You Can Try This Surprisingly Simple Options Trading Strategy For Monthly Income

Share it with your friends Like

Thanks! Share it with your friends!

Close

Option Trading strategies for monthly income do not have to be complicated. In this video we give you the rationale behind a surprisingly easy and powerful options trading strategy that you can implement around earning reports. Register for our free intensive trading webinar http://smbu.com/seth

#MonthlyIncome #OptionsStrategies #OptionsTrading

*SMB Disclosures* https://www.smbtraining.com/blog/smb-disclosures

Comments

Katherine Templeton says:

Seth,

Thank you for a fascinating video! Do you have any suggestions for stocks that might be suitable for a nonprofessional trader?

Theo Paine says:

Excellent strategy! One can also garner similar gains with Calendar (single or double) spreads too.

TickerVault says:

Would you mind sharing what software/tools are used for options backtesting?

Matas Dilpšas says:

Can you please share those stocks that are good for this strategy?

Johnson LeHype says:

Thx Seth. Love your shit bro!!

greg es says:

Seth, your videos are so inspirational! thank you!

Todd Morgan says:

So. this is just the [textbook] tendency of an increase in I.Vol of typically high-flying names during earnings cycle. Risk is also reduced, in this case, due to the stability of Gamma across the curve as DTE approaches ZERO [AND] the corresponding rise in IVol.

[edit] in practice, however, the DPM of $AAPL is highly likely to have already raised his assumption of I.Vol on the whole series of that expiry many weeks prior to the expiration as to eliminate this type of long straddle profit opportunity. In other words, DPM's aren't in the business of losing money. They know their names well and they price their IV assumptions super high starting 5 – 6 weeks prior to earnings. One look at the options chain even now will show the Jan – Feb 2020 cycle earnings week priced as much as 50% -100% higher than the non-earning series surrounding it.

Of course, any decrease of the DPM's likely already highly-priced Vol assumption is gonna bring down the price of the long straddle causing a loss. No free lunch in Options Trading. 🙂

An alternative approach for your Trader to backtest IF he/she truly believes IVol has yet to rise going into Earning might be a Time Spread (Calendar) or a Double Calendar…perhaps even a Double Diagonal spread. Of course, in the case of a high IV name, one has to deal with the "Vol Crush" after the report which will hurt the position since this structure is [theoretically] long "Vega"…so it's imperative to buy back the short weekly before the Crush. But, the "Time" structures give one the opportunity to rewrite the Short weeklys many times (collecting Prem each time) against the Long wing(s). As follows, ideally, the goal is to write enough weekly prem over the course of n-weeks to exceed the cost of the long wings. And even if the collection of the short prem doesn't exceed the full cumulative cost of the long wing(s), the return on margin can be quite substantial…especially when done systematically all year, and multiplied n-times using a basket of names.

Done with a basket of both high and low IV names over the course of n-expirations yields a global Vega position one can hedge against while still maintaining the opportunity to collect substantial cumulative Premium while remaining hedged with a "Delta One" product…perhaps n-short SPX Futures position(s) [(may require Gamma hedging in case of large move)…save for another post]

However, In the example above creating structures designed to collect Premium may be risk/margin prohibitive in your Shop. Though, after proper backtesting, the Risk Mgr. at SMB may find that the embedded Vega risk mitigated with the short Futures hedge to be worthwhile to profit from 40 cumulative weeks [per name] of Theta decay. If not, then no need blow outta the short weekly into expiration. Then with the luck of Odin and the Options Gods, the position will expire under the "tent" for a substantial profit.

My dos centavos anyway

Thanks for the vid Seth.

Kenneth Garcia says:

Hey seth. Im Kenneth and Im giving you an update with my bread and butter strategy I have been green for the past 4 weeks now. I dont make money every day but my equity curve is going up.

James Franks says:

So many permutations of trading. As a novice, what hammers home is having the right trade to suit the right situation.

Thanks

Brandon Gum says:

Thank you Seth. Amazing video. You did incredible in explaining this trade.

Scott Somer says:

You needed to use the cycle that included the earnings release to analyze how earnings impact the options on the Friday AFTEE the earnings release.

Backspin says:

Fantastic trade idea with details. Many Thanks.

sc0or says:

You did show market prices. Not right side (bid or ask) ones. It’s very likely that buying at ask and selling at bid will cost those 15% or even more.

Historic Stock Data says:

Thanks for the video! I don't have a way look at option price history so I scanned for stocks that have had a big move immediately after earnings assuming that market makers would price in a "big" move for future earnings releases since these tickers have had "big" moves in the recent past. Here is my list: ROKU, TTD, AMD, COUP, CVNA, DKS, DRNA, FGEN, HAIN, IRBT, PLNT, RDFN, SFIX, SHOP, TSLA, ZEN.

Christopher Campbell says:

I enjoy your ability to speak clearly and present the information in a way that's easy to follow and very engaging. Great content!

Insurance Casino says:

I love these on TSLA and ROKU. Thanks for the vid man. You can even play these off a single chart with the right platform.

Rekted Trader says:

🍺🍺🍺🍺🍺🍺🍺

Comments are disabled for this post.