I just want to add that if people are buying options along with Greg, I would be very careful with the amount of leverage you're adding. It's very easy to just double down on options and the next thing you know your account is down 20% because "trade talks failed." I did this many times when I started trading and it almost never worked out. Make sure you manage the sizes of your positions. I'm only saying this because of some of the questions I read in comments. Some of you are new to this....
It's one thing to be long a call or two, and it's something else to be long 10 CSCO calls in a small account. That's 40,000 worth of leverage you're getting for about 5 grand. Add in 10 more GILD calls at 10 $6 a pop. and now you're up to $110,000 worth of leverage on about 10 grand of capital. You're up to 11x leverage now. 1% down is 11% for you. Just some rough maths....
i have found myself in multiple positions like this - the worst being XLE. the more I add to it in hopes of averaging down, the more I am losing - almost at 50% down! i am wondering what to do with these calls dated jan 21.
Thanks LionHelper! i tend to agree with you on all points, which is why I've kept it so long (since June!) while adding to it as it just drops more. i'll put sell orders in and forget about it for a bit and destress. :-)
why do you think that XLE has lagged on this oil support??
i agree....while I appreciate greg's calls/alerts, there is so much more to it than just buying what he says i'm finding. needing to reorg what I'm doing now.
Well I will tell you what I did with GILD, I sold my calls and bought stock instead and sold out of the money shorter dated calls against it. I'll pick up the dividend when it hits and if the move doesn't happen quickly then I'll have time erosion on my side. I like GILD In the low 60s, pays 4%.
ok thanks! i am a bit unclear on this strategy, but need to learn - specifically "sold out of the money shorter dated calls against it". i am thinking of selling all my red calls and moving to stock for swing trades instead for the moment.
Question for the lions out there: How is it possible to own a call, purchased slightly OTM, that is now solidly ITM, but the price is less than purchase price? Factors other than underlying asset price at play? If someone has an explanation, I would love to know. Makes no sense to me.
unfortunately I am a learner while doing. couldn't stand to paper trade for more than 2 days! but I have losing calls. a question on the greeks - i look at them before I buy....but they change don't they as the time goes on? that means looking at them before buying is not a good indicator whether it'll be a winning trade? Thanks!
Price isn't the only factor in options pricing. Volatility, time, the risk free interest rate, and other variables have an effect on the options price. Each one of these variables actually change all the time which changes the effect on the options price.
Does Gregory have a learning or education section? Complete beginner here. Just buy and sell stocks outright in my 401k. Don’t know about futures or crypto.
Can someone explain How to understand the list? I’m a beginner. Is he Recomending to buy WMT at $140? What does the word “call” signify? Thank you Lions...
Delta is the derivative of price. All at the money options are 50 delta. 1 delta = the same exposure as 1 share of the underlying. The delta of an option is also roughly the same % of expiring in the money. A 100 delta option should always trade at underlying price - strike price, assuming the market is tight. If AAPL is $490.63, a 400 strike call for next week, which I didn't look but should be 100 delta, should trade for $90.63.
Vega is the options sensitivity to changes in volatility. So, the underlying's implied volatility IV, can go up and down in dramatic fashion. If the IV goes up, a stock option will go up as well even if the underlying DOES NOT MOVE.
when looking to buy calls and puts on something like msft that seems to move drastically each day (high then low by at least 2 dollars), would this have a high IV? and if high IV wouldn't that be something to do this type of strategy? (buying calls and puts on one underlying at the same time that moves rapidly)?
Theta is the option's rate of decay. Or roughly it's the extrinsic value of the option versus it's time until expiration. Viewed through a daily perspective, having a portfolio of 5 theta in it means that if the stock market doesn't move you will gain $5 per day.
Gamma is the rate at which delta changes. As options go from OTM, to ATM to ITM delta increases. So AAPL went up 20$ today. It started at $470. If you had a 470 a 480 and a 490 call, for every X$ increase of AAPL each strike, the higher you get would increase slower, compared to each other. I'm just guessing here but as the day goes on and you're watching your 3 options increase in value as AAPL skyrockets, here is how the first 3 option delta changes according to gamma. The 470 strike will have a 50 delta, the 480 probably 40 and the 480 probably 28. As the stock moves to 480, the 470 is probably 63, the 480 is 50 and the 490 is now 40. Gamma represents the acceleration of the option towards 100 delta based off of its expected move from implied volatility. I personally don't use gamma at all.
If an option as 0% change of being out of the money or in the money the gamma is 0. If an option has a very low chance of being in the money the GAMMA is extremely high. It's like those people who were short 500 AAPL calls that expired today they almost got fucked by high gamma as they watched they're generally worthless options explode into the end of the day only to expire worthless.
ah that explains some of the calls i did that got ITM the final week, but i lost. Thanks Justin for taking the time to explain this. without understanding it all, the trade alerts are useless, in fact setting up for failure.
What happens if I can't add to a position again. I added to csco yesterday but I can't do it again today. Do I close with a loss or just wait until Gregory tells me to close? Thank.s
It's performing pretty badly so far, but who knows- there is a lot of time for it to move all over still. Only problem is you'll have to sit and wait for it to make a move.
Thanks Pete. I know from paper trading his positions that is true and I always made a profit but I was able to add to it. I will just wait it out and hopefully grab a small profit. Not enough dry powder for those big trades!
I have to say, if you don't have a plan, I hope you're trading with paper money. Greg buys very expensive options. If you can't afford to trade those, then you shouldn't be doing so. You could look at shorter-dated calls or just shares instead. Greg averages down into these positions. If you can't afford to that, then don't it. Note: having the money isn't the same as being able to afford it. You should be risking a small % of your account balance on a given trade.
that is something I am now realizing in hindsight...the "dry powder" left for averaging down. and I am thinking not only not risk small % on a given trade, but all these trades - cut them back some and be more selective
Thank you Ian. I paper traded Gregory's trades for 2 months and have just started using real money. My plan is to use only 5%-10% for each trade. So yes, I have to realize that he may add to his position 3 or 4 times and yes, I cannot afford that. Good learning lesson. I will close this trade as soon as I make a profit no matter how small. Almost there. Thanks again.
hi William, i know you use TOS too. i have been searching for days trying to figure out how to do price alerts that are ongoing vs just one time. do you know how to do this? i have tried on TOS and ameritrade website and it always just does it once, then you have to re-program. I need to step back for a bit from this and destress and don't want to watch the screen all day as i have so much else going on and it's so time consuming and requires me to remember to reset each alert every time it goes off. Thanks so much!
Sassy, I don't know I don't use them but it seems that when it reaches the alert price and It warns you then that alert is over and you have to do it again. I don't usually day trade and plan on my trades to take several days or a week or more to reach my price target before I sell, so I have never tried to use alerts, but if I figure them out I will let you know.
Yes, I'm a full time trader and only trade during the day while the market is open, but I study my watchlist and keep keep up with current trends plus take Greg's advice on where this market is going. I don't see how anyone could be successful setting your trades on autopilot and expect to receive good results. Greg is right when he said to engulf yourself 24/7 into your trades and all your financial securities, gold, silver and how ever you plan for your financial future, and that is the secret!!! In here at 8:20 pm on a Saturday night doing my homework getting ready for the week ahead. Focus & Dedication!!!
I just want to add that if people are buying options along with Greg, I would be very careful with the amount of leverage you're adding. It's very easy to just double down on options and the next thing you know your account is down 20% because "trade talks failed." I did this many times when I started trading and it almost never worked out. Make sure you manage the sizes of your positions. I'm only saying this because of some of the questions I read in comments. Some of you are new to this....
It's one thing to be long a call or two, and it's something else to be long 10 CSCO calls in a small account. That's 40,000 worth of leverage you're getting for about 5 grand. Add in 10 more GILD calls at 10 $6 a pop. and now you're up to $110,000 worth of leverage on about 10 grand of capital. You're up to 11x leverage now. 1% down is 11% for you. Just some rough maths....
i have found myself in multiple positions like this - the worst being XLE. the more I add to it in hopes of averaging down, the more I am losing - almost at 50% down! i am wondering what to do with these calls dated jan 21.
Thanks LionHelper! i tend to agree with you on all points, which is why I've kept it so long (since June!) while adding to it as it just drops more. i'll put sell orders in and forget about it for a bit and destress. :-)
why do you think that XLE has lagged on this oil support??
Thanks again
i agree....while I appreciate greg's calls/alerts, there is so much more to it than just buying what he says i'm finding. needing to reorg what I'm doing now.
Well I will tell you what I did with GILD, I sold my calls and bought stock instead and sold out of the money shorter dated calls against it. I'll pick up the dividend when it hits and if the move doesn't happen quickly then I'll have time erosion on my side. I like GILD In the low 60s, pays 4%.
ok thanks! i am a bit unclear on this strategy, but need to learn - specifically "sold out of the money shorter dated calls against it". i am thinking of selling all my red calls and moving to stock for swing trades instead for the moment.
Your like super beets GM, you increase our blood /cash flow lol. stay handsome
closed MSFT +12% or so thx Mufasa
Question for the lions out there: How is it possible to own a call, purchased slightly OTM, that is now solidly ITM, but the price is less than purchase price? Factors other than underlying asset price at play? If someone has an explanation, I would love to know. Makes no sense to me.
The Greeks !
DELTA: price movement relative to sub jacent (ex: $10 for $1 stock movement )
GAMMA: acceleration of the price movement. High when you are close to expiration.
VEGA: volatility (different from the stock volatility)
THETA: the cost of the time ellapsed by day
RHO: change of price relative to the risk-free rate of interest
If you're a pilot of aeronef, you don't go without a dashboard !
the greeks are your dashboard when you ride !
example: when two days ellapsed without movement, with a CALL at a Theta of "15", you have loose $30...
...And you win it when you sell ;o)
Is it helping you ?
Excellent advice, thanks for your time!
I try to do my best with my all friends ! ;o)
That's some good advice, thanks. I guess I should get my head around this ASAP.
yep, I recommend to do it BEFORE trading option !
learning before acting,
cause I want all my friends to loose the minimum ! ;o)
i generally only buy calls with theta of 1 -2. but again that changes no?
i mean no more than a - 2
maybe looking at the greeks while a position is gasping for breath is a good way to know if to exit with loss?
unfortunately I am a learner while doing. couldn't stand to paper trade for more than 2 days! but I have losing calls. a question on the greeks - i look at them before I buy....but they change don't they as the time goes on? that means looking at them before buying is not a good indicator whether it'll be a winning trade? Thanks!
Price isn't the only factor in options pricing. Volatility, time, the risk free interest rate, and other variables have an effect on the options price. Each one of these variables actually change all the time which changes the effect on the options price.
Thanks Greg- I like WMT- just added more 140 calls. Hoping GILD works out as well .
Equally? How much do you average down?
Are you adding
Bought some more CSCO.
Is that a good idea?
It's just been going down mostly
Does Gregory have a learning or education section? Complete beginner here. Just buy and sell stocks outright in my 401k. Don’t know about futures or crypto.
Can someone explain How to understand the list? I’m a beginner. Is he Recomending to buy WMT at $140? What does the word “call” signify? Thank you Lions...
it's such a complex answer - i recommend doing the trainings on the ed center of your brokerage.
Delta is the derivative of price. All at the money options are 50 delta. 1 delta = the same exposure as 1 share of the underlying. The delta of an option is also roughly the same % of expiring in the money. A 100 delta option should always trade at underlying price - strike price, assuming the market is tight. If AAPL is $490.63, a 400 strike call for next week, which I didn't look but should be 100 delta, should trade for $90.63.
Vega is the options sensitivity to changes in volatility. So, the underlying's implied volatility IV, can go up and down in dramatic fashion. If the IV goes up, a stock option will go up as well even if the underlying DOES NOT MOVE.
when looking to buy calls and puts on something like msft that seems to move drastically each day (high then low by at least 2 dollars), would this have a high IV? and if high IV wouldn't that be something to do this type of strategy? (buying calls and puts on one underlying at the same time that moves rapidly)?
Theta is the option's rate of decay. Or roughly it's the extrinsic value of the option versus it's time until expiration. Viewed through a daily perspective, having a portfolio of 5 theta in it means that if the stock market doesn't move you will gain $5 per day.
Gamma is the rate at which delta changes. As options go from OTM, to ATM to ITM delta increases. So AAPL went up 20$ today. It started at $470. If you had a 470 a 480 and a 490 call, for every X$ increase of AAPL each strike, the higher you get would increase slower, compared to each other. I'm just guessing here but as the day goes on and you're watching your 3 options increase in value as AAPL skyrockets, here is how the first 3 option delta changes according to gamma. The 470 strike will have a 50 delta, the 480 probably 40 and the 480 probably 28. As the stock moves to 480, the 470 is probably 63, the 480 is 50 and the 490 is now 40. Gamma represents the acceleration of the option towards 100 delta based off of its expected move from implied volatility. I personally don't use gamma at all.
If an option as 0% change of being out of the money or in the money the gamma is 0. If an option has a very low chance of being in the money the GAMMA is extremely high. It's like those people who were short 500 AAPL calls that expired today they almost got fucked by high gamma as they watched they're generally worthless options explode into the end of the day only to expire worthless.
ah that explains some of the calls i did that got ITM the final week, but i lost. Thanks Justin for taking the time to explain this. without understanding it all, the trade alerts are useless, in fact setting up for failure.
has 0% chance
What happens if I can't add to a position again. I added to csco yesterday but I can't do it again today. Do I close with a loss or just wait until Gregory tells me to close? Thank.s
It's performing pretty badly so far, but who knows- there is a lot of time for it to move all over still. Only problem is you'll have to sit and wait for it to make a move.
Thanks Pete. I know from paper trading his positions that is true and I always made a profit but I was able to add to it. I will just wait it out and hopefully grab a small profit. Not enough dry powder for those big trades!
Not even close to enuf dry powder for the average person to buy and maintain these positions.
That is for sure! It is down from -42 to -26 so I can get on with my day! Thanks again Pete.
I have to say, if you don't have a plan, I hope you're trading with paper money. Greg buys very expensive options. If you can't afford to trade those, then you shouldn't be doing so. You could look at shorter-dated calls or just shares instead. Greg averages down into these positions. If you can't afford to that, then don't it. Note: having the money isn't the same as being able to afford it. You should be risking a small % of your account balance on a given trade.
that is something I am now realizing in hindsight...the "dry powder" left for averaging down. and I am thinking not only not risk small % on a given trade, but all these trades - cut them back some and be more selective
Thank you very much. There is so much to learn.
Thank you Ian. I paper traded Gregory's trades for 2 months and have just started using real money. My plan is to use only 5%-10% for each trade. So yes, I have to realize that he may add to his position 3 or 4 times and yes, I cannot afford that. Good learning lesson. I will close this trade as soon as I make a profit no matter how small. Almost there. Thanks again.
Thanks Greg, same here.
hi William, i know you use TOS too. i have been searching for days trying to figure out how to do price alerts that are ongoing vs just one time. do you know how to do this? i have tried on TOS and ameritrade website and it always just does it once, then you have to re-program. I need to step back for a bit from this and destress and don't want to watch the screen all day as i have so much else going on and it's so time consuming and requires me to remember to reset each alert every time it goes off. Thanks so much!
Sassy, I don't know I don't use them but it seems that when it reaches the alert price and It warns you then that alert is over and you have to do it again. I don't usually day trade and plan on my trades to take several days or a week or more to reach my price target before I sell, so I have never tried to use alerts, but if I figure them out I will let you know.
ok thanks! how do you know when to sell then? do you watch the screen all day? that is what I need to get away from now.
Yes, I'm a full time trader and only trade during the day while the market is open, but I study my watchlist and keep keep up with current trends plus take Greg's advice on where this market is going. I don't see how anyone could be successful setting your trades on autopilot and expect to receive good results. Greg is right when he said to engulf yourself 24/7 into your trades and all your financial securities, gold, silver and how ever you plan for your financial future, and that is the secret!!! In here at 8:20 pm on a Saturday night doing my homework getting ready for the week ahead. Focus & Dedication!!!