mark, thanks for another great video. Would you be able to do a video on how much due diligence you do before you feel comfortable taking a position? Especially with respect to building a portfolio, how much time and how granular do you get into individual names before you feel comfortable putting risk on? building out complete financial models (DCF, DDM, EP etc.) for 7-15 names in a portfolio in tandem with assessing peers in an industry seems a bit extreme, but where do you draw the line? appreciate all your work and willingness to share your insights.
As always Mark, excellent content. I wondered whether it would be possible to do a video on national debt? Interested to understand how you source and interpret the data as well as how all this links to central banking. Would also be super interesting if you could do a video of a central banks balance sheet. Also happy VE day!
Mark - BYND has gone up to 140 level - could you please elaborate on how are you hedging it and what the risk management strategies are when stock move against you. A short video on this will be great - Thank you.
Hi Mark. Always a fan of your content and always very helpful for learning how to apply CFA concepts to the real world. Just a question for you, given that BYND is now trading at 145, I presume you would have some risk management strategies in place as the stock moves higher to your call price. Mind sharing in this scenario, what kind of actions would you have taken to mitigate the risk as the stock goes higher? (i.e buying the underlying stock?)
Hello Mark! one quick question, if the short BYND position has a zero price why dont you set it up for a longer time horizon such as 2022 options to allow it to play out ? You can always close them out before expiration....I ask because of the type of stock, the short term movements can be quite unpredictable! Thanks for the great content by the way, learning a lot from your youtube videos, and just now enrolled on your site to prepare for CFA 1 Dec 2020!
Hi Mark. I was wondering if you could also talk about your selection process for positions. How do you research what you like, how you go about screening and the like. I think many people here would be interested to know and I suppose it would be a good way to showcase the application of different subject matter covered in the CFA. Thanks
Hi Sir ! Your videos on CFA curriculum helped me a lot. And, the lights you put on the things which are going on in the real world is actually amazing. I would love to learn from you as much as possible. Is there any way to connect?
hi Mark. would you consider political factor for BYND short position? China to buy American goods or provide market access as part of trade negotiation?
Mark, what about a 5th strategy to short the S&P where you buy a put with a strike at 2500 and then you sell a put with a strike price at 2000? If it doesn't go as expected, I lose a specific amount of money only, whereas because I don't believe it can go lower than 2000, I want to "cap" my target and get some money to fund the first put option.
any thoughts on eurn? They raised the dividend to quarterly of 0.81$ , which would essentially be a 32% yield. Obviously not sustainable long term, but holding the stock for two quarters while selling covered calls seems like a relatively good bet, since I don't believe that oil tanker demand will fall substantially before end of 2020 at the earliest
Hi Professor Mark, I’m always curious how the VIX index derive from and how do we trade market volatility, are you familiar with that? I would be appreciate if you can talk something about the topic
Great Video! Mark, ABR's results are out and I see they didn't cut their dividends and their CMP is well below the Book Value per share. Could you do a video on how to evaluate earnings and what to make of management not cutting the dividend even in these times?
Could you explain the reasoning behind "divide by 2" to locate a 10ask call. Thank you What broker platform are you using, the option builder feature looks very useful.
I believe /2 because he is selling 2 calls. Buying 1 put costs him $0.2 per share*100 shares (1 contract) = $20. Selling 2 calls yields him $0.1 per share*200 shares (2 contracts) = $20. 0 cost. He uses IB (Interactive Brokers if I'm not mistaken).
Thanks for the content Dr. I have a question. why would someone buy the $160 call you're selling ? I mean all the big firms are forecasting a low stock price for BYND
Heya guys! Mark mentioned dollar beta in the video, do you guys know know where I can find more information regarding using dollar beta to see portfolio risk? Is the topic covered is CFA L2 or L3?
Dr. Mark. my 4th question on your videos, but I have never got a reply before. But I don't give up. How do you manage an options position risk, if the trade is positive/negative with some time to expiration, if you find out you are wrong or if you want to let the profit ride. It's very costly to book profits, you leave a lot of money on the table. Thank you
If the payoff is large in a short period of time, I take it. If it is moving against me, I assess why. If I don't believe the move I continue to hold. If I come to the conclusion that I made a mistake - I'm out. Or, If I can hedge out with the underlying, I do that.
Mark Meldrum When I placed the sell call order at 165, Robinhood told me that I don’t have enough stock as collateral. Could you let me know what should I do? I don’t want own BYND
To close the calls on BYND you would have to buy them back right? If it got higher than 165. I have Interactive Brokers, but it would not let me do naked calls. Do you know why?
Buy the back, yes. Or buy the stock on the close of expiration date and have them called away. Chances are you do not have permissions set, or your account is too small, or your profile does not include speculation as an investment goal.
Personal advice: Never do this strategy. He didn't go into details how risky this is. Even stated some misleading things. Again, don't sell uncovered calls in 2 : 1 ratio with long puts! NEVER! That's a recipe for default. It's much worse then just being short on the stock.
@@MarkMeldrum Sure Mark. All the respect to you I like the content you create and the disclaimer you did was quite broad. There are people here who obviously have low option knowledge and with combo strategy they can go to default. In the 13:00 mark you state that you don't lose any money until BYND doesn't go above 165. That's true if we are looking at profit/loss profile at expire (or at European-type options) while things might end long before expire date. American naked call options require margin accounts to be sold. Call premium is highly dependent on IV (implied vol.). If the price skyrockets in 1 day to 160 the IV is going explode and the MTM loss on such position can become devastating. The long put won't even matter. Best case scenario is margin call and huge loss. You can be liquidated without BYND ever touching the strike price. I once heard: "The market can remain irrational longer then you can remain solvent". To put it short - the IV can become infinite number (HUGE) so does the time value premium of option (so does the ask price to close). The broker is going to cut losses on MTM basis. The risk I talk about is definitely not worth the "free" long put. If the 1-day rally is up to 170-175 the things can become really ugly really fast. It's similar about the combo regarding S&P. If you people wanna short - buy puts or go short stock + OTM call insurance. Don't sell naked calls. Margin account can easily blow on that. P.S. i looked at the comment after mine. @Ernest mak asks isn't it safer to short 4 180$ calls vs 2 160$ for safety. Imagine where this guy is headed if things go slightly the way i describe. Yanko Dolapchiev
What you say is true, when you consider the suitability of a security in isolation along with its risk. My channel is dedicated to CFA candidates primarily. I can’t stop others from watching, but they are not my audience. What you are watching is one video in a series. Like looking at one piece of the puzzle without the benefit of the whole. I say in many places not to copy me. This series adds to a longer series called the Applied Market Series, the purpose of which is to apply the words on the pages in the CFA content at all 3 levels to the market. It is an extension of the education within the CFA series. One of the things that is learned very early in Level 1 is that you cannot judge the suitability or risk of an investment in a stand-alone context, but only within a portfolio context. What may appear to be an unsuitable investment for an investor may in fact lower portfolio risk when added to other risky securities. Another video I did a few days ago demonstrated a zero cost long position on the SPY by selling two puts and buying one call. That will have a certain delta and beta exposure. I have also been adamant that you should not short the market, but rather short individual names. The addition of a short position using options on BYND will actually lower portfolio risk since it comes with negative delta and negative beta exposure. Further, the combo strategy in this video is far less risky than taking a short position on BYND directly or using a synthetic short. Within a portfolio with a long bias, other securities in the portfolio will act as margin. I also say that if this moves against me I will engage in risk management tactics long before it becomes a problem. I do not say “Hey everyone, do what I do, and head to my website and give me money where I tell you more things to do”. I have already done a video on sleazy website like that. This series is not meant to be a “Do as I do series”, it is meant to show the application of CFA content to the market using examples. For those non-CFA candidates looking around on RU-vid for guidance on what to trade next, they will lose their money anyways - they do not need me for that. That is what Mad Money and CNBC is for.
When you are selling naked calls, you are introducing infinite risk! How are you managing that risk other than spending the capital on 10000+ shares of SPY to hedge the delta? Not everyone has 3 million dollars to use to hedge their position...
@@MrSabugas right but by buying those calls, it will cost a lot upfront & then if there is a pullback those calls with higher strikes will lose value faster from theta decay!
Selling 2 contract = 200 shares, the market/economy doesn't jump from 300 to 5000 in 3 month. At the same time, shorting of course has more risk than long, but its about risk and rewards. Also, he is probably holding underline SPY as well so more like a collar.
As I say in the video, and in many places - DO NOT SHORT THE MARKET. However, I do get asked how a short can be done. My channel is dedicated to CFA candidates primarily. I can’t stop others from watching, but they are not my audience. What you are watching is one video in a series. Like looking at one piece of the puzzle without the benefit of the whole. I say in many places not to copy me. This series adds to a longer series called the Applied Market Series, the purpose of which is to apply the words on the pages in the CFA content at all 3 levels to the market. It is an extension of the education within the CFA series.
