Why We Manage Positions at 21 Days Till Expiration | From Theory to Practice Options

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Опубликовано:

18 сен 2024

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Комментарии : 32

@sunaxes Год назад

You can verify for yourselves on option sim tools, after with 21d left, gamma growth accelerates, so you become more exposed to a sudden move in the market. At 45d left until expiry, if a sudden move away from your profitability limit price cost you "x", at 10d until expiry, the same move (in size) against away from your profitability limit price costs you 2x! and few days before expiry: 4x!! No wonder it is not worth holding until expiry!

@Marisung Год назад

so the beginning was good for a newby in options like me. I fully understood what you were talking about. But then, watchting your platform and your trades that I totally unfamiliar with made me fully lost. So I hoped to get a clear explaination why 21 and not more or less days...but either you didnt do that or I didnt understand. Gonna keep now searching other videos.

@wboquist Год назад

As you get closer and closer to expiration, the impact of a change in price of the underlying stock or ETF on the value of your position increases exponentially. In other words, gamma risk increases. They want to avoid that increasing gamma risk.

@vitaliichernov6538 11 месяцев назад

I actually agree, he didn't do a great job at explaining this.

@ringchaser4488 2 месяца назад

Well written and explained. Thanks

@mattydominic4219 Год назад

Really enjoying your videos. Still not sure why what's good for the goose isn't good for the gander (managing undefined but not defined) but I'm sure it'll make more sense the more I trade.

@deanberlin498 Год назад

Undefined risk options allow for rolling out to the next month and collecting additional credit, even if they are in the money at 21 days. This allows more time for the trade to go your way. Defined risk trades usually cannot be rolled to the next month without paying a debit, which you really don't want to do because you're locking in a loss. There are other ways of managing the potential loss of defined risk trades if they have seriously gone against you. Such as moving your untested side in to collect additional premium and reducing your total loss. You just have to be careful not to adjust too much in case the price whipsaws back, which in the current market id a definite possibility.

@mattydominic4219 Год назад

@@deanberlin498 Aah, thanks Dean!

@vitaliichernov6538 11 месяцев назад

Honestly, I feel the reason why you (and I also) don't understand why it's good for undefined risk and not too good for defined risk in because Jim didn't explain it super well. A little too fast and only 1 slide, not as much visual representation and a lot of talking. Kinda hard to fully get it like that. This is aimed for more advanced audience. At least more advanced than me.

@joshuawoodford7525 Год назад

Covered call is a defined risk trade, he says in the video the 21 day management stems from undefined risk trades

@jackengholm4505 8 месяцев назад

CC and CSP are undefined risk

@joshuawoodford7525 8 месяцев назад

@@jackengholm4505 Both of those statements are false sir

@brettmedina24 3 месяца назад

great education thank you

@ChrisJ333 Год назад

If my short call is still OTM but losing money and getting closer to the strike, do I roll out and up at 21 DTE? Or do I keep the same strike and roll out another 45 days? I can't seem to find this anywhere on Tasty. Thanks!

@ringchaser4488 2 месяца назад

Depends on the underlining. If you are sure it will come back down to your strike but you are just off by a few days, then rolling out is best. But if you think the new price will be there much longer, but you are confident it won't break through the next level of resistance, then rolling up is best... But just a disclaimer, I am not an faniancial advisor otherwise I would be selling a masterclass and not giving you this for free so my opinion holds no real weight or value lol

@rantg Год назад

keep saying "manage at 21", and never said what manage means and how to do it

@Kk-iw4ck 8 месяцев назад

😂

@justinmyho5235 8 месяцев назад

exactly. says the words "manage" dozens of times - like all the tasty videos - and NEVER explain what that means. I use the platform, been watching as many videos as I can, for months - and still no explanation. It's really remarkable if you think about it. All he does here is close 1/2 of a butterfly and contemplate rolling up 1 side of a naked strangle - is that managing? then what, after 21 days you just let it go to expiration? I'm sure they've gotten thousands of emails and questions on this. Why wouldn't they devote an in depth presentation on what exactly they mean by "managing".

@realestate_sc 2 месяца назад

It typically means to close it. Unless otherwise there's some critical information that would otherwise make it sense not too. For example. If the stock (such as SPX_ just dropped 3 percent last two days and if no significant news for it and no expected news the next day, maybe waiting for climb up could be (at your risk), respectable. Otherwise, close it.

@shawnclark732 Год назад

Natural gas later went to $2.50 from $9 which you thought was low.

@Nirmalkumar-hc3hp Год назад

Does all these outcomes will work same in all market...like currency or indian Index derivatives?

@museachina Год назад

if covered call as you said is undefined. what is undefined in your opinion?

@teelaw2986 Год назад

What is the difference between defined risk positions and undefined risk positions?

@edmandell3064 6 месяцев назад

Is 45 or 60 DTE better for Iron Condors.

@realestate_sc 2 месяца назад

45 is what they preach.

@Kokomadeta Год назад

12:00 I unfortunately cannot tell if you're being sarcastic when you say that the NASDAQ is not going down again and that 12,000 is the bottom. Can you clarify whether you genuinely think that it's only up from here?

@listenu Год назад

Sarcastic. Always.

@Kokomadeta Год назад

@@listenu thank you.

@zo9fg Год назад

Does that mean if I'm an option buyer, I should buy it at 21 days if I want direction exposure?

@wboquist Год назад

As long as volatility is relatively low (so it is unlikely to go much lower during your holding period) and you anticipate that the move in price of the underlying will be large enough to more than offset the loss of time value due to theta decay, yes.