Trade idea
SPX contrarian
The market is currently in a phase of rapid upward movement, with significant volatility. The speaker suggests that the next downturn could be severe, potentially leading to a 2,000-point drop in the NASDAQ. This indicates a potential overbought condition, making a short position a viable contrarian strategy. The VIX levels suggest heightened uncertainty, supporting the idea that a correction is likely.
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Strategycontrarian
Assetindex
Time horizonshort-term
Entry / triggerMarket is overbought and shows signs of a potential correction
Target / exit2,000 points down
Invalidation / stopIf the market continues to move upward without correction
SpeakerScott
Risks- Market may continue to move upward
- Volatility could lead to unexpected price swings
Trade idea
SPX reversal from oversold conditions
The market is correcting from oversold conditions, with the VIX at 30 indicating high fear and potential capitulation. The speaker suggests that the rally may be a 'pump fake' with potential for further declines. The SPX was up 115 points, and the speaker believes the market is overbought and may correct. The speaker also notes that the VIX is still high, indicating continued uncertainty and potential for further volatility.
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Strategyreversal from oversold conditions
Assetindex
Time horizonShort-term, within days to weeks
Entry / triggerMarket appears to be correcting from oversold conditions
Target / exitPotential rally of 220 points or more
Invalidation / stopFurther decline below key support levels
SpeakerScott
Risks- Further decline below key support levels
- Market may continue to be oversold
- Potential for increased volatility
Trade idea
SPX iron condor
The speaker suggests that iron condors on the SPX with zero DTE are only viable when placed just outside the expected move and managed early. The strategy involves taking profits up to 25% and is considered a last resort due to its marginal returns in bull markets.
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Strategyiron condor
Assetindex
Expirationzero DTE
Time horizonshort-term
Entry / triggerjust outside the expected move
Target / exitmanage early with max 25% of profits
Invalidation / stopmarket moves beyond expected range
SpeakerTom
Risks- Market volatility
- Liquidity issues
- Time decay
Trade idea
SPX put selling
The speaker sold puts on the S&P 500 (SPX) when it was at 41 and has since seen it rise to 66. They are continuing to sell more as the market moves higher, indicating a strategy of profiting from potential price declines during rallies. The speaker believes that rallies are often followed by corrections, making put selling a viable strategy. The entry point was at 41, and the target is a price reversion to a previous level, with the invalidation being a significant upward move beyond the expected range.
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Strategyput selling
Assetindex
Time horizonShort-term
Entry / triggerMarket is in a rally phase
Target / exitPrice reverts to a previous level
Invalidation / stopSignificant upward move beyond expected range
SpeakerTom Stnoff
Risks- Market moves significantly higher than anticipated
- Volatility increases, leading to larger-than-expected price swings
Trade idea
SPX iron condor
The speaker discusses their strategy of selling 20 delta 45-day SPX iron condors with $20 wings, maintaining delta neutrality. They note that the put legs are further away than the call legs, and suggest tightening the put side to earn more premium. The speaker acknowledges that skewing the condors can be beneficial, depending on market outlook, and suggests adjusting the put legs closer to the call legs to collect more premium while accepting a slight delta imbalance.
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Strategyiron condor
Assetindex
Expiration45 days
Time horizonshort-term
Entry / triggerdelta neutral with 20 delta wings
Target / exitpremium collection
Invalidation / stopmarket moves against the position
SpeakerMike
Risks- market volatility
- delta imbalance
- expiration risk
Trade idea
SPX contrarian trading
The speaker discusses a trade where they went long the SPX (S&P 500) at a specific level, which was later validated by the market moving higher. They describe this as a contrarian trade, indicating that they entered the trade when the market was at a lower level, expecting a rebound. The trade was successful, and the speaker acknowledges it as a good example of a contrarian approach. The trade idea is based on identifying market dips and entering long positions with the expectation of a rebound.
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Strategycontrarian trading
Assetindex
Time horizonshort-term
Entry / triggermarket dips to a certain level
Target / exitmarket reaches a higher level
Invalidation / stopmarket continues to decline
SpeakerJeff
Risks- Market continues to decline
- Volatility increases
- Liquidity issues
Trade idea
SPX statistical arbitrage
The expected move in the S&P 500 for the next 35 days is approximately 5%, which is considered a one standard deviation move. If the price breaks through this level, it indicates a significant deviation from the expected range, and the trade should be exited to avoid further losses. This approach is based on statistical analysis of market movements and assumes that the market will revert to the mean within the given time frame.
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Strategystatistical arbitrage
Assetindex
Time horizon35 days
Entry / triggerBuy S&P 500 futures at current price
Target / exit5% move within 35 days
Invalidation / stopExit if the price moves beyond one standard deviation (approximately 5%)
SpeakerScott
Risks- Market volatility could lead to unexpected price movements
- The expected move may not materialize as predicted
- Liquidity issues in futures markets could affect execution
Trade idea
SPX iron condors
Rodrigo suggests that when volatility is low, it's better to ladder iron condors across multiple expirations to synthetically create higher implied volatility in longer durations. However, when volatility is high, focusing on near-month expirations is more effective. The strategy involves opening one iron condor per day, with a focus on the front month and the next month. This approach allows for flexibility in managing volatility and maximizing returns based on market conditions.
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Strategyiron condors
Assetindex
Expiration45 days
Time horizonshort-term
Entry / triggerlow volatility
Target / exitvolatility increase
Invalidation / stopvolatility decrease
SpeakerRodrigo
Risks- volatility may not increase as expected
- market direction may move against the short position
- liquidity issues in the options market
Trade idea
SPX iron condor
Given the current high volatility, the speaker suggests focusing on the near-month options, specifically March and April, for an iron condor strategy. This is based on the idea that high volatility creates a synthetic higher volatility environment, which is more suitable for such strategies. If volatility were to drop significantly, the strategy would need to be adjusted to longer-dated options.
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Strategyiron condor
Assetindex
ExpirationMarch, April
Time horizonshort-term
Entry / triggerhigh implied volatility
Target / exitsynthetic higher volatility environment
Invalidation / stopif volatility drops below 15 in the VIX or VIX futures
SpeakerTom
Risks- Volatility could drop below the threshold, requiring a strategy adjustment.
- Market direction could move against the short delta position.
- Implied volatility could change rapidly, affecting the effectiveness of the strategy.
Trade idea
SPX put spread
The probability of a 20% meltdown in the SPX by December 2026 is 30%, based on the delta of the 5600 put. A short put spread strategy can be used to capitalize on this probability, with a focus on higher probability trades (e.g., 65-75% chance) to reduce risk. This approach allows for a more realistic and strategic position, balancing potential gains with the risk of market movements.
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Strategyput spread
Assetindex
Expiration2026-12-31
Time horizon2026
Entry / triggerMarket reaches 5600
Target / exit30% probability of reaching 5600
Invalidation / stopMarket does not reach 5600
SpeakerDavid
Structure / legs- 5600 put
- far out of the money put
Risks- Market volatility
- Incorrect probability assumptions
- Liquidity issues in options trading
Trade idea
SPX put-selling and call-buying
The strategy of selling a put and buying a call is a capital-efficient way to buy stock, as it allows investors to use the proceeds from the put to fund the call, with only a 20% margin requirement for the put. This strategy is described as cost-effective and has historically performed well over the past 20 years. The put's premium provides a credit that can be used to offset the cost of the call, making it a viable option for investors looking to enter a long position with limited capital.
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Strategyput-selling and call-buying
Assetindex
ExpirationDec 31st
Time horizonLong-term, with periodic reviews
Entry / triggerMarket conditions allow for the strategy to be executed with a 20% margin requirement on the put
Target / exitProfit from the call's appreciation and the put's premium
Invalidation / stopIf the market moves significantly against the position, the strategy may require adjustment or closure
SpeakerScott
Structure / legs- sell put at strike 5600
- buy call at strike 5600
Risks- Market volatility could lead to losses if the underlying asset moves significantly against the position
- The strategy requires sufficient capital to cover the put's margin requirement
- The effectiveness of the strategy depends on market conditions and the underlying asset's performance
Trade idea
SPX broken_wing_butterfly
The broken wing butterfly strategy on the put side with 5 and 10 delta strikes is a high-probability trade that can be rolled out when tested. This strategy is suitable for traders who believe the market is trending upwards, as it allows for rolling the put side if necessary. The trade involves using two separate put spreads if the entire spread cannot be rolled due to platform limitations.
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Strategybroken_wing_butterfly
Assetindex
Expiration1DTE
Time horizonshort-term
Entry / triggertested
Target / exitroll the vertical part of the trade
Invalidation / stopmarket moves against the trade
SpeakerEugene
Risks- market moves against the trade
- platform limitations may restrict rolling the entire spread
Trade idea
SPX Iron Condor
The trader is managing a $30 wide iron condor with a 21 DTE expiration. The strategy involves selling calls and puts at the outer strikes while buying calls and puts at the inner strikes to limit risk. The trader is concerned about market corrections or crashes that could wipe out the position. The suggested adjustment is to skew the iron condor with a small amount of negative delta to provide embedded protection without paying excessive premiums for VIX calls.
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StrategyIron Condor
AssetEquity Index
Expiration21 DTE
Time horizon21 DTE
Entry / triggerMarket within the defined range
Target / exitDefined risk based on strike prices
Invalidation / stopMarket moves outside the defined range
SpeakerScott
Structure / legs- Short Call at $30 strike
- Short Put at $20 strike
- Long Call at $40 strike
- Long Put at $10 strike
Risks- Market moves outside the defined range
- High cost of VIX calls
- Difficulty in timing the market for VIX calls
Trade idea
SPX scalping
The speaker's trade idea involves buying the dip on the S&P during high volatility. The strategy is based on identifying short-term price dips and capitalizing on them. The speaker's example involved buying the S&P at a dip of around 41 and scalping 10 points. This approach is effective in volatile markets where prices fluctuate rapidly, allowing traders to profit from short-term movements.
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Strategyscalping
Assetindex
Time horizonshort-term
Entry / triggerIdentify short-term price dips in volatile markets
Target / exit10 points
Invalidation / stopPrice drops below the entry point or market conditions change
SpeakerSpeaker
Risks- Market conditions can change rapidly
- Potential for losses if the dip is not correctly identified
Trade idea
SPX tail risk protection
The speaker discusses the cost of tail risk protection for the SPX, noting that it costs $500 to protect $275,000 worth of notional value. The idea is to buy one week of protection against a crash, but the speaker personally does not recommend this strategy, suggesting that it is not a recommended move for most investors.
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Strategytail risk protection
Assetindex
ExpirationMarch 20
Time horizonone week
Entry / triggermarket drops to 6000
Target / exitprotection against a crash
Invalidation / stopno specific stop mentioned
Speakerunknown
Risks- high cost relative to notional value
- only effective in the event of a crash
- not recommended for regular use
Trade idea
SPX volatility-based
The speaker believes that the VIX is approaching 30, which could lead to significant market volatility. The inverse relationship between crude oil and the S&P index is highlighted as a key factor to monitor. The speaker suggests that the market may experience wild swings if the VIX reaches 30, and that traders should be cautious and prepared for increased volatility. The speaker also mentions that triple witching next week could provide trading opportunities, but the market is expected to be volatile.
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Strategyvolatility-based
Assetindex
Time horizonshort-term
Entry / triggerVIX approaching 30
Target / exitVIX reaching 30
Invalidation / stopVIX dropping below 25
SpeakerUnknown
Risks- Market volatility could lead to significant losses
- The inverse relationship may not hold consistently
- The speaker's personal position is not disclosed
Trade idea
SPX selling zero-day options and buying long wings
The speaker suggests that selling zero-day options and buying long wings can be a strategy for managing risk in the SPX. They note that adjustments are necessary due to SPX fluctuations, and the approach involves frequent recentering of long wings. The strategy is based on the idea that frequent adjustments can help capture volatility while managing risk.
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Strategyselling zero-day options and buying long wings
Assetindex
Expiration3 weeks
Time horizonshort-term
Entry / triggerdaily trading with frequent adjustments
Target / exitrecentering long wings based on SPX fluctuations
Invalidation / stopadjustments based on SPX movements
SpeakerSol
Structure / legs- zero-day short
- long wings (3 weeks out)
Risks- volatility in SPX
- need for frequent adjustments
- potential for large losses if SPX moves against the position
Trade idea
SPX strangle
The strategy involves selling a zero-day strangle and buying long wings at the 30-day expected move. Adjustments are only necessary on days with significant price movements (over 1/2%). The speaker emphasizes that the difference in results between staying in the zeros or adjusting is minimal, and the strategy is based on extensive backtesting over 2 years.
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Strategystrangle
Assetindex
Expirationzero-day
Time horizonshort-term
Entry / trigger30-day expected move levels
Target / exitprofit from volatility compression
Invalidation / stopsignificant price movements (over 1/2%)
SpeakerRaphael
Structure / legs- sell zero-day strangle
- buy long wings at 30-day expected move
Risks- Significant price movements may require adjustments
- Volatility may not compress as expected
- Market conditions may change
Trade idea
SPX volatility-based
The speaker mentions selling S&P futures (SPX) when the VIX indicates higher volatility but the market does not move as expected. This suggests a strategy of shorting the index when volatility signals are misleading, with the expectation that the market will not follow the volatility trend. The speaker also notes that they held NASDAQ futures (QQQ) and adjusted their positions based on market conditions, indicating a dynamic approach to managing risk.
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Strategyvolatility-based
Assetindex
Time horizonShort-term
Entry / triggerHigher volatility with lower actual market movement
Target / exitUncertain, based on market conditions
Invalidation / stopMarket movement exceeding volatility signals
SpeakerScott Sheridan
Risks- Market movement exceeding volatility signals
- Incorrect interpretation of volatility signals
- Liquidity issues in futures markets
Trade idea
SPX options wheeling
The trader uses the premium from a mag 10 wheeling strategy on SPX to roll into short-dated options. The strategy involves balancing between zero-dated and one-day options, with a focus on the mathematical aspects of SPX. The trader acknowledges that the 45-day SPX options caused issues in April, but the overall approach remains effective. The trader views the VIX move as an opportunity for buying dips, with the VIX at 1835 indicating a potential range-bound market.
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Strategyoptions wheeling
Assetindex
Expirationnot specified
Time horizonshort-term
Entry / triggerpremium from wheeling strategy
Target / exitnot specified
Invalidation / stopmarket move against the position
SpeakerTom
Structure / legs- short-dated options
- zero-dated options
Risks- Market volatility
- inability to exit positions during sharp moves
- changes in market regime
Trade idea
SPX short puts
The speaker suggests that if the market is not expected to continue breaking down, selling puts on the SPX is a viable strategy to capture premium. This is based on the idea that the market may rally, and the puts would be profitable if the market moves against the short position. However, the strategy is invalid if the market continues to decline, as the puts would be in the money and result in losses. The speaker also mentions that selling calls can be an alternative strategy, but the calls are more risky as they can be 'killed' if the market rallies.
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Strategyshort puts
Assetindex
Time horizonshort-term
Entry / triggermarket is not expected to continue breaking down
Target / exitpremium capture
Invalidation / stopmarket continues to break down
SpeakerTom
Risks- market continues to break down
- premium erosion
- liquidity issues
Trade idea
SPX vertical_spreads
Trading vertical spreads on SPX can offer tax advantages under Section 1256, which allows for lower tax rates on long-term gains. This strategy is suitable for traders looking to capitalize on market volatility while minimizing tax liability. The cash-settled nature of SPX also provides flexibility in managing positions, as traders do not need to cover out-of-the-money positions at expiration.
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Strategyvertical_spreads
Assetindex
Expirationnone
Time horizonshort-term
Entry / triggermarket volatility or anticipated price movement
Target / exitprofit from price movement within the spread
Invalidation / stoploss if price moves beyond the spread
Speakeranonymous
Risks- market direction against the trade
- slippage or liquidity issues
- tax implications if not properly managed
Trade idea
SPX scalping
The speaker mentions scalping the market rally at 8:30, indicating a short-term trade idea. The rally is described as an uptick of 10-50 handles in the S&P and NASDAQ, suggesting a quick trade opportunity. The speaker is uncertain about the long-term implications but is focused on short-term gains.
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Strategyscalping
Assetindex
Expirationimmediate
Time horizonminutes to hours
Entry / triggermarket rally at 8:30
Target / exitshort-term price increase
Invalidation / stopmarket reversal or significant drop
SpeakerTom Stnaf
Risks- Market reversal
- Volatility
- Execution risk
Trade idea
SPX index inclusion
The speaker believes that large-cap companies, such as those with a $2 trillion market value, should be included in indices immediately upon IPO. This is based on the rationale that such companies significantly influence market dynamics and should not be excluded due to outdated regulations. The speaker argues that the current market conditions justify immediate inclusion, and that the stock's performance in the 165-170 range could set a precedent for other high-flying stocks.
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Strategyindex inclusion
Assetindex
Time horizonShort-term (within a year)
Entry / triggerIf the stock remains in the 165-170 range
Target / exitIndex inclusion if the stock remains above 135 by the end of the year
Invalidation / stopIf the stock falls below 135 by the end of the year
SpeakerSpeaker
Risks- Market volatility could cause the stock to fall below 135
- Index inclusion decisions may be influenced by other factors beyond the stock's performance
Trade idea
SPX strangle
The speaker discusses a short strangle on Intel (INTC) as part of a diversified portfolio. The trade is positioned to benefit from volatility, with the speaker noting that the expected move in the NASDAQ is a key factor in the trade's rationale. The trade is part of a broader strategy of using non-correlated assets to minimize risk.
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Strategystrangle
Assetindex
Expirationunknown
Time horizontwo weeks before expiration
Entry / triggermarket conditions before expiration
Target / exitunknown
Invalidation / stopunknown
Speakerunknown
Risks- volatility risk
- expiration risk
- market direction risk
Trade idea
SPX volatility trade
The speaker is short puts at the 100 level, anticipating a decline in volatility. The expected move by August expiration is 38 bucks, with the speaker adjusting their view to 37 bucks. The trade is based on the assumption that the stock will close lower than its current price, with the potential for a short-term decline. The risk is that the stock may close higher, invalidating the trade. The trade is structured as a volatility trade, leveraging the expected decrease in volatility.
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Strategyvolatility trade
Assetindex
ExpirationAugust
Time horizonshort-term
Entry / triggervolatility has been coming down a little
Target / exit38 bucks
Invalidation / stopif the stock closes higher than expected
Speakerspeaker
Structure / legs- puts at around the 100 level
Risks- The stock may close higher than expected, leading to a loss
- Volatility may not decrease as expected
- Market conditions may change, affecting the trade outcome
Trade idea
SPX shorting the S&P 500 after a rally
The speaker has sold S&P 500 contracts at 7557 and has since bought some back at 47 and sold more at 67. The speaker is currently short and believes the market is rallying, with the S&P 500 being 10-13 points higher than the entry point. The thesis is that the market is in a rally, and the speaker is taking advantage of the upward movement by being short.
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Strategyshorting the S&P 500 after a rally
Assetindex
Time horizonShort-term
Entry / triggerRally into the close
Target / exit10 points higher than the entry point
Invalidation / stopIf the market continues to rally beyond the target
SpeakerUnknown
Risks- Market reversal
- Increased volatility
- Liquidity issues
Trade idea
SPX put credit spread
The speaker suggests that selling put credit spreads can be a viable strategy when the market is trending up, as the put spreads are cheaper and the market is less likely to crash upwards. However, the speaker also notes that the market can drop significantly in a short period, which could lead to losses. The thesis is based on the idea that the market's skew pricing reflects the risk of downside moves, making put spreads a more attractive option for bearish scenarios.
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Strategyput credit spread
Assetindex
Expirationnot specified
Time horizonshort-term
Entry / triggermarket trending up
Target / exitpremium collected
Invalidation / stopmarket reversal or significant upside move
SpeakerMichael
Risks- Market reversal
- Significant upside move
- Liquidity issues
Trade idea
SPX put selling
The speaker believes that selling puts on SPX is a viable strategy given the current market conditions.
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Strategyput selling
Assetindex
Time horizonshort-term
Entry / triggerSPX is down 31
Target / exit105 or something
Invalidation / stopif it gets into the high 120
SpeakerTony
Risks- Market moves against the position
- Volatility changes
Trade idea
SPX sell calls or puts
Trading zero DTE options involves selling premium either through calls or puts, with a focus on small positions due to the lack of time to adjust. The strategy emphasizes making a decision based on the expected market movement for the day, with the trader typically acting as a seller rather than a buyer. The key is to stay small and be cautious due to the high risk of rapid price movements without time to respond.
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Strategysell calls or puts
Assetindex
Expirationzero DTE
Time horizonDay
Entry / triggerMarket expected to be range-bound or move in a specific direction
Target / exitProfit from premium decay
Invalidation / stopMarket moves against the expected direction
SpeakerTom
Risks- High risk due to lack of time to adjust
- Requires strong conviction in market direction
- Small position sizing is critical to manage risk
Trade idea
SPX shorting during sharp price declines
The speaker shorted the S&P 500 (SPX) at 7210 and 7209.5, taking profits as the price reversed to 7163. The trade was based on the expectation of a sharp reversal due to the high volatility and the completion of earnings plays. The speaker took partial profits and exited the trade without holding it long-term, indicating a short-term trading strategy.
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Strategyshorting during sharp price declines
Assetindex
Time horizonshort-term
Entry / triggersharp price decline with high volatility
Target / exit50-point reversal
Invalidation / stopif the price continues to decline beyond the initial trade setup
SpeakerThe speaker
Risks- Market reversal against the trade
- Increased volatility leading to larger-than-expected price swings
Trade idea
SPX short put
The speaker discusses a scenario where a short put position was taken on the SPX, and the market experienced a significant drop. The trade was based on the expectation of a market decline, but the actual outcome was a crash that invalidated the trade. The speaker acknowledges the risk of such positions during periods of high volatility and uncertainty.
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Strategyshort put
Assetindex
Expirationnot_specified
Time horizonshort_term
Entry / triggermarket volatility or unexpected news
Target / exitnot_specified
Invalidation / stopnot_specified
Speakernot_specified
Risks- Market crashes can lead to significant losses.
- Systemic risks may invalidate trades.
- Liquidity issues can prevent execution of orders.
Trade idea
SPX broken wing butterfly
The speaker suggests a patent-pending broken wing butterfly strategy for SPX, which is a complex options strategy that involves buying and selling multiple strike prices. The idea is to capitalize on the market's volatility and rotation, with the potential for profit if the underlying index moves within a specific range. The strategy is considered a last-minute opportunity, suggesting it is a short-term trade.
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Strategybroken wing butterfly
Assetindex
Expirationlast night
Time horizonshort-term
Entry / triggerlast night
Target / exitnot specified
Invalidation / stopnot specified
SpeakerTony
Structure / legs- short strike
- long strike
- short strike
Risks- The strategy is complex and requires a good understanding of options trading.
- The market could move outside the expected range, leading to losses.
- The strategy is not suitable for all traders, especially those with a long-term investment horizon.
Trade idea
SPX Broken Wing Butterfly
The broken wing butterfly is a high probability trade with an 80-90% chance of profit. The trade involves buying a put at 6650, selling two puts at 6755, and buying a put at 6800. The risk-reward ratio is favorable, with a $34 credit on $5,000 risk. The trade is synthetically long a butterfly and short a put spread, providing protection against downside while capturing upside potential.
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StrategyBroken Wing Butterfly
AssetIndex
ExpirationLast night
Time horizonMonth
Entry / triggerPrices at 6755
Target / exitMax profit of $5,000
Invalidation / stopIf the price moves beyond the expected move of $330
SpeakerTony
Structure / legs- Buy 6650 put
- Sell two 6755 puts
- Buy 6800 put
Risks- Market movement beyond expected range
- Volatility changes
- Liquidity issues
Trade idea
SPX put position
the speaker believes the move will be outside of the expected move
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Strategyput position
Assetindex
Entry / triggerif the expected move is 20 bucks
Target / exitmove outside of the expected move
SpeakerTom
Risks- the move could be within the expected range
Trade idea
SPX expected move butterfly
The expected move butterfly strategy is suitable for short-term trading in highly liquid instruments like the SPX. By widening the strike range and paying a price between $1 and $2, traders can increase their chances of success. The strategy is based on the probability of the market moving within a specific range, with the odds of success proportional to the price paid. This approach is ideal for traders who can tolerate the low probability of success but are willing to take a calculated risk.
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Strategyexpected move butterfly
Assetindex
Expirationshort-term (0 DTE or weekly)
Time horizonshort-term
Entry / triggermarket volatility and expected directional movement
Target / exitmax profit based on strike width and price paid
Invalidation / stopif the market moves outside the expected range
SpeakerUnknown
Structure / legs- short 25 cents
- short 30 cents
- short 35 cents
Risks- Low probability of success
- Market volatility
- Incorrect assumptions about price movement
Trade idea
SPX iron condor
The speaker suggests that for SPX iron condors, a spread width of 50 points is sufficient for most traders, with 100 points being a maximum. Wider spreads (e.g., 150 points) are not recommended due to the increased capital requirement and the risk of significant losses. The trade-off between capital efficiency and probability is critical, with narrower spreads offering better capital efficiency and lower risk of large losses.
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Strategyiron condor
Assetindex
Time horizonShort-term, typically within the expiration of the options used.
Entry / triggerWhen the trader is willing to accept a defined risk and is looking for capital efficiency.
Target / exitThe potential return is maximized by choosing a spread width that balances capital efficiency and probability.
Invalidation / stopInvalidation occurs if the price moves beyond the outer strike prices of the iron condor.
SpeakerRodrigo
Risks- Market volatility can lead to larger-than-expected price movements.
- The trader may miss out on higher returns by not using wider spreads.
- The strategy requires careful monitoring to avoid large losses if the price moves beyond the outer strike prices.
Trade idea
SPX Market on Close (MOC) trading
The speaker suggests that buying SPX at the money options before or during MOC could be a viable strategy, as it allows traders to capitalize on the closing market movement. The speaker also notes that this strategy is not commonly used today, and that it is more of a historical practice. The speaker also mentions that MOC trading can be used in conjunction with options and futures, but it is not without its risks.
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StrategyMarket on Close (MOC) trading
Assetindex
Time horizonEnd of the year
Entry / triggerBuying SPX at the money options before or during MOC
Target / exitHigh 60s
Invalidation / stopMarket moves against the trade
SpeakerTom
Risks- High risk
- Requires deep market understanding
- Not commonly used today
Trade idea
SPX ratio spread
The speaker executed a ratio spread on the S&P 500 (SPX) by shorting 100 calls and longing 200 puts, with an entry at 72. The target was set at 67, with a stop at 72. The strategy was based on the expectation of a price decline, which was supported by the speaker's observation of the market's lower levels. The trade was adjusted by adding to the position, indicating a belief in the continued downward trend.
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Strategyratio spread
Assetindex
Expiration2023-08-18
Time horizonshort-term
Entry / triggerprice below 72
Target / exitprice below 67
Invalidation / stopprice above 72
SpeakerTom Sausnoff
Structure / legs- short 100 calls
- long 200 puts
Risks- Price could move against the short position
- Volatility could increase the risk of losses
Trade idea
SPX iron condor
The trader is setting up an iron condor with a wide range of $50, using 45 delta for the short legs. The strategy aims to collect a credit of around $14.50, with a target of 50% profit. The trader acknowledges that the difference between SPX and XSP is negligible, and the focus is on the speed of profit realization. The trade is considered low risk due to the wide wings, which reduce the chance of max loss.
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Strategyiron condor
Assetindex
ExpirationMay 1st
Time horizonShort-term
Entry / triggerMarket closed
Target / exit50% profit
Invalidation / stopMarket moves beyond the wings
SpeakerPamela
Structure / legs- 6050 6100 put
- 7100 7150 call
Risks- Market volatility
- Unexpected price movements
- Time decay
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
What was the market level when you went long the SPX?
The speaker mentioned going long the SPX at a level around 6,400, which was a dip in the market. They later noted that the market tickled 6,666 points, indicating a rebound from that level.
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Actionable takeawayTraders should consider entering long positions when the market dips to a certain level, expecting a rebound.
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 are the chances of a 20% or more meltdown in 2026?
The probability of a 20% meltdown in the SPX by December 2026 is 30%, based on the delta of the 5600 put. This is calculated as double the delta of the put option, which is 15%.
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Actionable takeawayTraders should consider the probability of market downturns and use options strategies like put spreads to manage risk.
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
What is the current level of the S&P 500?
The S&P 500 is currently at 7029, with the speaker having sold it at 7011 and bought some back this morning. The speaker is still short and sold some Nasdaq.
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Actionable takeawayThe S&P 500 is near a key level, and the speaker is considering shorting it.
Q&A
How often do long wings need to be readjusted when selling SPX zero-day options?
The speaker explains that long wings need to be readjusted frequently, especially on days with significant SPX movements, such as the 90-point increase mentioned. They suggest that adjustments are necessary to maintain the strategy's effectiveness.
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Actionable takeawayLong wings should be adjusted frequently based on SPX fluctuations to maintain the strategy's effectiveness.
Q&A
What is the current state of the market?
The speaker discusses the current market conditions, noting that Bitcoin is down 460, oil is down 23, S&P 500 is up 27, gold is up 49, NASDAQ is up 185, silver is up 377, VIX futures are down 23, and cash is down 24. The speaker also mentions Micron's stock is up 21 in change today.
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Actionable takeawayThe market is showing mixed performance with some assets rising and others falling, indicating a volatile environment.
Q&A
What is the reason for the change in the cost of SPX calendar trades?
The cost increase is due to the nature of calendar spreads in European-style options, where early exercise is not allowed, and the risk associated with these trades is tied to the premium paid for the calendar spread.
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Actionable takeawayThe cost of SPX calendar trades has increased due to the structure of European-style options, which do not allow early exercise, thereby affecting the risk and cost of these trades.
Q&A
What is the current market performance of S&P, NASDAQ, gold, oil, silver, and Bitcoin?
The S&P is up 60, NASDAQ is up 593, gold is down 22, oil is down $30, silver is down a dollar, and Bitcoin is up 35. This indicates a mixed performance across different asset classes.
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Actionable takeawayThe market is showing mixed performance with equities and Bitcoin rising while precious metals are falling.
Q&A
Why would zero TT bull spreads on QQQ give more than those say of SPY not comparing against SPX index due to its size?
The speaker suggests that bull call spreads on QQQ may pay more than SPY due to the expected move in the NASDAQ. The speaker notes that everything is priced to absolute perfection when trading indexes, and that the reason for the difference in payouts is likely due to the expected move in the NASDAQ.
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Actionable takeawayThe expected move in the underlying asset can influence the pricing of options strategies, with higher expected volatility potentially leading to higher payouts.
Q&A
What is the expected move for the SPX trade?
The expected move for the SPX trade is $330, which is the EM (expected move) mentioned in the transcript.
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Actionable takeawayThe expected move is a key factor in determining the potential profitability of the trade.
Q&A
Have you ever thought about buying SPX at the money options right before or during MOC?
The speaker confirms that they have considered this strategy in the past, but notes that it is not commonly used today. They also mention that it is a high-risk strategy that requires a deep understanding of market dynamics.
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Actionable takeawayThe speaker suggests that buying SPX at the money options before or during MOC could be a viable strategy, but it is not without its risks.
Q&A
Can you do something similar if somebody wants to trade how SPX is going to close and you don't want to trade it's too expensive to trade the SPX?
The speaker suggests using SPY (SPDR S&P 500 ETF Trust) instead of SPX (S&P 500 Index) for trading, as SPY is cash-settled and easier to trade. The speaker highlights the difference between cash-settled and stock-settled options, noting that SPY avoids assignment risk and is more straightforward for traders.
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Actionable takeawayUse SPY instead of SPX for trading the S&P 500 due to its cash-settled nature and reduced assignment risk.
Q&A
What should I take into consideration when choosing between SPX and XSP for an iron condor?
The speaker states that there is almost no difference between SPX and XSP in terms of movement and speed. Therefore, the choice between the two is largely irrelevant, and the focus should be on the strategy itself. The trader suggests that the key is to choose the one that allows for faster profit realization, but this is not guaranteed.
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Actionable takeawayThe choice between SPX and XSP for an iron condor is not significant due to their similar behavior. Focus on the strategy and profit targets rather than the specific instrument.
Q&A
Are you doing any trades in a SPX or SpaceX?
The speaker discusses margin requirements for short options, particularly for SpaceX, and mentions a trade involving a broken-wing butterfly strategy. The speaker also notes that the margin requirements for short options are full, with no relief.
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Actionable takeawayUnderstanding margin requirements is crucial for short option strategies, and the broken-wing butterfly strategy was executed with a 25 cent credit.