthless?