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@thinkingaboutit2738
2 жыл бұрын
The thing with Max Pain is that it calculates the pain point based on the entire chain for that exp date. However, most of those strikes are already so far from the current price as to become irrelevant. I usually like to eyeball the chain and see the largest open interest within 10 - 15% of the current price and see how many Calls would be taken out of commission vs how many Puts would becoming in-the-money and gauge the balance between the two within a tight range around the current price.
@TheFinancialMinutes
2 жыл бұрын
Definitely a great point! This month at least for SPY the max pain is fairly close @ 440 vs 437 current price.
@scarfo441
2 жыл бұрын
read carefully...its from a pro..
@timj4755
Жыл бұрын
Just stumbled on this…thurs evening, looked on a graph of OI and thought “ well if I were a MM, I would want QQQ to close at 311” . It destroyed the puts and minimized the call payout. The close quote was 310.80 but QQQ trades till 15 min after close…closed above 311. Very cool stuff. 307 was the max pain…OI walls were the evidence. Exited to follow this over the next months and observe the relationship and influence from the variables …put call ratio and expected move.
@kikook222
2 жыл бұрын
Before anyone gets their hopes up the trade he showed giving him 130 dollars credit wouldn't be allowed on any brokerage. You cannot open a trade where the credit exceeds the collateral. You can always open two separate positions that gives you more than 100 dollars credit but it will never let you open an iron condor or iron butterfly for more than 100 dollars.
@johnnyw4life
2 жыл бұрын
Thank you for this comment. I was surprised that he made a video suggesting you can print free money. I guess if the federal reserve can do it /shrug
@ShadowMind312
2 жыл бұрын
Thanks. I'm working to enter the options market for the first time this week!!
@TheFinancialMinutes
2 жыл бұрын
Glad I could help!
@tocadadj2951
Жыл бұрын
You say to close position before expiration date. How do you go by doing this? Is it by days? Lets say you get a monthly expiration date. Do you wait 3 weeks? Or is by price, if stock goes up, you close your position?
@TheFinancialMinutes
Жыл бұрын
The idea for this strategy is to close the option while the stock is trading as close to your sold strike price, and as close to expiration as possible. That is up to a trader's own discretion, where some traders make take profit at a specific %, some may wait till the expiration to collect as much credit as possible, and some may cut losses early if they expect the stock to make a big move that would go against their trade.
@puiyam6722
3 жыл бұрын
I know how to sell call and sell put because of ur vdo. Thank you so much. U made it very ez to understand.
@TheFinancialMinutes
3 жыл бұрын
Glad I can help!
@Silvertestrun
2 жыл бұрын
Ty
@thepepperking3075
2 жыл бұрын
What is the difference in a premium and closing with a full credit?
@TheFinancialMinutes
2 жыл бұрын
If you close it before the options expire your profit / loss will be the credit to open minus your cost to close
@-mr3puttz-310
3 жыл бұрын
i may do the spreads with SPX. No early assignment/exercise
@TheFinancialMinutes
3 жыл бұрын
Great idea!
@MauricioBanuelos
3 жыл бұрын
you my friend give sound advice thanks for the words of wisdom to strike like a beast
@TheFinancialMinutes
3 жыл бұрын
Thanks for your support Mauricio! Good luck this week 📈
@Random-Things
2 жыл бұрын
Very informative! Thanks for posting this video.
@TheFinancialMinutes
2 жыл бұрын
Glad it helped 😊
@marquessofblayne4166
Жыл бұрын
Very helpful thanks for the ideas.
@bodhisoha
2 жыл бұрын
Max Pain is actually a contrarian indicator. Basically it is about who is holding all those calls and puts. -- smart money or dumb money. If the majority of people are holding calls, you can bet your a** that smart money is holding puts. In my experience max pain is bunk, esp. with highly traded ETFs.
@edmandell3064
Жыл бұрын
Great Video. However, you can't execute a trade with a 100% guarantee of profitability. Keep in mind, if you as the writer of an option with a 100% chance of success this means your counter buyer would be buying an option with 100% chance of losing.
@theguy1991
Жыл бұрын
Why would you want the 437 strike if the market makers are pushing for the stock/etf to be at $437 at expiration? Wouldn't you want a strike just above or below instead?
@TheFinancialMinutes
Жыл бұрын
Ya choosing a couple strike prices away tends to help. I usually use price levels to set the nearest support/resistance and use that as my strike price.
@customersupport9055
2 жыл бұрын
Wait a minute, why would you try to sell close to the strike that has the most main, in this case wouldn’t you want to make sure you’re nowhere near close that max pin strike because that’s where the stock will close at… if you’re lingering near that closing price, your short leg could become ITM and you could get assigned.
@TheFinancialMinutes
2 жыл бұрын
Your short leg would likely only be assigned if you held it into expiry. You can close these options the same day, hours, even minutes before the closing bell.
@customersupport9055
2 жыл бұрын
@@TheFinancialMinutes that still doesn’t explain why you would want your short leg at the max pain strike? If the stock moves towards it, your short leg is more than likely not losing premium and thus you aren’t profitable.
@Mrchickenonabun
2 жыл бұрын
Do you ever use SPX on this instead of SPY? Then you don't have to worry about assignment, and can just let it expire as its cash settled.
@TheFinancialMinutes
2 жыл бұрын
No I only trade spreads on Robinhood since their UI is easier to navigate. Robinhood doesn't list SPX.
@mistersir3185
2 жыл бұрын
If I'm holding a credit spread or debit spread until the expiration, then I shouldn't have to worry about assignment do I? Isn't that the whole point of spreads? Doesn't robinhood handle this? Or do I have to worry about buying a 100 shares at the strike price? I have been assigned by RH on couple of spreads and it usually goes away the next day business day.
@TheFinancialMinutes
2 жыл бұрын
Robinhood will close your spreads at 3PM the day of expiration if it’s close to your strike prices but you may need to close just in case they don’t
@funrise3080
2 жыл бұрын
how do you know if you should sell a call or put?
@TheFinancialMinutes
2 жыл бұрын
Depends if you own the shares or want to buy them. When you sell a put you agree to buy the shares and when you sell a call you agree to sell them.
@arudnev79
2 жыл бұрын
you are awesome, thank you very much!!!!
@TheFinancialMinutes
2 жыл бұрын
Any time 👍
@princessaleeha7962
3 жыл бұрын
On the credit spreads when you SELL put and buy put options what happens on the expiration date? Do you have to do anything or leave it alone ?
@TheFinancialMinutes
3 жыл бұрын
Always close your spreads before they expire, otherwise you may run the risk of exercising or assignment at expiration. So you would buy-to-close the put you sold, and sell back the put you bought.
@lisahuddleston141
Жыл бұрын
what happens if the strike price isnt reached? Do you los everything you paid? or lose some maybe and only all if it goes completely opposite?
@TheFinancialMinutes
Жыл бұрын
If the stock is outside the range set by the options you buy, you take max loss. Max loss is the difference between the strike price you buy and the strike price you sell, minus your credit, multiplied by 100.
@seaffordablee0
Жыл бұрын
Thanks!
@TheFinancialMinutes
Жыл бұрын
Any time 🙏
@Solothaboss
3 жыл бұрын
On credit spreads, your premium cant be more than your collateral, or atleast thats the error message robinhoods giving me....
@TheFinancialMinutes
3 жыл бұрын
You may be able to sell them separately in 2 transactions, but I'm not entirely sure.
@k2horology
3 жыл бұрын
Is it strategic to pick the strike price right under the max pain? Can you treat it as support if you never want to be assigned shares from selling a put? Thanks
@TheFinancialMinutes
3 жыл бұрын
That’s a potential strategy, but consider how deep the strike is out of the money and how much premium you’ll receive compared to your collateral. Some months may be worth it, others not so much depending on the implied move.
@northsidesal
3 жыл бұрын
thanks for the info
@TheFinancialMinutes
3 жыл бұрын
You’re welcome. Glad I could help!
@shellyfascinate
Жыл бұрын
Omg show us group pics of the tribal dinner gathering!❤
@rnbsn777
Жыл бұрын
Does the max pain site still give the max pain srrike price graph? It doesnt seem to come up when i try like he showed on this video
@ericblood1551
Жыл бұрын
Greg, Does this theory only work the week monthly options expire?
@TheFinancialMinutes
Жыл бұрын
Yes since they tend to have more open interest & volume
@chrismnutone8421
2 жыл бұрын
How come I can find SPY with no problem on robinhood, but SPX is nowhere to be found
@TheFinancialMinutes
2 жыл бұрын
SPX is listed by CBOE Global Markets whereas SPY is listed on the NYSE. I would imagine that's the reason why.
@corbin289
3 жыл бұрын
Does this strategy work for buying Cala and puts?
@TheFinancialMinutes
3 жыл бұрын
No this theory is best used for selling calls and puts
@mperez508
2 жыл бұрын
@@TheFinancialMinutes can this work also with credit spread
@DavidGarcia-vs7gn
3 ай бұрын
Is an option called a contract
@TheFinancialMinutes
3 ай бұрын
Yes "options contract," it is a legal binding contract to buy or sell 100 shares. For the buyer, it gives them the right to buy/sell and for the seller, they are obligated to buy/sell if the option is in the money at expiration. The buyer can choose to exercise the option before expiration to buy/sell 100 shares, obligating the seller to sell/buy 100 shares before the expiration date.
@MarkBoxeo
2 жыл бұрын
Risk loosing £800 to win 200 that’s a 1-4 ratio opposite loose 4 to win 1 does not make good risk management to me
@TheFinancialMinutes
2 жыл бұрын
You're not losing $800 in that example, you're gaining $246 by selling the shares for an equivalent of $447.46
@aksprayinn
3 жыл бұрын
Why the third Thursday of every month?
@TheFinancialMinutes
3 жыл бұрын
It's the most popular by open interest, typically
@aksprayinn
3 жыл бұрын
@@TheFinancialMinutes ah thank you!
@JBulsa
2 жыл бұрын
Bionano Genomics has trouble commercializing its products, investors have noticed this red flag, still, stock price volatility should be high in 2022 as investors may try a bottom-fishing strategy. #85 Forbes best small companies #BNGO
@blessymathew4972
2 жыл бұрын
@Everything Options So with that custom spread, i saw the premium is almost same as collateral. So there is NO WAY that trade will eb in loss if we close it before market closure, right?
@TheFinancialMinutes
2 жыл бұрын
Right, if the credit matches the collateral or the difference between your strike prices times 100 you have nothing to lose if your options expire ITM. If the option you buy expires ITM and your sold option expires OTM, you will run into an issue where you have to buy or sell 100 shares at the strike price for the option you bought. This is the biggest risk on trading spreads and should be avoided by closing spreads before they expire. Finally if both options expire OTM, you realize max profit which is equal to the credit received to open your trade.
@slinkycrown8757
2 жыл бұрын
bro i love your channel but when you make vids like these you make me wanna hit the subscribe button thrice
@TheFinancialMinutes
2 жыл бұрын
Triple take 🤣
@ZeroToHeroInvesting
3 жыл бұрын
Wouldn’t your WORST CASE be that you lose your $100 (difference of strike prices) at @11:00? And this is only if you hold to expiry, right?
@TheFinancialMinutes
3 жыл бұрын
That would be your max loss scenario. The rare case when your stock lands between your strike prices is where things can get dangerous due to exercising / assignment. Here's a video from In the Money on this topic: kzitem.info/news/bejne/1n-jzYWNk6GXnXY
@TheFinancialMinutes
3 жыл бұрын
and yes, this only pertains to expiry
@levialston1496
Жыл бұрын
Reading through these comments I see still got a lot to learn but nothing ventured nothing gain it's all gambling
@TheFinancialMinutes
Жыл бұрын
sophisticated gambling 🤓
@IvanTheReptile
3 жыл бұрын
Damn this is the video I've been waiting for
@TheFinancialMinutes
3 жыл бұрын
Glad I could help!
@nc1975
2 жыл бұрын
But I know those MM a-holes are doing this because I have seen some unreal uturns just before options expirations.
@TheFinancialMinutes
2 жыл бұрын
Yeah expect more volatility this Friday, big expiration coming
@John-he2xo
3 жыл бұрын
I'm betting on HIMX stock 🥶
@TheFinancialMinutes
3 жыл бұрын
Mid - long-term play. Next earnings is likely to send them flying with the growth they’ve experience lately
@elymanic3497
3 жыл бұрын
SEC: It's a Free Market Sir
@TheFinancialMinutes
3 жыл бұрын
Meanwhile stealing my $150 for me opening 2 trades by accident 📸🤨
@mkz4123
2 жыл бұрын
I like how naive you are but you deliver your video like a professional which makes you look reliable but you’re not.
@TheFinancialMinutes
2 жыл бұрын
I like how you give constructive feedback without giving constructive feedback 🤝
@mkz4123
2 жыл бұрын
@@TheFinancialMinutes anytime everything talk
@ishmaelm1932
2 жыл бұрын
@@TheFinancialMinutes your title is misleading. You can't do this at all in any brokerage. Idk what the point of this video is tbh.
@TheFinancialMinutes
2 жыл бұрын
@@ishmaelm1932 You can open the vertical spreads separately
@NorthStar420
3 жыл бұрын
Bullshit!! Options are all priced in!! You basically have to get lucky or properly use options to hedge existing share positions.
@TheFinancialMinutes
3 жыл бұрын
Options being priced in would mean the markets are efficient which they most certainly aren’t. If options were “priced in” as you suggest there would be no fluctuations in premium prices and you could never take profits or losses.
@NorthStar420
3 жыл бұрын
@@TheFinancialMinutes ..you just made my argument for me. They are efficient, very efficient actually. Of course there is movement in premiums, but the volatility is priced in. Straight up options are gambles because of the movement needed to make a profit. Options should be used to mainly hedge positions, unless you feel like gambling 🎰
@TheFinancialMinutes
3 жыл бұрын
_Implied_ Volatility is priced into markets along with Vega and every % chance in implied volatility changes the options by the Vega value. There wouldn’t be a Vega if the % IV never changed. To call options a gamble is stretching the truth, it is a calculated risk at worst. My win rate has been hovering between 75 - 80% and my average win is 20% per option. I’m no expert at all, only been options trading for ~2 years in favorable market conditions but there’s certainly money to be made in the current options market.
@tootsieboy778
3 жыл бұрын
@@NorthStar420 its only gambling if you treat it that way
@itm_randy
3 жыл бұрын
just stick to ETF’s if you view options as gambling
@DavidGarcia-vs7gn
3 ай бұрын
Try to sell my options but they won't let me
@TheFinancialMinutes
3 ай бұрын
Really? Did the broker tell you why?
@jasonpermanna308
2 жыл бұрын
It actually pretty accurate but it doesn’t predict after hours on expiration 🪡
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