Alright faggots, time to talk serious about the stock market

Corrections*

you want probability of ITM to be 30% or for the short leg to have a .3 delta.
this spread is a CREDIT*** spread and is 5 points wide. your max risk is 350$

you're actually only half memeing since selling options IS the one of very few ways for poor fags to get rich, but selling naked strangles 2 std out is still dangerous af and eventually you will get btfo and wiped out completely

in a sep 2008 scenario if you managed your strangle this wouldnt happen.

you are right, REMEMBER KIDS IF YOU SELL AN UNDEFINED RISK OPTION AND YOU DONT SET ALERT FOR WHEN THE STOCK GETS NEAR OR AT YOUR BRAKE EVEN YOU HAVE NO BUSINESS IN UNDEFINED RISK TRADING.

and you my friend are only half memeing as well. you would only get BTFO if you hold to expiration. can you name me one stock (that isnt a penny stock) that OPENS at 2 STD above or below its previous close? Dont think so senpai.

how do you personally choose your stock/index? how many at once and how many times a year?

after researching it seems like an iron condor is like saying you will only take so many profits and so many losses, and you are selling right around 45 days bc thats the safest day to know you are going to make SOME type of profit

>Only a 2 STD move
But user if I have STD's how will I ever into gf?

this is beautiful stuff man, didnt even know this was a thing, but I have no skin in the game...YET

40% of my account size
and im glad you brought up frequency.
the only way you can make this return consistently is to make many small trades.
1 a day at a minimum. 5 - 10 positions at a minimum.

I personally find lists of notable, good to the core stocks and filter by IV % rank. anything above 50% is fair game if I like the way the stock is going.

do you actually ever let options deteriorate/expire?

45 DTE and buy back at around 13-23 depending on how comfortable you are with the stock. taking 25%-50% profit is statistically best.

Selling ICs gives you an edge. You make money every day if the stock stays between your short legs.

Strangles are just the undefined risk version.

tldr: sell 2 standard deviations strangles on high implied volatility % stocks at 45 days and buy back after 25-50% of profit is reached. This is the ONLY way to legitimately make a huge yearly return. Sure there is "unlimited risk" but there is a reason your BPR only a 2 STD move in the stock price.

Ask your answers.

Can you explain that in English pls

expire no.

taking early profits is also KEY.
25-50% of max profit is where you NEED TO GET OUT. If you let it expire, over the long run you will not make anywhere near are much as coming out early.

if you dont understand what I am talking about do the following:

1. Learn what an option is
2. Learn both sides of options trading (being a buyer and a seller)
3. Learn the different types of options wombo combos you can trade (namely naked puts, iron condors, strangles, etc.)
4. Learn about how options are price. ITM options and OTM options are priced very differently.

i dont have the screener to find that but i'm pretty positive that has happened more than a few times. it's not even that impossible there are plenty of stocks that have very low volatility, and 2 std out move is totally possible when buyout or merger news happen during market close

and how much have they dropped? 50%? 75%?

Also, this strat is much safer with well established stocks that are 50$+ per share in value. Of course this is a garbage idea for companies that can go out of business/be liquidated.

but if you look at the returns, this tailrisk that you are talking about is very easily mitigated with the proper management.

what do you mean by 40% of your account size?

what is your personal best trade? Or something memorable that you did with the IC strategy? If you set it up correctly, I assume it's all automated so that if you are working your job you don't have to be stuck watching your monitor?

>>"Meaning, statistically over time, you will either be where you started or worse due to commissions."

lol what? Robinhood has $0 commissions. How do you lose money from commissions from $0 commissions??

to close the position you have to do it yourself. But the IC is a defined risk strategy. If you follow the guideline of a .3 delta on each short leg (this can be adjusted depending on market/stock biases) your chance of success at EXPIRATION is 70%. You should watch all of your trades at least once a day so that if one of your trades go wrong you can get out before max loss.

My best trade was in around 2008/9. It has nothing to do with any of these strats but I bought a LEAP call with 450+ DTE at 1100 and told myself not to touch it a year from that day. I did so and made around 20000$ from that one trade. This isnt sustainable by anymeans and the chance only comes once in a blue moon.

What I mean by account size is 40% BPR is held for the risk you take in selling options and the 60% is either cash or dividend paying bond etfs which you sell covered calls on.

You should really learn the ins and outs on ICs.

The best trade you make with an IC is not losing within the first 2 weeks and buying back. I dont remember much of them. Each trade is not supposed to be a home run.

can you read? even with no commissions its still a zero sum game.

from my POV robinhood is garbage.

if you cant afford commissions you dont know what youre doing in the market.

the IC strategy seems pretty sweet for making steady daily gains. a lot of tutorials mention think or swim...is this a good tool to visalize your trades? I am now curious in checking out the tasty one you mentioned.

TOS is probably the best platform in existence right now. The same guy who made TOS also made tastyworks (he got bought out by TD) and wanted to make a platform dedicated to selling premium. Yes of course you have your charts, info, stocks, future etc but none of the extra garbage investment products.

the IC is great if you have limited capital

Thanks I do know what an option is like call put and butterfly strategy. Only basic idea tho.

Can you guys help me understand a relatively safe strategy to make about 20% from options.

thank you sir
how do you sell covered calls on bonds?

20% a year? Sell vertical spreads/ICs dude.

*Make sure the stock is stable and not a bad one (50$+ is a good rule)
*Make sure when you place the trade IV Rank is above 50%
*Make sure you pay attention to price extremes and binary events or even earnings dates to take advantage of IV rising
*Exit trade at 25-50% max profit
*Only sell closest to 45 DTE
*Each short leg should have a .3 delta for a great chance of success
*trade small and often
hmm dont think I missed anything

also, your max loss is limited. Collecting 1/3 the width of your strikes is key

bond etfs***
not bonds.
just companies that buy bonds on your behalf (high and low yield) and pay you a dividend with slight capital appreciation.

what kind of risk/ratio reward do you think is smart, considering these programs let you slant your IC.

Yes 20% a year. Thanks I'll read on all the jargons you posted like DTE, IV, etc

I really hope I havent been writing all of this for nothing.

Like I said a .3 delta is considered the sweetspot when it comes to risk/reward ration.

65%/45% and 70%/30% is best.
The first number of each set is of course your chance of keeping the credit you received when the option expired. That is if you dont touch your position you will have a 65%/70% chance of keeping the whole credit, but this is advised against. Taking profits early is key. 25%-50% profits.

Im off to bed for now, Ill answer questions in a couple of hours. Pile them up and Ill answer soon.

Dont make me repeat myself as much as I already have. If you dont know what I am referring to when I write something, educate yourself.

also if your account size is big enough and your broker will let you trade naked options, set strangles in your line of sight in the future.

what happens if you lose a sd strangle? do you get btfo and turned into a slave? or is it just your credit that takes the hit?

realistically if you have a strangle on something thats not a single stock you will never get btfo by the time you can do something about it.

Take 2008 sep for example.
If you sold a strangle in early sep. The biggest as fastest crash happened during that time but you have to remember it wasnt all in one day and it never will be. The biggest lose in one day of the worst financial crisis for almost 100 year was 100 points, or around 8%. This IS the worst possible case scenario.at this point you would cut your loses and get out of the position. What would your lose be at 100 points down in one day of a strangle thats 2 STD OTM?
You wouldnt have lost a dime on the intrinsic value on the strangle because, by my estimation, a 2 STD at this specific date would have been around 120-140 points wide.

And as the put short gets more expensive aka a lose the call short loses value aka an equal gain. you would probably lose maybe 1000-2000$ in this doomsday scenario because of IV shooting straight up which would increase the cost of getting out of such a trade.

Not that much of a loss for an unlimited risk trade huh? Just gotta be realistic about the markets. You can also roll your positions to mitigate losses of even come out flat

Im talking about the SPX btw

have you ever heard of the phrase 'no free lunch'?

if you can make 100% returns per year, why don't you just fuck off and do it?

>can you read? even with no commissions its still a zero sum game.

How are stocks zero sum if companies pay dividends, expand their businesses, world population grows and globalisation increases? HOW?

As horrible as some of this thread is it is an absolute legit strategy. High probability trades cap your gains but I'd take that side every single time. High number of occurrences, vary your underlyings and strategies, stay small and let the maths play out.

I think 2 standard deviations is too wide though. 1 standard deviation will give a better risk to reward ratio. But that's the beauty of options, you choose the level of risk you're willing to take.

>Tastyworks
Amen. I'm opening an account as soon as they'll let me. (Which will be around the 3rd week in Jan apparently, for international customers) They also sent out the commission rates today. $1 for options and no closing fee. Pretty sure that will beat every other brokerage. They are all about the retail investor and they're keeping the commissions as low as possible to facilitate the "trade small, trade often" mantra.

Can't wait to get started. Been paper trading for a year and been getting more and more sophisticated and am so ready to start for real now

I dont have permissions to trade undefined risk options. I do the defined risk version of this strategy and it works out great for me. The undefined risk version is sure to work out better though.

Rofl I literally answered to this, unless you are in it for the long run, stocks are 100% a zero sum game. And even then your returns are mediocre at best

I don't think you will but what's the harm in asking

Can you pls explain step by step what exactly you are saying in OP.
I only know what call and put is.
Thanks

Call me an idiot if I am one, but how do you deal with earnings reports? A stock could swing 5-10% overnight which could be higher than your 2STD. Do you avoid any contracts that could fall within an expected ER?

If you know what a call and a put is, then learn about theta decay and delta.

Then learn about ICs and credit spreads if you dont have rights to undefined risk strats. If you do have the ability to use undef risk strats research the Strangle.

After you are acquainted with how these options spreads work, you want to find a stock that isnt garbage and has a very high implied volatility (above 50%). Once you do this you can make the proper trade on it and collect a credit. 45 DTE is best and once theta has chewed away 25-50% of your max profit you should close the position and find another stock.

Things to remember:
*IV Rank should be ABOVE 50%
*Each short leg contract should be closest to 45 DTE with a .3 delta
*each trade should be a max of 5% of your account so that the probabilities will eventually work out in your favor.

A calendar spread takes advantage of earning because IV Rank shoots straight up during this time.
You could also sell an overpriced strangle/IC/credit spread because the expected move tends to overstate actual.

Sorry, I did not finish reading your post. But the idea still applies. Personally I sell ICs/spreads/calendars on earnings but you do get paid a hell of a lot if you take the risk. If the company isnt pure dogshit its a good way to bump the amount of premium you receive.
5-10% swings almost never happen with shit companies and when they do 5-10% really isnt such a huge loss. 98% of the time this wont happen.
2 STD is around 30% room for expect move I believe. A huge window

thanks for the info OP, its very much appreciated

Thanks, I've been trading mainly by speculating ERs so far, but they can be pretty risky depending on the company. I might try playing around with options to mitigate risks.

just read a shit ton of studies and report on playing earnings. Seems like a garbage strat actually.

What about finding a high volitility stock and buy strattle, with the strike price both ITM? worked for me with TZA recently.

Sounds like a decent strategy, thanks :)

its because of the fact that high IV equals over priced options. You only really have an edge in this type of trade if you have inside info tbqh

>selling your positions instead of just selling contracts on them
Are you retarded?

Ready for the RNVA pump on Tuesday from .08 to .16 or .2
Or till the 1/5/17 CC

kys

I've talked with an active trader, and he described how he mostly traded options. He did claim to have a higher return than the market average. I didn't entirely understand what describing, but he said that trading options had much less risk than stocks.

>taking a monumental amount of risk buy holding positions that net you a less than 10% ROC at best per year
rofl

>monumental amount of risk
You think a strangle has "unlimited risk" when it actually has a very clearly defined maximum risk, so why the fuck would I listen to you?

if you want to capture the profit of hundreds of shares with options it sure is much much cheaper with no tail risk

theoretically it has unlimited risk to the upside and a maximum risk to the downside if the stock price drops to zero

>bitcoin is unlimited risk
You can't lose more than 100% of what you put in, though.

alright it is defined but 100% is almost as bad as it can get

no. losing more than what you put in is way worse.

damn i dont understand anything here, what happened to buy high and sell low? damn jew magic

if you dont understand this stop trading and do yourself the favor of learning

im not trading, i just sometimes come to this place

Hey OP where can I go or what book can I buy to read about this in detail?

why are you telling us about your epic strat?

dont pay anyone a dime for strats on trading, its not going to help you. Just google studies on strangles and eventually youll pick it up

so you faggots stop posting retarded penny stock xd threads and robin shit.

its not a secret trade strat xd

Any options strat that doesn't involve selling naked contracts has a maximum defined risk. Unlimited risk is for shit like shorting a stock, in which you could theoretically owe thousands of times what you own, or selling naked calls, in which case again the price could increase so much you owe many times over what you actually own. Unlimited risk is a very specific thing, and doesn't just mean you lose 100% of your investment. It's much, much worse than that.

You act as if I didnt say this exact thing.

a strangle is NOT a defined risk strat. unless you close the short put leg. If you consider it as a package it has unlimited risk to the upside

Saved for later reading OP, appreciate the bulk info.

Dabbled a month ago with theoretical and mock up stocks through ASX and came out with "$13,000+" after investing 48,000 using similiar methods you've used here. It was part of some ASX Sharegame though as I wasn't entirely confident on the strategies I had in place.

I lost interest once I was Bogged down in work.

TLDR: Appreciate your advice and plan on re-implementing the above rules and strategies to make delicious Money over time in order to Develop an application on the side of working.

They key to remember is that even though you're dealing with potential unlimited risk the chances of that happening are relatively low. 6-7 standard deviation moves like the crash in 1987 or the financial crisis in 2008 are once in a lifetime events. And the 2008 crisis happened over the period of a year, easily time to deal with any open positions you have.

These are black swan evens, you can't let that sort of thing stop you. It's like saying you'll never cross the road because you might get run over. It's impractical, not realistic,

And they key to not blowing out your account is to stay small. Then nothing can take you out.

>TFW have no clue what this means.

I'm an ETFcuck. How can I make use of this information?

this

worse thing to happen in a 1987 scenario is that you lose 50% of your account if you had correct risk size

tbqh watch the tastytrade financial network

just watch their videos on youtube. They do all sorts of great studies on the topic.

tastytrade shill detected

stahp, im just trying to help out

How do I know they have my best interests in mind?

I'm somewhat skeptical of your mentioning of overly high returns.

Help me out. 40 year old, going to start investing now. Yes I know, I'm old and just starting. I made this decision because in 10 I want enough money to buy an 80k house. I am going to use Robinhood to purchase penny stocks in hopes of a big turn around. I usually spend 100 a month whiskey, i'm gonna pump that into these high risk things. I don't have enough to pay commissions, nor do i feel like paying a jew to do what i can do for free. If I lose out I don't care, because it's money that was going to waste anyway. tell me why this isn't a good idea.

if you seriously need help and you arent just shit posting

tell me your income and savings and I can tell you what you personally need to teach yourself and you can very well be making good returns this year.

As I was when I started to hear things like this.

You dont have to and shouldnt take my word for it, those guys NEVER market their company and dont ask the consumer for a damn penny. They founder of tastytrade created thinkorswin and sold to TD for 600+million. He has the investors interest at heart.

All the research he does on the stock market costs lots of money and gives out amazing information for free.
Just watch some of their vids with adblock on so you get to decide whether its bunk or not

I'm in the same position as this guy 20 years old, no economic knowledge besides a few things I read in the intelligent investor. Have a Robinhood account that I use to trade meme Gold ETF's. My primary source of income in gambling on political outcomes. Made over 10 grand betting on Trump winning and have it mostly in Bitcoin. I also get neetbux and will probably have a job to add to that income. With expenses I'll probably have around 500-1000 dollars expendable income per month for the foreseeable future. Got any books that I should read, I don't mind learning that way, and I have a lot of free time.

I didn't see that you mentioned selling strangles in the OP, not buying. Selling a strangle definitely has unlimited risk, but I'm not seeing why you would do that instead of buying iron condors

you mean selling ICs? Why would you buy ICs?

Ok but I live in Canada.

Will this help me? Can I do it with only 10% of my portfolio instead of a significant portion? It sounds scary.

>Sure there is "unlimited risk"

Lmao.

Yeah, so what right? Quick question: what's your annual return? 8%? 9%? The risk/reward isn't there whatsoever.

With a 1 SD strangle sure there is

Income is 40k a year. Raising 3 children. Extra money is slim. I have 500 to start. I want to buy cheap stock in large quantities for as cheap as possible. For example, buy 1000 of SHIT at .0345 a share then hold onto it. When it hits 2 or 3 dollar sell. That's my plan. Not shitposting.

tough situation dude, I would say to NOT buy into shit stocks and save up until you have 3000$. At that point you should sell defined risk options spread and youll make good money that way. Youll never make a dime on pennymemes

Pls help me above I have a portfolio of $35k