My name is Erik and welcome to my channel- Option Edge. Option Edge is devoted to demystifying the complexity of options + option trading. In addition to talking and teaching about options, I also discuss stocks and crypto.
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How does the profit get calculated throughout the day if it’s a flat profit area? Right now I’m doing debit spreads for a couple day expiration and if we didn’t have the day trading rule I’d be returning fast profits but I don’t understand the calculations for iron condor
@@Abears_ I’m not sure what you mean by “how does the profit get calculated throughout the day” this isn’t a 0dte trade. The contracts expire in 30 days. Since this trade is a net credit the max profit is the credit received which is $1.04 in this video. Max loss will be the width of strikes of the spread ($5 in this video). Minus the credit received ($1.04) $5-$1.04 = $3.96 max risk. A iron condor is a the combination of two credit spreads: a call credit spread and put spread. It’s a flat profit area between the short strikes of the condor: $190 short call and $160 short put. Your profit is the exactly same as long as price stays within those strikes. Hope this helps. Feel free to ask more questions.
@@optionedge8324 Not sure why my last comment disappeared but I was saying that I opened a spread trade and the expiration was Friday but I closed 6 hours after opening for a 25% profit. You don’t have to hold for expiration. Since iron condor spreads are flat profit how do they calculate the profit say on day 1 or 2 if price is within your spread parameters
Yes of course. In addition there is a “bracket” feature that allows to set a stop loss while simultaneously setting a gain limit. So if you wanted to you could have stop limit set to 50% of the contract value and then a gain limit set to 50% gain and it will execute whichever hits firdt
Great Video Erik! I learned this awhile back… the current generation call it a “Ghetto Spread” 🤣 I was taught its legging into a debit spread… one leg at a time once profit needs to be protected.
@Option Edge Think about the risk you were taking. NVDA went up more than 25% after it announced earnings, META dropped more than 20% after earnings last year, these kind of moves are not uncommon anymore, I don't care what any AI or social platform are saying. There are other, safer ways to play earnings if you must do it
@@guyredares I hear you. However, in order to be rewarded, you have to take on risk. That’s the name of the game. There are adjustments you can make if the stock moved against you. You can roll out and up, sell a put to neutralize delta, etc. if you have a strategy that’s better I’m all ears.
@@optionedge8324 Yes, you do need to take calculated risks but with catastrophic events in mind. Had you sold a naked Call on NVDA prior to its last earnings there is no way you could have rolled your way out of a gigantic loss which would take you months or even years to recover from. My point is that you made $50 by taking a much larger than $50 risk.
I bought the 10 puts and sold the 8 puts. It’ll be almost a 3 bagger if it closes tomorrow around 8. I play these super small so I’m not making much at all ha
yeah, 50% profit stop and 50% loss stop is what I usually go by. I usually always close out right before the short leg expires. You could roll down the short leg for a larger credit, but if you do that and the stock rips you could end up losing money. Gotta be careful with that.
Word of advice, check out the inner circle trader, it changed my trading life. Ditch the indicators and learn candlesticks, i used to be in your spot my friend. Price runs to liquidity and imbalances, god bless
Lets say you sell a $90.00 strike cash secured put for a credit of $1.00 in a stock currently trading at $100.00 stock. You're breakevn point on the trade would be $89.00. short strike - credit received = breakeven ($90.00 - $1.00 = $89.00) If the stock gaps down to $85.00 at expiration, you would be "put" (AKA buy) 100 shares of stock at $90/share. This means you would be down $400. ($89.00 - $85.00 = $4.00 x 100 = $400). At this point you could sell a call over the 100 shares of stock you know own (covered call strategy). Since your breakeven point is $89.00 you would want to sell a call at a strike price that is above $89, or slightly in the money, as long as the credit received would allow your breakeven to be above $89.00 still. For example, if you sold an $87.00 call for a credit of $2.00, your breakeven would be $89.00 and you wouldn't lose money if the stock breached the short call strike.
Gotta watch those sub 10$ stocks. Just because it's a 2 deviation drop doesn't mean it won't happen. I tried to pick up some " easy premium" A few times like that from cheap stocks and got screwed.
I do, I use this strategy on Spy for weekly income. I shoot for 20-25% profit. Keep a tight stop/loss. The dbl calendar has worked extremely well for me when I play earning on a high flyer like NFLX, Tsla, Roku,Amzn,etc. I really enjoy your videos and perspective. Thank you! 🙏🏼
Excellent video . What you think for Monday? Follow thru from Friday. We shall see .Eye on the ten year and Dxy and so on green screens tomorrow my friend
Thanks! I think we'll see the market continue to rally for tomorrow at least. Pretty oversold. There was also a rumor that Fed wants to slow down rate hikes
What a day crazy I’d like you to check out my guy, he got me back in the market after a long hiatus.Anyway the guy is amazing taught me more than any book or course I’ve done or read You may or may not like U tube Gregory Mannarino .Only thing I did today bought more JEPI Let me know what you think of him
The last couple months were pretty demoralizing. It was hard to continue making videos. I guess everyone is a genius during a bull market. And yes, my stock holdings are worth a fraction of what they were back in Feb 2021
@@optionedge8324 Yes I hear you.I sold every equity,should of done it earlier.Just got back in slowly.JEPI etf treat’s me well monthly dividend does all right.They trade like me sell covered puts but the monthly dividend is sweet
How are you my friend?Wanted to say I like your charts thanks I need brushed up on occasion.I look at debt market 10yr and such works or help me.Risk on risk off.It’s headed for interesting week.Let’s rip the face off the market .
@option Edge Hi, I have a question about the Rolling option. I bought Fb for $ 235 call 4/8 1 contract for $459 yesterday. It expires on 8th April. Now the market is on the decline and I was thinking of using the rolling option When I select roll for April 14th and select strike price as $ 310, it shows the total credit as $29. What does that mean? I am new to options trading Will I be charged $459 -$29=$430
Sorry. Just saw this now. None of this is financial advice but there is a 99% chance you will lose all of your money on this trade. If it was me, I would take my loss because if you roll out in time for a debit, you will end up also losing the debit you just paid for