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2021.09.15 – SESSION 27– GO ASK A TRADER

8 replies, 6 voices Last updated by Sherri Locke 1 month ago
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    • #17950

      Sherri Locke
      Keymaster
      @KDAKSj4ux
      Going to The Trading Triangle LIVE 2016Ultimate Income Trader Workshop

      The video index for this session has been posted. Enjoy!

    • #17927

      Sherri Locke
      Keymaster
      @KDAKSj4ux
      Going to The Trading Triangle LIVE 2016Ultimate Income Trader Workshop

      The recording of the GO Ask A Trader session from earlier today is ready to view. Enjoy!

    • #17921

      David Wagner
      Participant
      @hazelnutfoundry@gmail.com
      Points: 298
      Rank: Freshman

      Hi John,

      After seeing a few different people online touting 7DTE SPX trades (bull put spreads), I decided to backtest this idea. Surprisingly, my testing showed it works reasonably well across a number of market conditions, assuming risk is tightly managed. However, intraday and overnight exposure is significant. So a couple of questions:

      1. First, what’s your opinion on these types of trades in general? And, when (if ever) do you trade shorter term trades like this?
      2. Managing intraday risk drastically changes the characteristics of this trade for the better. In your experience can automatic stop loss orders be viable for something like a credit spread? You mention them in the FIT program, but I’m wondering what the risks and benefits might be in a scenario like this.

      Lastly, I’ve seen a number of people recommend rolling “down and out” as a sound defensive technique for credit spreads. When (if ever) would you consider this type of adjustment on any of your trades?

      Thanks!
      David W.

    • #17849

      John Locke
      Keymaster
      @john-locke
      Going to The Trading Triangle LIVE 2016Locke In Your Success CoachAPM2Trade JournalsUltimate Income Trader Workshop
      Frank M
      What I have also found very difficult with trading your strategies is making adjustments, when the market is experiencing the big down moves.  Since Mid-price is all over the place, it’s hard not only to determine what a good price might be but it’s almost impossible to get fills.  Again, any suggestions or can you point me where I might be able to get some direction on this topic.
    • #17795

      olufemi george
      Participant
      @olufemig@outlook.com
      Points: 120
      Rank: Newbie

      is it possible to trade the V32 and m3.4u using IWM and if so, what setup changes need to be put in place? Thanks

      • #17850

        John Locke
        Keymaster
        @john-locke
        Going to The Trading Triangle LIVE 2016Locke In Your Success CoachAPM2Trade JournalsUltimate Income Trader Workshop

        George,

        I’ll address this on the meeting as well. Is it “possible”?    Yes, but I would avoid using IWM for 3 main reasons. 1. The IV skew curve is different in IWM than it is in RUT meaning it will react differently (not necessarily worse but different).  2. Your paying 10X the commissions and at that rate it will be more challenging to maintain profitability. 3. Assignment risk on short options means you’d want to be sure you have enough money in the account to own the stock to avoid a margin call.

        To avoid assignment risk, you could use MRUT mini index options but the 10X commissions still apply as does uncertainty in the assets IV structure

    • #17787

      Erwin Storms
      Participant
      @storminator@telenet.be
      Points: 127
      Rank: Newbie

      Hi John,

      I have following questions:

      1. I’ve experience some trouble getting filled closing out a butterfly (few weeks ago). Looked in IB platform and modified price a few times in order to get filled; rather difficult it appeared. (..and it was just one lot only). Any suggestions in order to avoid such situations? Anything I should be aware of? Watching several of your videos, you trade way larger positions so I suspect there must be some kind of thing that I did wrong in my example; I initially aimed for midpoint and then modified gradually as I couldn’t get filled)
      2. over past days, it appears that option premiums are relatively low to before although VIX is not dramatically different (16.5 today vs. some 18-ish a few days ago). Is there an explanation for that? (I type this in on 11AUG, slow period in market it appears)
      3. in relation to selling naked options: in IB I can put in a bracket order in order to overcome any irresponsible risk situation. I’ve done this a few times and when price moved against me, the STP leg worked fine and took me out at a pre-defined risk (with a little slippage ~ 0.2$). Just to be sure: having such a bracket order active, is that ‘ok enough’ ? (…or am I still exposed to risk that I don’t fully appreciate at present). The example I refer to is related to 0DTE setups, so I never take on overnight risk for that strategy. (I also do the bull setup and for that I use the guidelines ref. STP, it’s only for the 0DTE that my question is relevant and that I use bracket orders. It’s the only strategy I trade like this, works fine so far but just want to hear your advice on this risk mgmt. approach; I always use stops and am disciplined to never move them).

      Am in another time zone so it might be that I cannot join live, but then will certainly listen to recording afterwards.

      Thank you for your help.

      • #17793

        John Locke
        Keymaster
        @john-locke
        Going to The Trading Triangle LIVE 2016Locke In Your Success CoachAPM2Trade JournalsUltimate Income Trader Workshop

        Thanks for the questions/topics E S. I can address them in the meeting.

        There is one topic however that can be rather urgent and that would be the topic on naked SPX options. There have been in the past, and will be in the future, instances where you cannot get out of an index option, even trying to exit manually. My point being you cannot expected to ALWAYS be able to get out of an options position. Therefore, I would recommend trading with the realization that certain events may occur where you “could” realize the entire amount at risk in the position.

        Regarding a naked 0 DTE, PM settled, SPX option specifically, the asset movement is limited to 20% in a trading day by circuit breakers and they expire that evening meaning, at least theoretically, your risk in the naked option would be limited to the result of a 20% move in the SPX

        Whather or not you want to take that risk is a choice but personally I would not trade naked options.

    • #17786

      Jenica Locke
      Keymaster
      @Holzschuh8Jenica

      We highly encourage PRO, GO, and Trading Performance members to post their questions and topics to be discussed in the REPLY TO text box below at least 48 hours in advance of this meeting.

      Click here if you would like to request a mini coaching session.

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