Please note slide correction at 07:48 Should read "at any price at or ABOVE 295 both puts would expire worthless" SMB's Options Workshop: bit.ly/3K4ac79
I asked before but looks like it disappeared and so reposting the question. I watched the workshop through the above link. I saw the discounted offer presented at the end. Question: The training that was offered was done recently or created long time ago. Hope someone from SMB answers it before I buy it. Thanks.
To be successful in markets, traders should understand the crossover between asset classes & liquidity flow. Ronal’ focuses on Multi-asset trading, a single strategy to manage risk, profit, and the code or the actual decision-making across multi-asset classes. His skills set is top notch.
My trades are 95% backwards too. I really think about switching, but I'm afraid to. When all RSI, MACD, Bollinger and MA are saying uptrend, I buy and it goes down for the next 500 ponts, then consolidation for 3 days 😢
I Hit 34k today. Thank you for all the knowledge and nuggets you had thrown my way over the last months. Started last month 2024. Financial education is indeed required for more than 70% of the society in the country as very few are literate on the subject. thanks to Louise O'Brien for helping me achieve this ..
Just a few observations from my side I have traded options for over 15 years what I found was I was very profitable selling far out of the money credit spreads in fact one year I had almost 200% return however the one loss can potentially wipe out all the gains. Just to give you a perspective I grew a 27,000 account to $96,000 and then I lost 25,000 in one day, and then another 3,000 the day after that which completely destroyed my confidence The mistake I was making was I traded my entire account but now I just trade small positions and take profit when I can. The account doesn't grow as fast but there is a certain level of safety and also peace of mind
$330 credit vs. $4700 maximum loss at a 90% chance of win? $330 x 9 wins = $2970. 1 loss at $4700 without stop, buyback, or rolling out. $4700 - 2970 = $1730 net loss over 10 trades.
You are on the right track, but you have missed something. You have the max loss right but there can be various outcomes when the closing price falls between the short put and the long put. The bottom line is that, thanks to the efficient market, the expected return over the long run is zero.
Appealling for the high win rate--I am sure in the cases when the trade goes against the position can be mitigated. Just tried to conduct this trade on TradeStation as a strategy test, unfortunately did not have the $200k+ available funds to execute a $2,355 max loss trade for a $220 credit. Maybe just need more permissions (higher account trade level)?
Credit spreads are negative vega trades which is ok when IV is high to maximise the returns. If IV is low then a positive vega startegy is ideal like a diagonal spread.
The negative comments here are unhelpful. SMB has consisently provided among the very best educational videos about options and trading. They have full training programs for aspiring traders and while these videos are very well done and easy to follow., they don't pretend to be the "be all and end all" for options trading. Any self-respecting trader should do their own due diligence and if they did, they would realize there's a little more to it than what is explained in this video. For instance, a 90% win rate is certainly not guaranteed, esp over a short interval of trades; the video doesn't say otherwise. SMB Capital provides excellent customer support and is very responsive to questions. If anyone thinks that all they need to trade successfully is a 15-min video, they shouldn't be trading. Kudos to SMB Capital.
I have a high opinion of SMB capital as well. However, I respectfully disagree that it's "unhelpful" to point out the drawbacks in what's being presented. The "negative" comments here are not on disputing the 90% win rate, it's that the market makers are normally not paying us enough in premium, to compensate us for the 10% we lose in these trades over the long run. If I win $1 in 9 trades, and lose $12 on the 10th, that is not a "wonderful strategy" IMO. The only reason the strategy presented was a nice "winner" was because the perfect time was cherry-picked to implement it, at the end of 2022 with a year long bull run to follow. The magic was NOT in the strategy, it was in the 20/20 hindsight as to what the market did for that one year period! I think Seth would agree with that to be honest. Pointing that out is not being "unhelpful", I think on the contrary it's being quite "helpful" to point out to newer traders that they need to understand the reality of things. And the reality is, market makers are NOT in the habit of overpaying us for credit spreads we sell, they underpay us, that's how they make THEIR money! So the truth is, you have a have a real "edge" to make money, and 20/20 hindsight is NOT an edge, it's wishful thinking. We could have easily had a "thesis" that the middle of 2022 was "the bottom" and lost our shirts with this strategy. Or the market could have bounced the first few months of 2023, and then rolled over again, and again, given us a full and painful loss. So it's no use pretending, as the demo optimistically did, that we can simply predict, in advance, that we are in for a year long bullish market.. And if the market maker is underpaying us for our credit spreads, then I don't see how that's a very wise bet to take, since we can't predict the future, unless we have some other another actual "edge" (other than hindsight), to overcome that typical underpayment of premium by the market makers.
@@WorldSpectator705 Ok, I'll concede you have a point. Perhaps it would have been more "complete" for the video to clarify that the "90% win rate" is not a strategy in an of itself, but must be combined with an exit strategy to limit the 10% of losses to something far less than the max. For example, if the premium for 1 contract is 33 cents (for selling a 10-wide put credit spread), then the expectancy formula = # wins * avg win/trade - # losses * avg loss/trade = 9 * .33 - 1 * 9.67 = -6.7; in other words, a LOSS of $6700 with 10 contracts. However, by mitigating those losses with, say, a 3x credit premium strategy, e.g. exit with a Buy-to-close order when the price of the spread rises to 3x the initial credit premium, that could change the expectancy formjula such that you're in nicely positive territory.
A 90% win rate but what is expected value? I never sell options because the risk reward is in reverse of what it should be. I am a debit options trader that makes asymmetrical small position size bets and hoping for home runs
10-Delta diagonals and now 10-Delta Put Credit Spreads!! Now I have 2 High Probability strategies!! Also, my Hope is restored! SMB's option education is Holistic. The while, SMB is sharing the wealth.
problem with that weekly spread is that the credit received from a 10 delta (mentioned in video) will be a joke due to the minimal extrinsic value . $50 credit $400 +loss if breached type of a scenario .At least with spy qqq s etc .
I appreciate effort to create detailed explanation of strategy, but one important detail was omitted. If strategy is wining 90% of time, it doesn't mean its profitable, it can still blow up an account. So, many times it was said that strategy won x10 times in a raw about $350, which makes $3,500 profit. But it was as well said that broker wanted minimum of $4,500 in the account. So, I guess worst case scenario loss was $4,500. What is the point of winning $3,500, if potential loss is $4,500?
Exactly right. We are being underpaid for the risk we're taking on the credit spread. This focus on "high win rate" is frankly very deceptive and I'm a little surprised that true professionals like SMB would be pushing that nonsense. I think they know better. I'm sure they evaluate their own traders using their trading "profit factor" (ratio of wins versus losses) and NOT their "win rate".
As others have pointed out, the expected value (EV) of this trade is not great. Stop losses can *maybe* save you if the price doesn't drop over the weekend, and even then, volatility spikes can result in false stop losses. This trade alone is not enough of an edge.
The amount of people complaining about it in the comments is hilarious 😂. It’s a fantastic strategy way better than buying you pair it with TA that is following trend and it should be better than %90.
Win rates are mostly irrelevant. What is the overall p/l of the system over an extended period of time. A system where 1 loss wipes out all profits is a useless system.
Hmm I used to really push to get better at trading until I found my place.. hedging.. I now never lose money. Never. Not ever. Its small gains but at least its pretty much a guarantee I win. 99.999999% chance.
A 90% win rate means you win 9 out of 10 trades, but the 10th trade you lose 10 times what you won previously. Win rate is meaningless. There is no free lunch. You have to have an edge.
You need to compare the premium Credits and compare to the max loss, you can also use a stop loss. You need to understand some technical analysis for this to work.
I just saw your ‘iron condor’ video where you’re showing daily trades for someone who has a $1000 account. What you’re not telling the viewer is that less than a $25,000 account is that they are only allowed three trades per week unless the options trade expires worthless.
You have to apply for approval to trade options. And there are different levels of approvals required for different types of options trades. For example a lower level of approval is required to trade covered calls, than to trade spreads as with selling credit spreads. You probably also have a "margin" account I believe. Call your broker or hunt on their website for someplace that allows you to ask for approval to trade options, and again, for this strategy, you need the approval level required to trade "spreads", so that's what you need to apply for.
This supposed 90% win rate is only true over very large numbers of trades. In real life, one can easily lose a few or a lot of these in a row. Without risk and trade management, you have 100% probability of being completely wiped out.
Well, it's actually worse than that. Even if you have the capital to trade this so-called strategy month-after-month for years, you're being underpaid by the market maker for each 90% winner, so your 10% losers are larger in dollar terms than the sum of your 90% winners. It's a losing strategy in the long run, UNLESS you have some other 'edge' to selectively use it, and I don't mean 20/20 hindsight, which is the "edge' Seth uses in this video.
@@WorldSpectator705, agreed. Again, trade and risk management is the key here. I wish Seth would stop making these misleading videos. It's disservice to all the novice traders watching these clips.
People who are saying that 10% loss can give u negative results, well if u are making $330 on every trade then it doesn't make sense to hold on to a trade if it's showing loss more than $330 u should exit that immediately.. without any hesitation, don't worry if it can still get u back that winning end.
Read the book, Reminiscences of a Stock Operator. In one chapter he refers to one institutional trader as a "Robin Hood" who thinks he's being a hero for taking money from retailers and distributing it to his trader friends. EVERYONE should read that book. Robinhood is telling you in their name who they are.
