Options Boot Camp

Basic Training: Here is a rundown of the major topics from the show over the past year: Greeks Pros/cons of buying premium Pros/cons of selling premium Speculating with an ATM/OTM call Hedging with a protective put Stock replacement strategy Pros/cons of basic vertical spreads Ratio spreads Front spreads/back spreads Stock repair strategy Straddles/strangles Spreads with wings: Condors, Flies, etc. Volatility skew Basic calendar and diagonal spreads

Basic Training: Lessons from the Trading Floor Paper flow rules all - Go with the flow! Being obstinate and refusing to adjust to changing market conditions will only cost you money. Don't step in front of the train! When in doubt, palms out!! There is such a thing as an upside crash. Calls are puts and puts are calls. Mail Call: Schooling traders, one question at a time. Question from George: Why were puts so expensive when TWTR options launched? Question from Niles F., Montgomery, AL - I saw an article recently touting a "synthetic covered call strategy" that essentially involved buying an ITM call and selling an OTM call against it. It was really just a vertical call spread. What am I missing? How is this a synthetic covered call? Question from Mr. Gif - Great show on volatility skew. What do you guys think of this piece? Should I, as an investor, avoid these volatility ETFs? Question from Buckeye - A question from John - Can I buy a stock on margin then write covered calls against it? Or does a broker

Mail Call: All Mail. All day long. Question from Benjammin - I am currently a law student and have always been interested in options. I have read about options and am now listening to all of the Options Bootcamp podcasts, which is a great show, to prepare to start trading options! SCENARIO: Assume I sell a naked put option and collected $500 in prem. 1 week prior to expiration the value of the underlying has increased and it looks like the option will expire worthless and I will get to keep the $500. Is there anything I can do other than waiting to expiration to lock in my profits by sacrificing a portion of that collected premium? Question from Richard D - Mark and the Team, The shows are consistently great! Thank you! You may remember me from "the mega question" early in the month. I will be a LITTLE more succinct in these posts. Also thank you for that bootcamp episode on vol and skew! I think expiration and settlement could be a good topic for a future Bootcamp show. Could you discuss a little on how Amer

Basic Training: Trading VIX and Volatility Products What is the VIX? How is the VIX calculated? How are VIX options priced? How do the Greeks work with VIX options? What is the difference between VIX cash and VIX futures? The VIX is NOT a perfect hedge that offers pure inverse correlation of the S&P? VIX can be used as a kicker for extreme events. Beware of VIX settlement process. Remember to understand the context with which the VIX is being represented. Mail Call: How may we be of assistance? Question from Bicycle My - So how do you become a better trader? I have been trading for a few years now and although I am profitable, I have not seen phenomenal returns. Question from Hawkeye6: Can you explain what Maker-Taker is? What is different about it from the traditional methods? Advantages? Disadvantages? Thanks.

Basic Training: Let's talk fundamentals What is Implied Volatility and how it is derived? Why is understanding implied volatility is so important? Historical volatility versus implied volatility. What is skew? Why does skew exist? What is the put wing? What is the call wing? What is investment skew? What are other types of skew? #1 Options question from newcomers - I bought a call option then the stock rallied and my call lost value. Why? How do you evaluate skew? How is skew measured? What is reverse skew? What does reverse skew sometimes indicate? What is term structure? Mail Call: You have questions. We have answers. Question from Nick D. - I am a covered call seller. I have some people recommend that I should sell in-the-money covered calls instead of my usual 5%-10% out-of-the-money calls because of volatility. But why would I want to sell a call that is going to inevitably be called away? What is your thought on this strategy? Question from Charles Midler, Santa Fe, NM - I am thinking about hedging m

Basic Training: Stock Repair Strategy Review Have a downturn in your account? Options can help make that money back. When do you use this? How does this differ from just holding the stock outright? Is there a better alternative to doubling down? Mail Call: Tell us what you want to know. Question from Nick - Can you explain the difference between a front spread and a back spread? Thank for the program. It has a regular spot on my podcast playlist. Question from Avalon 360 - I have heard a lot of talk about covered calls. They are in interesting income trade, but they seem to be leaving money on the table - namely the put. Why does no one talk about covered straddles? After all, if you are comfortable selling the vol or premium on one strike you should be comfortable selling both and collecting twice the income?

Basic Training: It's that time of the year again. The kids are back to school, so let's go back to school as well, and refresh our listeners on the options basics. What is an option? How do options work? What is a multiplier? What are the greeks: Delta, Gamma, Theta, Vega. Long premium vs short premium. Option Drills: A review of the basic positions: Long call - Short call - Covered call - Long put - Basic vertical spread - Collars. Others can be found in previous episodes. Mail Call: Question from Dave S. - In the Options Boot Camp podcast #28 and #20 you discussed buying deep in the money LEAPS and selling shorter term calls against them. If the calls you sold expire worthless everything is great. What happens if the underlying goes up and the calls you sold are in the money at expiration? Is it better to just buy back the calls or let them get exercised? Can you discuss the process if they are exercised? Do I need to sell the LEAP to cover the call that was exercised?

Basic Training: Trading Diagonals What is a diagonal? Why would you put it on? What adjustments need to be made? How is it performed? How does it differ from a typical horizontal calendar spread? Why would you use a calendar vs. a horizontal spread? How do the greeks differ? How do you choose the strikes? Mail Call: Fall in, recruits! Question from Richard D: I think a whole boot camp show on skew could be very helpful! Thanks! Question from Hawkeye6: Love the pair of calendar spread shows. Can you make it a hat trick and have a show on double diagonals and double calendars? I am especially interested in hearing about selection criteria -- what makes a good candidate, criteria for strike selection, when to pick DD/DC vs. Condor/Iron Condor, etc.

Basic Training: Pro Tips Swap LEAPS for stock when writing covered calls. Everyone, even pros, have losing trades. Never ever ever enter a market order in the options market place pre-market. Swap in-the-money calls for stock whenever possible to utilize trading capital more efficiently. Use implied volatility on all your option trades. Don't base a sale or purchase of an option based purely on the implied volatility levels without understanding the context on the implied. When looking at implied volatility, be very careful around expiration. Don't be a lemming and blindly follow "unusual activity". Often it's better to sell the strike where the unusual buying activity took place. Swap in-the-money calls for stock whenever possible to utilize trading capital more efficiently. Fit the strategy to the situation. When reverse skew flips, it's usual a big buy signal. Mail Call: Question from Ron Yuravich - I listened to the podcast on calendar spreads and would like to know what book do you recommend that is c

Options Bootcamp 27: Calendar Spreads, the Sequel Mail Call: So many questions, so many answers. Question from Alpha_Dog - Let's say I buy the Ford August Week 1 17 call, and then sell the July Week 4 17 call for a $.07 debit. How does that position make money? I don't get it. Don't both calls make/lose money as the stock goes up and down? Question from Nevin Pierce - What is more important when trading time spreads - gamma or vega? Is vega the source of profit and gamma the source of risk, or vise-versa? How do I profit of vega without a corresponding large move that ends up costing me more with the gamma? Please help options drill instructors! I'm in over my head! Question from Tim Nettles - I am confused about time spreads. I don't really get how they work and how I'm supposed to view them. For example, in the XYZ July/Aug 50 call example cited my Mark Longo - what do I do after the July leg expires? Should I consider that or should I close out the whole position prior to July expiration? What if I was u

Options Bootcamp 26: Calendar Spreads Basic Training: Calendar Spreads This builds on the knowledge from episode 13 "Basic Spreads" and episode 14 "Advanced Spreads" from December. What is a calendar spread? Why would you want to use a calendar? Calendars are much more complex that basic textbooks tell you. The delicate balance between gamma and volatility in a calendar trade. Can't use P&L diagrams How do you manage a calendar?

Options Bootcamp 25: Using Options in Retirement Accounts Basic Training: What can and can't you do with options in a retirement account. Retirements accounts do not let you use margin. Stick to the covered calls. Mail Call: Listener questions are filling up our inboxes Question from Aman16 - Where does the "Iron" part of Iron Fly and Condor originate from? Question from Tim Phillips, Boston, MA - What is your referred way to express a near-term bullish outlook on a stock? Write an ATM or near ATM put or use a stock replacement strategy (deep ITM call)? Question from T_BO - When should I use a stock replacement strategy vs. call or call vertical? Question from Anaz9 - If I buy 1 ATM, sell 2 OTM calls in a ratio spread, how is the margin calculated on the naked portion? Is it the same as selling naked OTM?

Basic Training: Alternative Income Strategies: Writing covered straddles vs. covered calls. What are the benefits of writing covered straddle vs. calls? What are the drawbacks? Remember your synthetics: Covered straddle = short two puts. Some additional pros and cons of this strategy. Mail Call: Listeners Take the Mic Comment from Ronald Yuravich: I heard your podcast of the Option Boot Camp episode talking about straddles. I don't like straddles because I would have a gain on one side, but it didn't cover the loss on the other side. I prefer strangles better, but only when vol is high, like in 2008. On September 15 I placed a trade on XOM after I got home from work that would be placed for the opening of the next day. I bought 3 JAN 09 90.00 strike calls and I bought 2 JAN 09 45.00 strike puts. XOM was trading around 65.00 a share at that time. The next morning when the markets had opened, I checked to see if my trades were placed, and they were. I was watching Bloomberg around 11:00 AM and saw that XOM was

Basic Training: Getting to know the fundamentals What is a Straddle? Why would you want to use it? Straddle pros and cons. Iron Butterflies and Iron Condors are straddles and strangles with protection. Gamma scalping is the only way to really make long straddles profitable over the long run. Exiting straddle positions is difficult to do effectively. Using straddles pre-earnings Scammers love to pitch straddles, saying "Make money in any market condition." Be careful. Mail Call: Even bootcampers get mail privileges. Question from Alan Utchins, Baltimore, MD - I read with great interest the recent article about options trading in the New York Times. The article seemed to contradict everything you've discussed on this fine program. They highlighted several studies that they claimed prove that most options traders lose money. What is your response to this? Is this essentially a hit piece on the options market or does this author have some valid points? Question from Optrader - What books would you recommend

Options Bootcamp: Exit Strategy Basic Training: Why is it so important to have an exit strategy? What are the rules of thumb when closing out positions? Should you be more aggressive when closing out long or short positions? What are the rules of thumb regarding when to roll you positions vs. closing? Mail Call: Boot campers have so many questions. Question from Teddy Z: Mark - Love the show! I've listened to every episode. I think I'm getting a handle of this stuff now. Just wanted to ask - What do you guys think about ETF options? Are there any you prefer over others? Perhaps that's a good topic for a future show. Question from Alexander Gustaffson, Stockholm, Sweden: Guys, just want to let you know that you have a big following in Sweden. Maybe you should plan a live show in Stockholm one of these days? My question regards single stock futures. They are very popular in Europe but don't appear to have caught on very much in the U.S. I wonder why that is? Can you discuss the hedging of option positions with

Options Bootcamp 21: Playing Defense Basic Training: Playing defense with options: it’s very important right now! Basic Defense: Protective Puts (full overview in Ep. 3) How do you hedge your position with protective puts? Intermediate Defense: Put Spreads and Ratio Put Spreads. Covered Calls - (full overview in Ep. 4) How do you generate income with a modest hedging impact? The Power of the Collar: combining the put and the call into a beast of an option. This is the favorite defensive strategy of most financial advisors who use options. The pros/cons of repeatedly doing zero cost collars. Volatility Defense: VIX Options/Futures. The myth of VIX's perfect inverse correlation- there are problems with relying on volatility as your only hedge, i.e. black swans, days when VIX outperforms, etc. The pros/cons of direct defense vs. indirect defense. Mail Call: Hey recruits, what do you want to know? Question from Tina K. - When (if) should I consider volatility products as a hedge? Question from Mr_Zen - Can yo

Basic Training: We present two choices for using options in lieu of stock: Stock Replacement Strategy. How does it work? Examples include: An ITM leaps call purchase - requires premium over parity payment Selling a one month ITM put - for the more options savvy trader. By swapping out a LEAPS for an underlying, you get a much more preferable position from a Greeks perspective. Stock Repair Strategy Under the right set of circumstances, it can be very useful and practical. Appropriate for stocks that fall in value of 20-30%, that you feel within a few month can recoup half of it losses. How does it work? Mail Call: Bootcampers get their questions answered. Question from M Higgins: My financial advisor is not a big fan of options. He keeps trying to steer me into annuities and life insurance policies instead. What do you guys of those products as investment vehicle instead of using options? Question from Mr. Anonymous: I've heard a number of options traders, including hosts on this network, use the term "leg

Basic Training: The topic this week is margin What is margin? If I have leverage in my options, why do I need margin? Is it possible to not qualify for margin? Why do you need a cash account? What can/cannot you do with a cash account? What are some of the most common risks, mistakes or problems customers run into when implementing margin in their account? What are the benefits of portfolio margin over other, different types of margin? Mail Call: Let our drill instructors answer your questions. Question from Jason Cruz, heyojayo: Would Bootcamp be able to detail the pros and cons of buying two 50 delta calls vs. one 100 delta call, or point me to an episode if there is one already? Question from Tad Briggs: What does the term "risk reversal" mean? What risk am I reversing? How should I use this strategy in my training?

Options Bootcamp 18: The Joys of Synthetics Basic Training: Today's topic is Synthetics What is put/call parity? Example of put/call parity. What does it mean for your options trading? What are synthetics? What is a married put? Why knowledge of synthetics is important for successful options trading. Mail Call: Fall in for listener questions. Question from EonJ: Does portfolio margin matter if I am just trading long verticals and ratio spreads? Question from Phil S., Santa Fe, NM: I attended an options seminar recently where they promoted the selling of credit spreads in Apple and Google. I'm still somewhat unclear on the concept however. What exactly is a credit spread and how does it differ from other spreads like straddles, call spreads, etc.? Thank you for your time. I just discovered your program and I'm looking forward to listening to your earlier episodes. Question from Ephram J.: I'm a CFP and I'm starting to add options to my asset mix. Does Sogotrade offer a platform and/or specialized tools for

Options 101: The quintessential options debate -- buy options or sell them? Many options professionals lean toward "when in doubt palms out." Simplify the options universe into two segments of risk: directional risk and volatility risk. The use of delta and other Greeks when deciding or analyzing when to buy or sell options. Short premium pros and cons Long premium pros and cons Mail Call: Recruits are asking a lot of questions. Question from Tim Nagerty:Mark and the other drill instructors have repeatedly stressed portfolio margin on this program, but I'm somewhat confused by this concept. Can the hosts explain the benefits of PM for an options trader? I have about $70k in my trading account right now. Is it worth it for me to transfer in the extra $30k to me the $100k limit to qualify for PM? Lastly, does SogoTrade/Wang Investments offer PM for its customers? Thanks, love the show! Question from Allison S., Spokane, WA: I thank you all for this wonderful program. Do you have any plans to take Options Boo