Trade idea
SPY Covered Call
Investing in SPY directly offers greater control over the underlying assets and allows for more flexibility in trading strategies, such as selling calls against the position. This approach is more advantageous than holding the money in a mutual fund like Vanguard, as it provides the trader with direct control over the investment and the ability to implement active strategies.
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StrategyCovered Call
AssetEquity
Time horizonLong-term
Entry / triggerHaving $70,000 to $80,000 in a passive global stock bond mutual fund, and taking the money out to invest in SPY.
Target / exitLong-term hold with selling calls against it.
Invalidation / stopIf the strategy is not aligned with the trader's goals or if the market conditions change significantly.
SpeakerSteve
Risks- Market risk
- Volatility risk
- Liquidity risk
Trade idea
SPY naked calls
Selling naked calls in SPY can provide a pure short delta exposure, capturing potential downside if the market declines. This strategy is suitable for traders who expect a pullback or consolidation phase, with the risk of losing if the market rallies. The trade should be managed with clear profit-taking levels based on the trader's risk tolerance.
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Strategynaked calls
Assetequity
Time horizonshort-term
Entry / triggermarket pullback or consolidation
Target / exitprofit from short-term volatility
Invalidation / stoploss if market rallies
SpeakerTom
Risks- Market rally can lead to losses
- Volatility can increase the risk of large losses
Trade idea
SPY straddle
The speaker suggests selling a straddle given the current market conditions, indicating a belief in a range-bound movement for the S&P 500. This strategy is typically used when the market is expected to trade within a narrow range, and the trader profits from the premium collected. The speaker's suggestion is based on the current market environment, which includes a meandering S&P and a relatively stable NASDAQ.
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Strategystraddle
Assetequity
Expirationnot specified
Time horizonshort-term
Entry / triggermarket conditions suggest a potential range-bound movement
Target / exitnot specified
Invalidation / stopnot specified
Speakernot specified
Risks- Market moves beyond the anticipated range
- Time decay of the options
- Liquidity issues in the options market
Trade idea
SPY iron condor
The speaker suggests trading delta three wide SPY iron condors, which are designed to profit from a range-bound market. The strategy is positioned to benefit from the current up and down market conditions, though the speaker notes that the market has not tested the positions yet. The speaker's approach involves selling both call and put options at different strike prices to create a risk-defined range.
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Strategyiron condor
Assetequity
Expiration38 to 45 days
Time horizonnot specified
Entry / triggerup and down market
Target / exitnot specified
Invalidation / stopnot specified
Speakernot specified
Risks- Market moves beyond the defined range
- Volatility changes
- Liquidity issues
Trade idea
SPY iron condor
The speaker discusses the use of delta three wide spy iron condors and the importance of staying mechanical. The strategy involves entering the trade with 38 to 45 days to expiration and managing the position by rolling it to 21 days. The speaker suggests that the sweet spot for maximizing returns is during the decay curve, and the optimal profit level is around 25%. The trade should be exited or rolled out when the position reaches this sweet spot to avoid holding into the last week of the expiration, which increases risk with minimal reward.
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Strategyiron condor
Assetequity
Expiration21 days to expiration
Time horizon21 days to expiration
Entry / triggerWhen the market is in a range-bound or volatile environment
Target / exit25% of max profit
Invalidation / stopIf the position is held into the last week of the expiration, due to increased risk and minimal reward
SpeakerSpeaker
Risks- Market volatility
- Unexpected events
- Inability to redeploy capital efficiently
Trade idea
SPY monthly strangles
challenge to go shorter dated with strategy
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Strategymonthly strangles
Assetequity
Time horizonshort-term
Entry / triggerusing $60,000 buying power
Target / exitmaximize account size
Invalidation / stopdefine risk, $20 wide iron condor or synthetic strangles
SpeakerNotredogus
Risks- volatility at lows down 50%
- account size limitations
Trade idea
SPY call spread
high probability profit with a wide spread
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Strategycall spread
Assetequity
ExpirationSeptember 18th
Time horizonshort-term
Entry / triggermarket up
Target / exithigh probability profit
Invalidation / stopmarket moves beyond expected range
SpeakerTony AI
Risks- market moves beyond expected range
Trade idea
SPY put spread
When executing a put spread, the focus should be on the delta of the spread rather than the individual legs. The net delta of the spread is what determines the strategic combination of deltas. The amount of credit received is a key factor in determining the trade's profitability. This approach allows traders to focus on the overall risk and reward profile of the spread rather than individual strike prices.
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Strategyput spread
Assetequity
Time horizonNot explicitly stated, but the trade is based on the delta of the spread and the amount of credit received.
Entry / triggerWhen the delta of the spread is calculated and the net delta is considered for the trade.
Target / exitNot explicitly stated, but the trade is based on the delta of the spread and the amount of credit received.
Invalidation / stopNot explicitly stated, but the trade is considered invalid if the delta of the spread is not properly calculated.
SpeakerUnknown
Risks- Market volatility
- Incorrect delta calculation
- Liquidity issues
Trade idea
spy selling puts
Selling puts on SPY is a capital-efficient strategy that has historically performed well, especially in markets where downside risk is more likely. This strategy is preferred over skewed strangles due to its simplicity and effectiveness in capturing premium while maintaining delta neutrality. The key is to ensure the market does not drift significantly upward, which could erode the profitability of the trade.
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Strategyselling puts
Assetequity
Time horizonShort-term to medium-term
Entry / triggerMarket conditions favoring downside risk
Target / exitPremium collected from put sales
Invalidation / stopSignificant upward movement or market volatility
SpeakerMaria from the dog pound
Risks- Market volatility
- Significant upward movement
- Liquidity issues
Trade idea
SPY trailing stop-loss
Closing winning trades at 50% or 21 days to expiration is optimal for maximizing profit and minimizing risk, as supported by extensive research and backtesting. This approach aligns with probabilistic and optimization models that suggest these thresholds provide the best risk-adjusted returns. The trade should be executed with a clear entry point and a defined exit strategy based on these thresholds.
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Strategytrailing stop-loss
Assetequity
Time horizonshort-term
Entry / triggerentry at a defined level based on technical analysis
Target / exit50% profit or 21 days to expiration
Invalidation / stoploss exceeding 50% or market conditions deteriorating
Speakertrader
Risks- Market volatility may affect the optimal closure timing
- Unexpected news or events could disrupt the trade's performance
Q&A
Do you think the SPY, QQQ, and similar index funds will be split ever so it's easier for us to buy 100 shares?
It is unlikely that SPY, QQQ, or similar index funds will be split anytime soon. While some ETFs have split in the past, such as the S&P 100, the S&P 500 has not split. Fractional options are not expected to be introduced, and the likelihood of a split is low due to the complexity of derivatives and the interests of fund managers.
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Actionable takeawayFractional options are not expected to be introduced, and the likelihood of a split in SPY or QQQ is low.
Q&A
Will the SPY close over 760 by September?
The speaker states that the probability of the SPY closing over 760 by September is 85%, with a note that the prediction engine may provide more detailed analysis.
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Actionable takeawayThe speaker provides a probabilistic forecast for the SPY closing above 760 by September, suggesting a 85% chance based on their analysis.
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 XSP a better option than SPY for trading?
XSP is cash-settled and does not have the risk of stock price movements after the close, unlike SPY. However, XSP may involve additional fees and has different tax implications compared to SPY.
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Actionable takeawayXSP is suitable for traders who prefer cash-settled options and are willing to accept potential additional fees and tax implications.
Q&A
Is it better to keep the unused capital in something secure like treasuries or should I passively invest in something like SPY or QQQ for historically higher returns?
The speaker suggests keeping unused capital in secure assets like treasuries or equivalents (BIL/ESG) rather than passively investing in SPY or QQQ, especially at all-time highs. They mention that while SPY and QQQ may offer higher returns, the current market conditions and risks make them less advisable at this time.
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Actionable takeawayAvoid passive investing in SPY or QQQ at current market highs; prefer secure assets like treasuries for unused capital.
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
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
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.