Trade idea
ES iron condor
The speaker suggests selling an iron condor in ES with a 550 width, expecting the market to remain within the strike range. The trade is structured to profit from time decay and the expected volatility. The speaker advises adjusting the strike prices based on recent market movements, moving the calls and puts up 100 points to middle the trade again. The trade is considered interesting due to its potential for profit and the expected volatility.
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Strategyiron condor
Assetindex
ExpirationJune
Time horizon36 days until expiration
Entry / triggerMarket is lower than previous levels
Target / exitMax profit of $275
Invalidation / stopIf the market moves significantly against the trade
SpeakerSpeaker
Structure / legs- sell June 7725 call
- sell June 7750 call
- sell June 6750 put
- sell June 6725 put
Risks- Market moves outside the strike range
- Volatility changes
- Time decay reduces the value of the trade
Trade idea
ES Jade Lizard
The Jade Lizard strategy involves selling naked puts and selling call spreads above the market to hedge and capitalize on bullish expectations. This strategy is capital efficient and has historically performed well over the last 20 years. It is suitable for traders who are bullish on the underlying asset and willing to manage the risk associated with naked puts.
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StrategyJade Lizard
Assetindex
Expirationnot specified
Time horizonlong-term
Entry / triggersell out-of-the-money naked puts
Target / exitprofit from premium and potential upside
Invalidation / stopif the market moves significantly against the short put
SpeakerScott Sheridan
Risks- significant risk if the market moves against the short put
- capital requirements for the short put
Trade idea
ES pairs trade
The speaker suggests that a pairs trade could be executed by going long on ES and short on oil, based on the current inverse correlation between the two assets. However, the speaker also notes that the trade could be simplified by either going long ES or short oil, as they are inversely correlated. The trade should be kept small due to the potential risks involved.
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Strategypairs trade
Assetindex
Time horizonshort-term
Entry / triggerES is cheap and oil is expensive
Target / exitES and oil move inversely
Invalidation / stopIf ES and oil are not inversely correlated
SpeakerRon
Risks- Market volatility
- Inverse correlation may break
- Regulatory scrutiny
Trade idea
ES expected_move
The speaker suggests that buying S&P's at the current level and setting a stop at the one standard deviation expected move is a consistent way to manage risk. The expected move for ES is $274, which is a 5% move. If the market does not break down this expected move, the trade should be cut bait. This approach is based on the idea that markets are cyclical and that trades can turn around, so it's important to have a clear stop-loss level to avoid emotional decisions.
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Strategyexpected_move
Assetindex
Time horizon35 days
Entry / triggerBuy S&P's here if the market breaks down the expected move (one standard deviation).
Target / exitThe expected move is $274, which is a 5% move.
Invalidation / stopIf the market does not break down the expected move, the trade is invalid and should be cut bait at the one standard deviation level.
SpeakerLost Dog
Risks- Market may not move as expected
- Volatility may increase, making the stop-loss level less effective
Trade idea
ES Put Spread
In a high volatility environment, shorting put spreads on the ES (E-mini S&P 500) can be a profitable strategy. By selling put spreads and widening the spread, traders can capitalize on market rallies while limiting downside risk. This approach is particularly effective when volatility is elevated, as it allows traders to take advantage of market movements without overexposing their positions. The strategy should be adjusted based on market conditions, with a focus on managing risk and taking profits when the market moves in the desired direction.
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StrategyPut Spread
AssetFutures
Time horizonShort-term
Entry / triggerHigh volatility environment
Target / exitProfit from market rallies
Invalidation / stopMarket moves against the short position
SpeakerScott
Risks- Market moves against the short position
- Volatility decreases
- Liquidity issues
Trade idea
ES Rolling out of expiring futures contracts
The speaker advises traders to roll out of expiring futures contracts before the expiration date to avoid the risk of the contract being closed out. The March ES contract is set to expire, and traders should consider rolling it out to April contracts to maintain their positions. This is due to the market's tendency to open lower during triple witching events, and the speaker emphasizes the importance of being cautious about shorting near expiration.
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StrategyRolling out of expiring futures contracts
Assetfutures
ExpirationMarch
Time horizonBefore the expiration of the March ES contract
Entry / triggerBefore the expiration of the March ES contract
Target / exitRolling out to April contracts
Invalidation / stopIf the March ES contract is not rolled out before expiration
SpeakerUnknown
Risks- Market volatility during expiration
- Potential for unexpected price movements
- Need to monitor and adjust positions before expiration
Trade idea
ES buying futures for trending markets
futures give the best bang for the buck
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Strategybuying futures for trending markets
Assetfutures
Time horizon3 months
Entry / triggerwhen markets start trending
Target / exit3-month time frame
Invalidation / stopif the market does not trend
Speakerunknown
Risks- carry cost
- market reversal
Trade idea
ES naked puts
The trade idea involves using naked puts on the ES index, with the expectation of a significant down day followed by a snap back. The strategy is to close the trade at 25% of the position, with the entry condition being the occurrence of a large down day. The trade is based on the historical performance of similar trades and the expectation of a market rebound.
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Strategynaked puts
Assetindex
Expiration45 to 60 days out
Time horizon45 to 60 days
Entry / triggerWatch for a big down day and a snap back
Target / exitClose the trade at 25%
Invalidation / stopMarket conditions that invalidate the trade premise
SpeakerNick Batista
Risks- Market volatility
- Failure to predict the down day and snap back
- Liquidity issues
Trade idea
ES strangles
The speaker suggests trading wide forward/ES strangles as a strategy to profit from significant market movements in either direction. The strategy involves buying both a call and a put at different strike prices, with a wide range. The speaker emphasizes the importance of not using cheap options, as they may not provide sufficient coverage for the risk involved. The speaker also discusses the notional value of the contracts and the required capital for the strategy.
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Strategystrangles
Assetindex
Expirationone month
Time horizonone month
Entry / triggermarket volatility
Target / exitprofit from significant price movements in either direction
Invalidation / stoploss if the market does not move significantly in either direction
Speakerunknown
Risks- Market not moving significantly in either direction
- Loss if the market moves against the position
- Potential for high capital requirements
Q&A
What are the tickers that are always on Tom and Scott's watch list?
Tom and Scott's watch list includes SPX, IWM, Qs, Bitcoin, oil, ES, micro gold, Nasdaq, micro silver, VIX future, bonds, Apple, AMD, and Amazon. They emphasize the importance of monitoring futures as leading indicators.
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Actionable takeawayTraders should monitor futures as leading indicators and include them in their watch lists.
Q&A
Are you saying if uh ES is uh has around uh 31 then shouldn't be SPX in the same range?
The speaker suggests that if ES (E-mini S&P 500) has an IV percentile around 31, SPX (S&P 500) should be in a similar range. If not, it indicates a potential issue with the data feed or platform.
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Actionable takeawayIf IV percentile values for SPX and ES are significantly different, it may indicate a data feed issue rather than a market anomaly.
Q&A
What underlies do you trade zero days on?
The speaker trades zero days on the S&P 500 index, specifically SPX, ES, and SPY. They avoid other indices like Nasdaq and Russell due to lower liquidity.
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Actionable takeawayTraders should focus on highly liquid indices like SPX, ES, and SPY for zero days trading.
Q&A
Is there any sense in selling one put and two calls so that the strangle is premium neutral, although not delta neutral?
Maria, the answer is that this is called put skew, and it reflects the market's adjustment for downside risk. However, the speaker advises against using skewed strangles unless one is bearish. A one-to-one strangle is more capital efficient and has historically performed better.
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Actionable takeawayAvoid skewed strangles unless bearish; prefer one-to-one strangles for capital efficiency.
Q&A
Are you still short the MES or ES?
The speaker confirms they are still short both MES and ES, but acknowledges that they have too many such positions. They also mention being short Nasdaq as well.
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Actionable takeawayThe speaker is maintaining short positions in multiple indices, including MES, ES, and Nasdaq, but expresses a desire to reduce the number of such positions.