Options Playbook Radio (financial podcast)

We are continuing the discussion of options pricing. This week we take a deep dive into pricing of a butterfly.

Specifically:

  • Looking at a 10-day butterfly in AAPL
  • Picking a five-point spread
  • What strikes and expirations to choose?
  • What will this cost?
  • What is the maximum risk and reward?
  • What do we want to happen?
  • What impacts the pricing of butterflies?
  • Managing expectations
  • Looking at the same thing for a November 17 expiration
  • What is the ideal scenario?
Direct download: OptionsPlaybookRaido178.mp3
Category:financial podcast -- posted at: 1:44pm CDT

Today Brian is covering a short call spread (which is bearish) on AAPL. All of this applies on the put side, but in this episode, calls are being featured.

Specifically:

  • What dynamics do you need to think about when trading short spreads?
  • Look at the most at-the-money straddle to get an idea about pricing
  • Example 1: November 17 expriation; 52 days out
    • Selecting strikes
    • What will this cost?
    • What is the max risk? Reward?
  • Example 2: October 6 expiration; 10 days out
    • Selecting strikes
    • What will this cost?
    • What is the max risk? Reward?
  • Which would you choose?
  • How to close out the trade?
  • How to roll the trade?

Do you have a question that you want answered on a future episode? Send them to Brian at theoptionsguy@invest.ally.com, or to the Options Insider at questions@theoptionsinsider.com.

Direct download: OptionsPlaybookRadio177.mp3
Category:financial podcast -- posted at: 1:01pm CDT

In this episode, Brian explores long spreads. Specifically, long call spreads and long put spreads. These can be found on pages 60 and 62, respectively, of The Options Playbook. This is always available on OptionsPlaybook.com, in on the Amazon Kindle edition.

Details include:

  • The dynamics of spread trading
  • Using AAPL as an example
  • What to consider regarding forecasting and timing
  • The value of the spread does not provide quick rewards
  • Selecting strikes
  • What is the maximum risk?
  • What is the maximum reward?
  • Always look at how much time premium you have

Do you have a question that you want answered on a future episode? Send them to Brian at theoptionsguy@invest.ally.com, or to the Options Insider at questions@theoptionsinsider.com.

Direct download: OptionsPlaybookRadio176.mp3
Category:financial podcast -- posted at: 1:38pm CDT

Now that earnings season is over it's time to get back to basics: the Greeks. You can find an entire chapter on Greeks in The Options Playbook. This is always available on OptionsPlaybook.com, in on the Amazon Kindle edition.

In this episode:

  • A review of last time
  • Using the Greeks
  • What does a delta do?
  • Meet the Greeks in The Options Playbook
  • As expiration approaches, what happens to delta? For that, you need gamma
  • What about theta?
  • Delta when a contract is in-, at- or out-of-the-mooney
  • Delta moves slower than other Greeks
  • You can't have slow time decay on a fast moving option

Do you have a question that you want answered on a future episode? Send them to Brian at theoptionsguy@invest.ally.com, or to the Options Insider at questions@theoptionsinsider.com.

Direct download: OptionsPlaybookRadio173.mp3
Category:financial podcast -- posted at: 4:25pm CDT

With MRVL still to announce earnings, it might be interesting to look at a long call spread in the name. You can find this on page 60 of The Options Playbook. This is always available on OptionsPlaybook.com, in on the Amazon Kindle edition.

In this episode:

  • A review of last time
  • MRVL announces earnings on 8/24 after the close
  • What is the outlook for MRVL
  • Selecting the expiration
  • What is the most at-the-money strike?
  • Buying as much time premium as selling
  • What is maximum risk? Reward?
  • Selecting a different expriation
  • What is maximum risk? Reward?
  • Why does one trade cost more than the other?
  • Time premium caveats

Do you have a question that you want answered on a future episode? Send them to Brian at theoptionsguy@invest.ally.com, or to the Options Insider at questions@theoptionsinsider.com.

Direct download: OptionsPlaybookRadio172.mp3
Category:financial podcast -- posted at: 3:02pm CDT

It's time for listener questions on Options Playbook Radio. Do you have a question that you want answered on a future episode? Send them to Brian at theoptionsguy@invest.ally.com, or to the Options Insider at questions@theoptionsinsider.com.

In this episode Mark and Brian discuss:

  • Question from LesNod: How the heck do you actually get out of straddles? One side of a straddle is always a loss!
  • Question from Jelly: Can I buy longer-term options than LEAPS?
  • Question from Kim D.: How high to rates need to go before I need to worry about rho?
  • Question from Axel D.: Why do they update open interest only once a day?
Direct download: OptionsPlaybookRadio170.mp3
Category:financial podcast -- posted at: 2:37pm CDT

Since we are still in the middle of earnings season, it makes sense to continue with stocks that are about to release earnings, in this case Tesla, which announces earnings after the recording of this show. You can find skip strike butterflies on page 108 of The Options Playbook. This is always available on OptionsPlaybook.com, in on the Amazon Kindle edition.

In this episode, Brian covers:

  • A review of last time
  • Where did the AMZN skip strike butterfly end up?
  • Where is TSLA?
  • What is the outlook?
  • What is the expected move?
  • Setting up the trade: selecting strikes
  • What's the maximum risk? Reward?
  • What do you want to happen?

Do you have a question that you want answered on a future episode? Send them to Brian at theoptionsguy@invest.ally.com, or to the Options Insider at questions@theoptionsinsider.com.

Direct download: OptionsPlaybookRadio169.mp3
Category:financial podcast -- posted at: 1:19pm CDT

We are back in earnings season. Given the possibility for big moves, we will look at the skip strike butterfly with calls, which you can find on page 108 of The Options Playbook. This is always available onoptionsPlaybook.com, in on the Amazon Kindle edition.

In this episode:

  • What happens to implied volatiilty around earnings?
  • The dynamics of the trade
  • The more costly the underlying, the more costly the option
  • AMZN announces earnings on 7/27 after the close
  • What is the "expected move"?
  • Picking a close expiration
  • Selecting strikes
  • What is the maximum risk?
  • What is the break-even point?
  • What if we are completely wrong?
  • What is the best-case scenario?

Do you have a question that you want answered on a future episode? Send them to Brian at theoptionsguy@invest.ally.com, or to the Options Insider at questions@theoptionsinsider.com.

Direct download: OptionsPlaybookRadio168.mp3
Category:financial podcast -- posted at: 3:23pm CDT

It's huddle time again on Options Playbook Radio. This is when Mark and Brian answer listener questions. Do you have a question that you want answered on a future episode? Send them to Brian at theoptionsguy@invest.ally.com, or to the Options Insider at questions@theoptionsinsider.com.

The Bobster wants to know if options can be traded outside of U.S. trading hours.

  • Short answer: yes and no
  • Longer answer: liquidity issues, wider spreads, other nuances.
  • Should there be regular after hours?
  • Should it be limited to a number of names?
  • Index versus equity options

Nelly2 wants to know about assignment. Just so I am clear on the spread assignment thing. If I am in SPX, then I just get cash if the index closes inside my spread. But if I am in a stock, then I get the stock?

  • Cash-settled
  • Guidelines for cash-settled versus regular settled
  • Sellers and buyers rights and obligations
Direct download: OptionsPlaybookRadio167.mp3
Category:financial podcast -- posted at: 11:43am CDT

For the last few episodes, we were reviewing skip-strike butterflies in GOOGL. You can find this on page 87 of The Options Playbook. This is always available on OptionsPlaybook.com, in on the Amazon Kindle edition.

In this episode:

  • A review of the last few weeks of strategies in GOOGL
  • Looking at IBM, which will announce earnings on July 18
  • Remember: earnings add a bit of volatility to the underlying
  • Where is the IV?
  • Having a neutral to bullish outlook
  • Going out further in time. Why?
  • Time is on your side
  • Picking the expiration
  • Picking the strikes
  • What will this cost?
  • What is the maximum risk? Reward?

Do you have a question that you want featured on an upcoming episode of Options Playbook Radio? Send Brian an email at: theoptionsguy@invest.ally.com.

Direct download: OptionsPlaybookRadio166.mp3
Category:financial podcast -- posted at: 8:51am CDT