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Study Hall: Understanding Risk Management in Options Trading · Earn Your Leisure

• 0:00
  Speaker 1: An illegal alien from Guatemala charged with raping a child
• 0:03
  Speaker 1: in Massachusetts. An MS thirteen gang member from Al Salvador
• 0:07
  Speaker 1: accused of murdering a Texas man of Venezuelan charged with
• 0:11
  Speaker 1: filming and selling child pornography in Michigan. These are just
• 0:15
  Speaker 1: some of the heinous migrant criminals caught because of President
• 0:19
  Speaker 1: Donald J.
• 0:20
  Speaker 2: Trump's leadership.
• 0:21
  Speaker 1: I'm Christy nom the United States Secretary of Homeland Security.
• 0:25
  Speaker 1: Under President Trump, attempted illegal border crossings are at the
• 0:29
  Speaker 1: lowest levels ever recorded, and over one hundred thousand illegal
• 0:33
  Speaker 1: aliens have been arrested. If you are here illegally, your
• 0:37
  Speaker 1: next you will be fined nearly one thousand dollars a day, imprisoned,
• 0:41
  Speaker 1: and deported.
• 0:42
  Speaker 2: You will never return.
• 0:44
  Speaker 1: But if you register using our CBP home app and
• 0:47
  Speaker 1: leave now, you could be allowed to return legally.
• 0:50
  Speaker 2: Do what's right. Leave now.
• 0:53
  Speaker 1: Under President Trump, America's laws, border and families will be protected.
• 0:57
  Speaker 3: Sponsored by the United States Department of Homeland Security.
• 1:00
  Speaker 4: And in terms of contracts, as how many contracts are
• 1:03
  Speaker 4: you using for these strategies and are you doing a
• 1:06
  Speaker 4: similar strategy with features? So would you like go along
• 1:10
  Speaker 4: to ees many contracts and short to Nasdaq or do
• 1:13
  Speaker 4: you not touch the features at all?
• 1:15
  Speaker 5: I personally don't trade the futures. I have managers that
• 1:18
  Speaker 5: manage futures for me. I trade stocks, cryptos, and options myself.
• 1:27
  Speaker 5: I have other portfolios that trade options also for me,
• 1:31
  Speaker 5: run run a strangle selling strategy. So I don't trade
• 1:35
  Speaker 5: futures personally, and then I have guys that trade different
• 1:40
  Speaker 5: things right throughout different different investments and different investments. So
• 1:44
  Speaker 5: that's how I sort of stay diversified, so that the
• 1:47
  Speaker 5: money that I am actually managing, like an individual account
• 1:50
  Speaker 5: or a couple of different individual accounts, I could be
• 1:53
  Speaker 5: more aggressive and more concentrated in those positions because I
• 1:57
  Speaker 5: have other diversification and other strategies that are doing different things.
• 2:01
  Speaker 5: Because something I learned over the years is that sorry
• 2:04
  Speaker 5: to the answer to your question is how many contracts
• 2:07
  Speaker 5: not on the future side, but on the option side.
• 2:09
  Speaker 5: Depends on the premium right, could be one or two,
• 2:12
  Speaker 5: could be ten or twenty, could be fifty, could be
• 2:14
  Speaker 5: you know, thousands. Technically, you know I had two thousand
• 2:17
  Speaker 5: contracts of these out of the money Merra calls. You know,
• 2:21
  Speaker 5: I was like all the open interest myself. At some
• 2:23
  Speaker 5: point at one point, I know, but anyway, so it
• 2:29
  Speaker 5: depends on the situation. I didn't hold them long enough
• 2:32
  Speaker 5: for the record is the story there. But nevertheless, at
• 2:36
  Speaker 5: one point I did have a January. I had two
• 2:40
  Speaker 5: thousand January thirty calls from ERA at one point. Anyway,
• 2:48
  Speaker 5: So it just depends on the situation. But getting back
• 2:51
  Speaker 5: to the diversification, you know, your real wealth diversification, in
• 2:55
  Speaker 5: my opinion, by my right, not just my work, my observations,
• 3:00
  Speaker 5: but certainly work done by very smart people, but my
• 3:03
  Speaker 5: observations as well, is is having different strategies that are
• 3:10
  Speaker 5: as uncorrelated with one another as possible.
• 3:13
  Speaker 3: Three four five.
• 3:17
  Speaker 5: You know that four to five range mathematically seems to
• 3:20
  Speaker 5: be like the sweet spot once you start getting more
• 3:22
  Speaker 5: strategies than that starts getting. You know, it's the law
• 3:26
  Speaker 5: of diminishing returns or whatever. It's like being a basketball player, like, yeah,
• 3:30
  Speaker 5: you know, maybe being eight feet tall it might have
• 3:33
  Speaker 5: its advantages, but that's not really the ideal sweet spot.
• 3:36
  Speaker 5: You know, maybe like a six' nine with handles and
• 3:39
  Speaker 5: cahoe from the, out you know. Whatever, right you, know
• 3:41
  Speaker 5: like there's kind of like a sweet spot where you
• 3:43
  Speaker 5: want to. Be you, know so that's kind of that's
• 3:46
  Speaker 5: kind of HOW i think about. It so, anyway four
• 3:47
  Speaker 5: to five STRATEGIES i think is so that's HOW i
• 3:50
  Speaker 5: think about.
• 3:51
  Speaker 6: It, Well, CHASE i get one more. GROG i want
• 3:57
  Speaker 6: TO i want to make. Corrections SO i said. ONE
• 4:00
  Speaker 6: i THINK i said two eighty five is in the.
• 4:01
  Speaker 6: Money SO i WAS i misspoke IF i said, That,
• 4:05
  Speaker 6: mike let me KNOW i met one eighty. Five FOR
• 4:07
  Speaker 6: i know some people in the comments might nilistic.
• 4:10
  Speaker 3: INTEGRITY i like.
• 4:11
  Speaker 5: IT i like. IT i like. It LISTEN I I
• 4:14
  Speaker 5: i say all kinds of stuff THAT i. Live i'm,
• 4:16
  Speaker 5: like DID i really say?
• 4:17
  Speaker 6: That it?
• 4:19
  Speaker 4: Happens if you talk every, day it. Happens, yeah it, happens,
• 4:22
  Speaker 4: man it.
• 4:22
  Speaker 7: HAPPENS i wonder your options portfolio is it diversified amongst
• 4:28
  Speaker 7: multitude of companies or are there like ten or eleven
• 4:32
  Speaker 7: companies that you follow in?
• 4:34
  Speaker 3: Trade?
• 4:35
  Speaker 7: Right because you know we've talked about, this, right there's
• 4:37
  Speaker 7: been scenarios where we've had strategies where we have options
• 4:40
  Speaker 7: on the companies the stocks that we have already invested.
• 4:43
  Speaker 7: In what's kind of your your your sweet?
• 4:45
  Speaker 5: Spot, yeah so we run a couple of different. Strategies
• 4:49
  Speaker 5: so for one of them where we just sell. Strangles
• 4:50
  Speaker 5: what we do is we don't actually use any stocks at.
• 4:53
  Speaker 3: All it's only.
• 4:53
  Speaker 5: ETFs so we take the thirty five most liquid. ETFs
• 4:57
  Speaker 5: you know them, all you, KNOW E, E M, sp
• 5:00
  Speaker 5: why XL k you, know like you, know you know
• 5:02
  Speaker 5: them all or most of them, Anyway so it's just
• 5:05
  Speaker 5: those because what that, does since we're selling, strangles we're
• 5:08
  Speaker 5: selling naked calls and selling naked, puts so we're leaving
• 5:10
  Speaker 5: ourselves exposed theoretically to you, know major overnight gap risk
• 5:15
  Speaker 5: that you'll get in stocks that's relatively almost eliminated USING.
• 5:19
  Speaker 5: Etf so it's kind of like a risk management strategy
• 5:22
  Speaker 5: in a strangle selling situation where we now you don't
• 5:27
  Speaker 5: have to worry about, that, Right so we just use
• 5:30
  Speaker 5: the most liquid thirty five, ETFs and what we'll do
• 5:32
  Speaker 5: is we'll take the one with the highest applied, volatility
• 5:34
  Speaker 5: the one paying the most essentially and sell that. One
• 5:38
  Speaker 5: it's really that simple and like we like you, said you,
• 5:41
  Speaker 5: know and how we. Cover so that's that. Strategy and
• 5:44
  Speaker 5: then in terms of the kind of like the more
• 5:48
  Speaker 5: just buying and, selling you, know kind of adapting to
• 5:51
  Speaker 5: the environment, strategy that is exactly what you said about
• 5:54
  Speaker 5: ten twelve. Companies, now we don't focus on ten or
• 5:57
  Speaker 5: twelve companies that we specifically to sell. Options that's pretty
• 6:02
  Speaker 5: much the basket of what the portfolio looks. Like we
• 6:05
  Speaker 5: are willing to trade any stock OR etf that is
• 6:08
  Speaker 5: liquid enough to participate.
• 6:10
  Speaker 3: In we don't.
• 6:11
  Speaker 4: Care, okay final question for, you can you walk us
• 6:16
  Speaker 4: to your be greedy for twenty twenty four?
• 6:18
  Speaker 3: Strategy i'm.
• 6:19
  Speaker 4: Curious, well so the pass behind?
• 6:23
  Speaker 5: It so you know every year we get together and
• 6:26
  Speaker 5: it's like what do we? Learn you, know what mistakes
• 6:28
  Speaker 5: that we? Make and you, KNOW i guess a Common
• 6:32
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• 8:19
  Speaker 1: Forward an illegal alien From guatemala charged with raping a
• 8:25
  Speaker 1: child In. Massachusetts AN ms thirteen gang member From Al
• 8:29
  Speaker 1: salvador accused of murdering A texas man Of venezuelan charged
• 8:34
  Speaker 1: with filming and selling child pornography In. Michigan these are
• 8:38
  Speaker 1: just some of the heinous migrant criminals caught because Of
• 8:41
  Speaker 1: President DONALD.
• 8:42
  Speaker 2: J trump's. Leadership I'm christy nom The.
• 8:45
  Speaker 1: United States secretary Of Homeland. Security Under President, trump attempted
• 8:49
  Speaker 1: illegal border crossings are at the lowest levels ever, recorded
• 8:53
  Speaker 1: and over one hundred thousand illegal aliens have been. Arrested
• 8:57
  Speaker 1: if you were here, illegally your next you will be
• 9:00
  Speaker 1: fine nearly one thousand dollars a.
• 9:02
  Speaker 2: Day imprisoned and, deported you will never.
• 9:05
  Speaker 1: Return but if you register using OUR cbp home app
• 9:09
  Speaker 1: and leave, now you could be allowed to return.
• 9:12
  Speaker 2: Legally do what's. Right leave.
• 9:14
  Speaker 1: Now Under President, Trump america's, laws border and families will be.
• 9:19
  Speaker 3: Protected sponsored by The United States department Of Homeland.
• 9:22
  Speaker 5: Security the theme that kept coming up was you know
• 9:25
  Speaker 5: not you know. Letting we had some huge, winners huge,
• 9:30
  Speaker 5: winners and in some of those huge, winners we took
• 9:35
  Speaker 5: some off the table too. Early our price targets were
• 9:43
  Speaker 5: two conservative and we just left money on the table
• 9:49
  Speaker 5: that could have made a significant. Impact so like the
• 9:55
  Speaker 5: so for, example traditionally we have always so old half
• 10:01
  Speaker 5: of our calls as soon as the premium. Doubles so
• 10:05
  Speaker 5: if we pay two dollars for the option and it's worth,
• 10:08
  Speaker 5: four we sell half and we let the rest, run
• 10:11
  Speaker 5: and you, know we'll raise our stops along the. Way
• 10:14
  Speaker 5: now we won't sell, Half we'll just raise our stops for.
• 10:18
  Speaker 5: Example that's one way that we are sort of. Adjusting
• 10:23
  Speaker 5: and sometimes it's gonna shake us out, right and we know.
• 10:26
  Speaker 5: That and sometimes it's gonna bite us in the in
• 10:31
  Speaker 5: the ass because we could have taken money. Off it's gonna. Happen,
• 10:34
  Speaker 5: Yeah but we think that the longer term implications of
• 10:38
  Speaker 5: letting some of those winners run will outweigh those little
• 10:42
  Speaker 5: paper cuts will get on.
• 10:44
  Speaker 4: A year of a year, basis how much more return
• 10:46
  Speaker 4: do you think they would give you per year doing
• 10:48
  Speaker 4: it that?
• 10:48
  Speaker 5: Way, Listen it depends on the. Strategy of, Course in some,
• 10:52
  Speaker 5: strategies there's no way to be greedier they're just gonna
• 10:54
  Speaker 5: stay exactly the. Same but in a situation like you,
• 10:58
  Speaker 5: know an options, ACCOUNT i mean specifically in an options,
• 11:02
  Speaker 5: account it can make a significant impact because some of
• 11:05
  Speaker 5: these things can really really. Appreciate they could get you,
• 11:09
  Speaker 5: know these calls get in the money and the stock is.
• 11:11
  Speaker 5: RUNNING i Mean i've, Seen i've you, know witnessed huge
• 11:16
  Speaker 5: moves in both directions for the, record but you, know,
• 11:20
  Speaker 5: huge huge, Moves so it can have a significant. Impact
• 11:24
  Speaker 5: LIKE i, mean thousands of percent appreciation in an account
• 11:30
  Speaker 5: potentially is not out of the question at. All, Right
• 11:35
  Speaker 5: i'm not saying That i'm promising ten thousand percent of
• 11:37
  Speaker 5: returns or, something you. KNOW i, mean that is the
• 11:40
  Speaker 5: impact that you can potentially see in some of these,
• 11:43
  Speaker 5: positions especially in some of those yolo calls that we
• 11:46
  Speaker 5: talked about. Before if you're selling a, strangle or you're
• 11:49
  Speaker 5: selling you, know putting together like a put spread or
• 11:51
  Speaker 5: a call spread or, something you know you're not you're
• 11:54
  Speaker 5: going to make a finite amount of. Money it's a
• 11:56
  Speaker 5: higher probability of success, trade but it's a finite amount
• 11:58
  Speaker 5: of money in the case where you can go out
• 12:00
  Speaker 5: a year or two and buy cheap calls in something
• 12:03
  Speaker 5: ten to fifteen points out of the, money and it
• 12:05
  Speaker 5: gets thirty forty to fifty points in the money during
• 12:08
  Speaker 5: that two year. Period forget about. It yeah, right but
• 12:12
  Speaker 5: there's a time and a place those. Grades in a
• 12:17
  Speaker 5: high volatility, environment you can't be doing that. Stuff you'll
• 12:19
  Speaker 5: go broke right.
• 12:20
  Speaker 4: Away final, question speaking of ten thousand percent, return what
• 12:25
  Speaker 4: set of, circumstances what we need to get To kathy's
• 12:29
  Speaker 4: proclamation of a five hundred thousand bitcoin price or one
• 12:35
  Speaker 4: point five for the bull? Case you, think as A
• 12:38
  Speaker 4: i mean a charge, Technician.
• 12:40
  Speaker 5: I'll defer to. HER i, mean she's she's. Smart i'm
• 12:44
  Speaker 5: sure she's done her homework to come up with. That
• 12:46
  Speaker 5: good for. Her you, know let's get to one hundred, first,
• 12:50
  Speaker 5: right and then you, know then we'll worry about. It
• 12:52
  Speaker 5: and we have different time, horizons and her AND i
• 12:54
  Speaker 5: do different. Things so like she's entitled to believe that
• 12:57
  Speaker 5: she could position, accordingly her investors can follow or in
• 13:00
  Speaker 5: that or. Not, Right, like this is a free. Country
• 13:03
  Speaker 5: all of that is great for. Me that's. Great she's
• 13:06
  Speaker 5: obviously doing something. Right good for. Her for, me that's
• 13:09
  Speaker 5: just that is not WHAT i, Do LIKE i do something, else,
• 13:13
  Speaker 5: Like i'm interested in what's happening, Now like our target
• 13:15
  Speaker 5: was forty seven thousand on the bitcoin that was. Hit
• 13:18
  Speaker 5: we've seen rotation into. Ethereum you, KNOW i Think etheroreum
• 13:21
  Speaker 5: goes to thirty eight. Hundred you, Know bitcoin below forty
• 13:23
  Speaker 5: seven is kind of messy for a, While So i'm
• 13:25
  Speaker 5: not really that interested in. It i'm interested in some
• 13:28
  Speaker 5: of the other. Things that doesn't MEAN i don't Think
• 13:31
  Speaker 5: bitcoin goes. Higher in, FACT i. DO i think we
• 13:33
  Speaker 5: get back to sixty five and rip through that and
• 13:34
  Speaker 5: go to one, hundred probably one hundred and. Twenty it's,
• 13:37
  Speaker 5: probably you, know a good a good place to take a.
• 13:40
  Speaker 5: BREATHER i think that that's how it plays. Out but guess,
• 13:44
  Speaker 5: what it doesn't matter WHAT i. Think Right we're stuck
• 13:46
  Speaker 5: below forty. Seven SO i can tell you it's going
• 13:48
  Speaker 5: one hundred and, TWENTY i can tell you it's going
• 13:50
  Speaker 5: to ten, million it doesn't. Matter we're still stuck below forty.
• 13:52
  Speaker 5: Seven so in the, Meantime i'm kind of chilling out With.
• 13:55
  Speaker 5: Bitcoin i'm looking At ethereum and some of the, others you,
• 13:58
  Speaker 5: know go down the, list some of these other alt
• 14:01
  Speaker 5: coins and. Stuff injective protocol has been making a lot
• 14:04
  Speaker 5: of new. HIGHS tia is another. One some of these
• 14:07
  Speaker 5: icos are coming out pretty. Heavy so you, know we've
• 14:10
  Speaker 5: got our crypto scans that we've built over the. YEARS i,
• 14:12
  Speaker 5: mean we've been trading this stuff for a decade almost,
• 14:15
  Speaker 5: yeah about the decade since twenty. Fourteen, yeah so quite
• 14:18
  Speaker 5: some time we started covering. It you, KNOW i. STARTED
• 14:21
  Speaker 5: i wouldn't SAY i was trading. IT i was holding
• 14:23
  Speaker 5: some bitcoin in twenty, fourteen but we really started covering
• 14:26
  Speaker 5: it in our shop in twenty, sixteen so even, then you,
• 14:29
  Speaker 5: know relatively. Early so you, know for, us we've come
• 14:31
  Speaker 5: a long. Way and we do a lot of like
• 14:33
  Speaker 5: on chain analytics as, well WHICH i really really like
• 14:36
  Speaker 5: a lot like because of the transparency of the. Blockchain
• 14:40
  Speaker 5: there's so much more data that we get in cryptos
• 14:43
  Speaker 5: that we don't have in traditional assets like stocks and
• 14:45
  Speaker 5: bonds and. COMMODITIES i would kill to have some of
• 14:48
  Speaker 5: the data that we have in cryptocurrencies in traditional. ASSETS
• 14:51
  Speaker 5: i would kill for that.
• 14:52
  Speaker 1: Data an illegal alien From guatemala charged with raping a
• 14:56
  Speaker 1: child In. Massachusetts AN ms thirteen gang member From Al
• 15:00
  Speaker 1: salvador accused of murdering A texas man Of venezuelan charged
• 15:05
  Speaker 1: with filming and selling child pornography In. Michigan these are
• 15:09
  Speaker 1: just some of the heinous migrant criminals caught because Of
• 15:12
  Speaker 1: President DONALD.
• 15:13
  Speaker 2: J trump's. Leadership I'm Christy, noman The United States secretary
• 15:17
  Speaker 2: Of Homeland.
• 15:18
  Speaker 1: Security Under President, trump attempted illegal border crossings are at
• 15:22
  Speaker 1: the lowest levels ever, recorded and over.
• 15:25
  Speaker 2: One hundred thousand illegal aliens have been.
• 15:27
  Speaker 1: Arrested if you are here, illegally your next you will
• 15:31
  Speaker 1: be fined nearly one thousand dollars a, day, imprisoned and.
• 15:35
  Speaker 2: Deported you will never.
• 15:36
  Speaker 1: Return but if you register using OUR cbp home app
• 15:40
  Speaker 1: and leave, now you could be allowed to return.
• 15:43
  Speaker 2: Legally do what's. Right leave.
• 15:45
  Speaker 1: Now Under President, Trump america's, laws border and families will be.
• 15:50
  Speaker 3: Protected sponsored by The United States department Of Homeland. Security