Basic Training: Expiration Mythbusting What is expiration? Why do options expire? What does Triple Witching mean? Quadruple Witching? How does expiration impact the Greeks? How has expiration changed with the advent of the weeklys? Myth: Is it true that options control the stock market on expiration Friday? What happens when you exercise an option? American vs. European exercise? Can you exercise options early? Should you? How does auto-exercise work? Mail Call: Fall in for listener questions Question from Christina Rico - Will we ever have daily options? Question from Ian Nichol - Love the show. What do you guys (and lady) think of this VXX debacle with FINRA and Wells Fargo? Seems like a few of the folks at Wells Fargo should have been listening to this show. Question from TradeHer - How do we get more ladies into #options?

Basic Training: A Review of How to Protect Your Profits Easiest method: Buy a 2-3 month put ATM or slightly an OTM put. Protect just those gains. What do you do if you have a broad portfolio? Hedging Rule of Thumb. Expect to spend about 2% of your portfolio for effective 3-6 month protection. How do you reduce the cost of protection? Buy a spread instead of an outright put, set up a collar, or set up a collar with a kicker. Mail Call: It's time for listener questions Question from Ariell - Why should I ever buy puts? I can use a stop order in the stock for free and then put that extra capital to work in my trading account. By my math using stops instead of puts can boost your account 5-10% per year. That's a lot of cheese. Question from S_Warz - Do you trade options through dark pools Question from Thankfulness - Do you have dark pool access? Comment from H. Schwartz‏ - Who said option traders don't celebrate holidays! Question from L. Penguin - I have a question for the Options Bootcamp. I'm a new options trader and I want to buy a LEAP call because it looks like the stock is going to go to up in the next 12 months, but I don't want to commit yet. I also want to generate income while I hold that position. What are your thoughts on selling the call while I have the leap? Also, this stock has an attractive dividend that I'd like to capture. Is this even possible? Interested in your thoughts, thanks!...I was thinking about buying a deep in the money call for the LEAP, and then depending on where the stock is trading at the time, sell closer to the money.

In this episode, Mark, Dan Passarelli and Jill Malandrino take on listener questions. Options Drills: Today's topic was inspired by this listener question: Question from MarkLitwin: How do you lose money in options in the most effective way? Don't by ATM straddles Don't load up on far OTM options because they're cheap Don't trade earnings Be careful with trading weeklies Watch out when selling options going into weekends or holidays Mail Call: Listeners take over Question from ejh4isu: IF I buy/sell a vertical on SPX (or any equity stock for that matter) and hold until expiration, and SPX settles between the strikes, what happens? Example: sell 2395/2400 and SPX settles at 2397. Question from Darqane: Assigned on short SPX puts means getting long the underlying? But how does that work if it's cash settled? Question from Lesnod: How do you get out of the straddles? One side of a straddle is always a loss correct? Question from Bobster: Can you trade options outside of U.S. trading hours? Question from ejh4isu: Let's say you're short naked a bunch of puts and the trade goes against you, and you don't have the money to pony up? What can your broker do? Question from BULZEYE7: Are options worth it for day-traders? Or just for swing-traders?

Mark, Dan, and Jill were all in the Options Insider studio to record this session. Education, and hilarity, ensued. Options Drills: What are options trading ideas that an active stock trader can use in their portfolio? Getting paid to take on risk, cash-secured put The wheel trade Stock replacement strategy; what about using LEAPS? Using a diagonal spread to generate income Mail Call: Fall in for listener questions and comments Question from Tiim: Why isn't it standard or maybe required to let people close out shorts for free below $.10? Question from USA Patriot: What is ADV?? Question from Richard D: Are there any trades that if you did not have to pay brokerage fees would be excellent types of trades? I recently have been given the opportunity to trade options and equities for a near zero trading costs for about a year. I had in the past found some multi-leg spreads or underlyings with a really low prices unworkable because the trading costs made the potential gains or expected value too low. Thank you for your time and for the great shows you consistently point out! Best, Richard Question from Ascentaa: What can happen to the current options being held of KITE which is acquired by GILD and is being delisted? Question from Yieldhawk: What is the biggest size one could buy in options? If one had a long position of $1B and want to hedge w $10 million worth is that ok? Question from Lonesome: Could you explain Theta and how it helps/hurts options traders? Should anyone ever buy OTM options? Question from Butcherboyz: What options trading strategy would you say is best suited to people with absolutely zero knowledge of options? Thanks.

Mail Call: Fall in while your drill instructors answer your questions. Comment from Andrew McNichol - Big fan of your podcast. I appreciate how you start at square one and then walk listeners through every element of options and options trading. Thanks. Question from Tim D. - How high do rates need to be before I need to worry about rho? Question from Kraken1975 - Which of the Greeks do you utilize the most and why? Question from Meatz - Would you describe successful options trading as primarily singles and doubles or more swing for the fences home runs? Question from LCB - This is a challenging time to sell options due to low volatility. So does it stand that the opposite is true? Is it a good time to buy options? Particularly protective puts? Question from Mary - What's the shortest expiry available for plain vanilla options? Question from Ejh4isu - What qualifications do I need to work in the industry as a professional, i.e. as a trader? Is that a career path I'd even want to consider? Question from Privateer - Permission to speak freely sirs! Hi guys, Love the show and the entertaining military themed education. I've recently been learning about an exciting strategy called writing call options with CFDs. The claim by the teacher is that CFDs can leverage the return on premium selling by ten times, and reduce your break even significantly. I'm very invested in how this could apply in selling both legs i.e. covered strangles or straddles. Can you discuss the downsides, upsides and hedging strategies used in this scenario,and how to mitigate risk especially on the put leg. Sirs yes sir! Question from Axel D. - Why does open interest only update once a day?

Your hosts for this episode are: Mark Longo, Founder, Options Insider Media Group Andrew Giovinazzi, Chief Education Officer, Option Pit Jill Malandrino, Global Markets Reporter, Nasdaq Introduction Segment: What are Nasdaq's options education initiatives? Why are options and options education so important to Nasdaq going forward? Creating content for RIAs. Options 101: Going back to the Basics Basic Options Primer What are options? Basic options terms Why trade options instead of stocks? What are the Greeks? Why should traders care about volatility? Buying options versus selling options Start with paper trading Know where you are going to get out before you get in

Options Drills: What is a calendar? How do we set them up for earnings? Strike/Month selection? Should we carry them through the event? When do we take off? Calendars vs. Diagonals? Mail Call: Fall in recruits and get your questions asked. With $VIX giving up the ghost - which products are you hoping will provide new sources of #Volatility for your #options trading? 33% - Crude Oil (WTI, etc) 20% - Metals ($GLD, $SLV, etc) 20% - FX (GBP/USD, etc) 27% - Indv. Equities-$TSLA, etc VIX Limbo: Last Month 40+% of you said $VIX wouldn't break 9 in 2017. But recent events have us asking again: How low will $VIX get in 2017? Still Won't Break 9 Won't Break 8.5 Won't Break 8.0 Lookout - 7 Handle in '17 Listner Questions and Comments: What is on your mind? Question from Lesnod - How do you get out of the straddles? One side of a straddle is always a loss correct? Question from Meatz - Would you describe successful options trading as primarily singles and doubles or more swing for the fences home runs? Question from Bulzeye7 - Are options worth it for day-traders? Or just for swing-traders? Question from Axel D - What does open interest only update once a day? Question from Mary - What is the shortest expiry available for plain vanilla options? Question from Lincan - My go to options strat is to sell covered puts on stocks that I want to buy then get paid to wait. If the stock comes my way I eventually trade out of it using a covered call. What do you think? Savvy or stupid? Question from Steve: With the VIX so low, I am not selling a lot of options anymore, because I am afraid that I will not collect enough premium. Am I thinking of this incorrectly?

Basic Training: Delta Revisited A basic overview of Delta What is it? How does it impact your trading? Inspired by a Market Trader Mentoring newsletter article Delta Can Still be Your Friend Mail Call/Options Options Question of the week With $TSLA threatening $315 how are you leaning in your Options trades this month? Would you rather: 18% - Buy 1-month $300 put 25% - Buy 1-month $330 call 25% - Sell 1-month $300 put 32% - Staying far away from it Listener Questions and Comments: Question from Joshua Shealy: Thanks so much for all that you guys do! Sorry if this is a novice question. I know that Delta is not literally the % chance of expiring in the money, but more so the rate of change for a $1 movement in the underlying. I noticed today looking at VIX Calls that the strike closest to .5 Delta is the 20 strike, a long way from ATM. I usually associate near .50 Delta with being near ATM. Is this just a nuance of VIX, or am I missing something bigger? Qustion from Brian Fortin: Options Boot Camp Dan is fond of saying, why trade options naked when you can spread off the risk and make the same money by doing it twice? I feel the same way about carrying a short position into expiration? Why try to carry 6 short contracts into expiration to capture that last 5 cents, when you can just trade 7 contracts and do the right thing? Question from Gameday Dog: Aww man My vertical put spread has gone bad. I have +3 options at 61.5 and sold -3 at 62.5. Yesterday it gapped down to 50. I now have +200 shares of LULU in my account plus 3 put options at 61.5 and -1 put option at 62.5. I thought it was a $300 max risk spread. Do I have to do anything? Do I sell the shares? Everything expires in 7 days. Please help. Thanks. So, I learned about selling shares and back ratio spreads and even got an $19 credit. Question from Elio: Confused. How did that guy end up with only two of his short puts getting assigned to him? If he was short 3 shouldn’t all of them have been assigned? Question from JDog: I just got an options pitch that says that options buyers lose money seven out of 10 trades. Is that true? Question from Allen: Why would I trade options when 90% expire worthless? Question from AndersonIvesting: New to options. I use TD Ameritrade but currently I don't like it for options. I was looking at Charles Schwab. Any recommendations for an options newbie? Question from Sharkcake: I've been approved to trade options by my Brokerage but I have yet to execute my first trade. What trade do you recommend?    

Basic Training: Today we are going into the depths of option settlement. A question that is often asked in Group Coaching is that of the various settlement issues. Many option traders limit their universe of option trading to two broad categories: One group consists of individual equities and the similar group of exchange traded funds (ETFs). The other group is composed of a multitude of broad based index products. Individual equities and ETFs trade until the close of market on the third Friday of each month for the monthly series contracts. These days there are more and more ETFs and equities that also have weekly settlements too. These contracts are of American type and as such can be exercised by the owner of the contracts for any reason whatsoever at any time until their expiration. What is automatic exercise? Equity settlement? Cash settled indexes? Determining settlement? Mail Call: Listener questions and comments Question from Mike: Hello, Love the show. I am curious as to why one would ever use a collar instead of a bull put spread. Am I incorrect in thinking these strategies are identical with respect to risk/reward? Since the put spread will cost less to put on, it seems like the better trade. As an additional advantage, there is no need to tie up the capitol to hold the underlying. Thanks for your help. Question from Yukoner: Do you ever do spreads in LEAPS? Why and how? So I used to trade the LEAPS rather than buy the stock. Is that a good use case? Question from TradeCraft: Is there a correlation between high options OI and options price levels? Comment from Ian Felder: I started off in crude futures, then moved to VIX futures, now VIX options. Each time I trade a new market, I feel like I see more panoramic moves because I am less familiar with the underlying in the first few days. It sounds scary, but it is actually refreshing. I guess looking at options has changed the way I look at futures. Has something similar happened to you? Have options changed your outlook on other products?

Options 101: Our topic today was inspired by a listener question. Question from Mark Davis: Hello, I am a new listener to options bootcamp and am currently on Ep. 4. There was a mention of using covered calls to generate a "dividend." I am having trouble tracking down more information on this. Being still new to all of this I am hoping to get a clearer picture of how it works. How far out on expiration should I look and how do I figure the strike price? Thanks! Mail Call: Even more listener questions and comments Question from Robert Kornacki: I would like to use strategy regarding naked puts. If the naked put is far out of money what strategy could I use to protect myself. Could I use some type of order in case it was getting close to naked put strike price. Thanks Question from Dmitry Shesterin: What happens to LEAPs for tickers that get delisted before expiration? Question from Fred: I read Natenberg options volatility and pricing twice now and I have also set up paper trading accounts. But I am stuck going forward in my options progression. I do not want to trade using the greeks formula. But I want to spec on crude futures intraday using options. What should I do? Should I make more SIM trades until I figure it out? Or am I just too ignorant to trade options? Question from Jack Rieger: Do you have any specific strategies near or on expiration to profit from theta decay? Question from Bobby: How long did it take you to become comfortable trading credit spreads? Also what is my max loss when trading a credit spread? Question from from Tor: Hello. I am (restarting) my options trading on a shoestring; any thoughts on mini-options? Thanks. Question from Fred (#2): Is it my imagination or do options traders trade more markets than futures traders do? Is that a good practice? Is it good to look for multiple markets when trading options? Should I expand my horizons?

Basic Training: Short Puts Revisited Want a complete overview of selling puts? Check out Options Boot Camp episode 4 from May 7, 2012. New study: "An Analysis of Index Option Writing with Monthly and Weekly Rollover," written by Oleg Bondarenko, professor of finance at the University of Illinois at Chicago, and sponsored by CBOE. It is.the first comprehensive study to examine strategy benchmark with traditional stock, bond indexes incorporating weeklys options. CBOE Russell study "Analyzing Russell 2000 Index Options-Based Benchmark Indexes Designed to Provide Enhanced Yields and Risk-Adjusted Returns." CBOE announced the release of a new study that examines six benchmark indexes that invest in Russell 2000 Index (RUT) options and compares their performances with those of traditional benchmark stock and bond indexes. This is the first comprehensive study that examines the performance of multiple options-strategy benchmark indexes that incorporate Russell 2000 Index options. Written by Mark Shore, an adjunct professor at DePaul University's Kellstadt Graduate School of Business, and sponsored by CBOE. Mail Call: Listener questions and comments Question from QKT - If i sold a $1 strike put with a current trading price of $.50 and then the stock goes to $5-what happens and what is my risk? How do I look at expiration? Can my puts be exercised against me? Question from Nick S. -I am thinking of a cool new strategy that I haven't seen listed online before. It effectively involves buying an iron butterfly (one of Marks favorite strategies) and then selling an extra put on the downside leg. You would select your strike at a price where you are comfortable buying the stock should it drop. This has the obvious benefit of reducing your initial outlay for the position. However, unlike a naked short, put you have the added cushion of the long straddle to help protect you on the downside and lower your effective break-even on the downside. Question from AJ M. - I have a question for the drill instructors. I hope you guys can calm my frayed nerves over this DOL thing. What exactly is going on? Am I not going to be able to sell calls in my IRA anymore? Since the vast majority of my assets are in retirement accounts this would be a HUGE hit to my savings. Please tell me this is not the case. Is there anything I as a retail stock and options trader can do to help prevent this? What if I open an international trading account? Would that do the trick? Help - I need the drill instructors to talk me off the ledge.

Options Questions of the Week: How do you prefer to trade options? 19% - Long premium 15% - Short premium 56% - I avoid earnings 10% - Other, explain below How many U.S. options exchanges do we need? 5% - 14 is perfect! 29% - The more the merrier 62% - Make it stop! 4% - Other, explain below Should options trade after hours? 53% - Heck Yes! 15% - Only in Major Names 15% - No, poor liquify 17% - No, other Question from Alfy - Is it possible to be a day trader using options, or do you gave to take a longer term view? Question from Alex - Insider Trading, What are your thoughts on Shorting 1Y 25 Delta Puts on LNKD midday today (LNKD is at 105 as I write this message). Puts are quite juicy right now with quite acceptable break even points. I am very interested in hearing your feedback. Cheers, Big Options Trading Podcast fan, Alex. Question from Michael - $15 put Twitter drops off the map; yet the premium still has been declining. Can you explain? Question from FuturesMD - Is there a directional options strategy that you'd suggest for someone who wants to play the 2016 election? Question from TraderSon - Can a trader make a decent living buying straight call and puts, or do you have to get crazy with the complex stuff like iron condors?

Basic Training: Theta. A review of Theta and its impact on income trading. New Study: An analysis of index option writing with monthly and weekly rollover - First comprehensive study to examine strategy benchmark with traditional stock, bond indexes incorporating weeklys options. Mail Call: Listener questions and comments. Question from KDDiddy - I want to protect a stock position with puts at a strike 2% below market but there is not a strike there. I thought of dividing my purchase between two different strikes to get an average of 2% but I do not want all the guys to call me stupid. Mom always said I was a genius but it is hard to feel like one when buying something called a Put Stupid. What should I do instead? Regards, Mr. Smart Question from LATom - Can the drill squad explain covered strangles vs. covered calls? What is the difference?

Basic Trading: Second Order Greeks Question from Brian F. - My question is for Dan. I listened to the Boot Camp shows, and recently had a question about gamma. Imagine my surprise when I learned there are other secondary greeks and even tertiary greeks. What this? Are you holding some greeks up your sleeve Mr. Black hat? So my question is what are these greeks, but more importantly, who uses them and why? Does a retail mope like me need to know about these greeks? Question from Charlie C. - Do second order greeks have any relevance for retail traders? Mail Call: Listener questions and comments Question from AV56 - When is a good time to start trading options - is there any certain time of the week or year that options traders are focused on? Question from 777: How do you adjust your options trading for cheap stocks below $10 Comment from Brian F. - I went through the Options Bootcamp shows twice, and read a few books, and now have the bug for options. Have you perused the options videos on Youtube? Is it me, or are most of these people idiots? Thanks for the education on options, I now have a way to screen the real trading educators from the BS artists. Question from Max S. -I have a lot of AAPL in my IRA but I am worried about the downside potential going forward. I do not want to liquidate that position for a variety of reasons. I have some free capital in my trading account with TD. Does it make sense to potentially pick up a few AAPL puts in that account and use them as a hedge against the position in my IRA account? If I switch that trading account from TD to my IRA custodian will the firm treat those as offsetting positions? Thx for the show. Question from TJD - What os the story on using options in my IRA? Is it still legal for 2016? Comment from Matt L. - Huge fan of your shows, I have been binge re-listening to options bootcamp as I prepare for a new year of options trading, thanks! Register today for Dan's webinar, 7 Most Important Trading Tips for 2016.

Options 101: Today we are joined by Dan Cook from Nadex. He walks us through the following: What is a binary option? How does the pricing work vs. standard options pricing? How do the ticks work? Is there a multiplier? Does the price represent the pure probability of an option expiring in-the-money? How does expiration work? What about the final minutes around expiration? What is the farthest out you can trade a binary on Nadex? The Greeks: Binaries vs. Standard options Which underlyings offer binaries? How can you trade binaries? What is a typical binary use case? Mail Call: Get your questions answered by the team. Question from Jeb16 - I have seen a number of sports books online offering products that appear to be sports derivatives. Is it possible to trade actual products based on sports outcomes or other event-type derivatives in a legal exchange-traded form in the U.S.? Question from Amelia G. - Do you notice anything different in the options trading in higher volume products vs. lower volume products?

Mail Call: The drill instructors will take your questions now. Question from TennisGr8t - Can you give examples of managing positions using Greeks and is it a good strategy? Your show is awesome. Question from Pedro Indio - Discovered podcast within the last week and I am up to episode 8. I understand how overall market and industry direction might influence a stock direction. Is there something similar, regarding volatility that can be observed, where an overall sentiment might influence or work with an option's implied volatility? As a new recruit, wonderful educational basic training, SIR! Question from TopStep - Why would we use options in lieu of futures or other underlyings? Question from Steamboat Willie: What would you say is the best buy and hold strategy using options? I am interested in using some options in my retirement account but I do not have the time to manage them on a daily basis. I would like to put something on and only check on it every few weeks or months. I am mostly interested in large cap stocks although I am not averse to dipping my toes into alternative assets such as oil. Question from Beansie - Is there such a thing as a commitment of traders report for options? Something that shows bullish and bearish positions in the marketplace? Question from 999 - How do you spec on the market falling out of bed using options?

Options Bootcamp 56: Options Trade Tags Demystified Basic Training: Today’s guest is Andrew Giovinazzi, of Option Pit, Option Block, and Options Oddities fame. Mark, Dan and Andrew discuss options trade tags, including: Regular Spread Block Trade Inter-market Sweep Combo Cancel SoldLast Price Variation Buy Write Mail Call: Listener questions and comments Question from Vegan - What oil products do airlines use to hedge their crude exposure? Question from Alan - Why is rolling a position so prominent? Is that not just averaging into a losing trade? Question from Angus - Maybe this is a basic question, but where do the names call and put come from? What about straddle and strangle?

Options Bootcamp 55: Going Naked in IRAs Basic Training: Using Options in an IRA Account. Can you trade options in a retirement account? What are the limitations? What strategies can you utilize? What are the benefits of writing covered straddle vs calls? What is a stock replacement strategy? When should someone consider this strategy? Using options as an investment tool. What are any other investment strategy? Mail Call: Listener questions and comments Question from Hector - Can I still trade mini options or are they no longer available? Question from Neil Cerone - What are the most common mistakes you see from "stock guys" who try to become "options guys?" Question from Steve: First off, I love ALL the shows. They fill my daily commute with wit AND wisdom. Thanks! Also, better late than never, it was great meeting you all at Benny’s Chophouse back in Sept. I am one of the Lobster and Meatballs trainees (thanks to your shows). I had the pleasure of sitting right next to you and across from Uncle Mike as we devoured steaks on The Greasy Meatballs tab. That would be Extra pleasure as Sebastian was paying for them! However, I gotta tell you that you blew it big time the other day when trying to describe why a Leap Call Diagonal is called the "Fig Leaf". Brian named it the "Fig Leaf" because you are "kinda covered but not exactly" due to the curves in the profit graph. I think that makes perfect sense and is pretty funny to boot. Finally, on a side note I would love to hear Uncle Mike explain what is and what is not considered holding in the NFL. It boggles my mind to see play after play of inconsistent enforcement. I understand if that’s out of scope, but what the hell I thought I would ask anyways. It is not too often you meet a Pro Lineman. Best regards - Steve aka "Hawkeye".

Mail Call: Listener questions and comments Comment from Max_p24 - One of the best podcast for option trading. They have amazing Bootcamp for option beginners. Question from Brian Collamer - Back in October I sent this question and I see you ran with it in a couple of other shows: “You mentioned that when selling options the fastest theta decay occurs in the 45-30 day range. I thought that was only true for ATM options? Do OTM options decay the fastest at 60-70 days and then kind of flatten out?” In each show you had asked where I had seen/heard this. LiveVol blog and forum. Thanks for the great content! PS: Futures Roundtable needs to be twice a month IMHO. Question from Imbroglio - If I exercise a call option what happens - do I just hit a button and the stock hits my account? Or does it take some time? When do I actually get the stock? If I want to collect a dividend do I need to exercise a few days early in order to get the stock in time to collect the dividend? Question from Angry Bunny - What the hell is a front spread? How does it differ from a back spread? Who the hell comes up with these names? They seem to make no sense. Question from Neal Tompkins - How do I know when an option is going to be less liquid? What are some good suggestions for dealing with less liquid options? Question from Jason Dague - I am long AAPL from about $99, and have a protective put on right now at $105 for July. When do you know whether to roll your put up? I am obviously down on the put by ~%70% from where I bought it in November. Question from Jay - If the market is really falling out of bed what are some good strategies to take advantage of that movement while also minimizing option decay? Question from Matt Dilks - Hi, I have just listened to Mark on Topstep trader, and missed the questions. But could you recommend which company/broker to get a sim/demo account to get to grips with trading options? Any advice would be greatly appreciated. Question from John D. - Hi, Love your show. You guys do a great job. Keep up the good work. My question...If I am looking at a pair trade (e.g. long Facebook, short Twitter), obviously I can do it by buying/shorting the stocks. I was trying to figure out if there is any way to effective do the same thing with options what the advantages might be, if any. I thought of doing a synthetic long/short, but did not see any advantage since I will be naked short an option for both names... but maybe margin treatment is different? Long call on one and log put on the other does not seem to make sense since I am pretty much guaranteed to lose the premium on both those positions. Is there another or better way to structure this type of trade using options? Thanks.

Options 101: Income Trade Adjustments An overview of income trades: Covered call, short put, short straddle, etc. What do we mean by adjustments? When to or not to adjust? Previous episodes that will be helpful: Options Bootcamp 41: Advanced Adjustments & Options Bootcamp 40: Trade Adjustments. Basic adjustments, partial adjustments and adjusting into spreads. Mail Call: Listener questions and comments Comment from Dmitry Shesterin - @Options There is no V in the Greek alphabet, so how come Vega is considered a "Greek"? Who started this madness? Question from Brian Collamer - Do OTM options decay the fastest at 60-70 days and then kind of flatten out?? Great show, wish it was longer! Thanks, Brian Question from Charles Patterson - Is it accurate to describe delta as the probability of an option expiring in the money? Question from Rohan - Do you think it is viable for an active retail trader to become a professional retail trader using primarily the freely available tools from OX and other retail brokers? How viable is that in the current environment? Would I always be at a disadvantage from the pros picking me off? Is this just a pipe dream? How much would you say the average pro trader needs to make to be viable? Thanks again for all of the great programs you guys have put out for free. Question from AVG - I heard Dan Passarelli talking about Goldman telling people it's not worth it to sell S&P puts anymore. Do you guys agree with that sentiment?

Basic Training: 2014 Year-in-Review/2015 Preview What option strategies worked in 2014: put credit spreads, IV overpriced throughout the year, "Wheel of fun." Things to learn from 2014 - Do not get married to a single strategy. Misperceptions of 2014 - VOL/VIX was cheap. Despite "low volatility" options volume was still very strong in 2014. Tempting to believe that OTM call buyer did well in this extended market. Fed tapering - When is it likely to happen? What is likely to happen in the market when the Fed tapers? Things to keep in mind for 2015 - It might be time for a smart hedge. The return of Rho. Volatility has a volatility. Exchange fragmentation will continue. Expand your horizons.

Basic Training: Futures Options vs. Equity Options We've talked about how to use options to mitigate your portfolio risk, but many traders also rely on commodities diversification as a way to mitigate portfolio risk. Futures options strategies: All of the options strategies we've discussed on this program in the past are applicable to futures options as well with a few exceptions Covered call & protective puts both require underlying futures positions - something most traders prefer to avoid. Most traders looking for diversification typically want bullish exposure to the underlying. Some great options strategies for this include: Stock/futures replacement strategy Vertical call spread Spreads with wings Futures are useful for traders who want to establish sizable positions with a minimum of outlay Options on futures can be useful for traders and asset managers who want exposure to alternative asset classes but can't or won't trade futures. You'll need a futures account to trade futures options - but if you use risk mitigated strategies such as spreads and don't get net short units and close out positions near expiration you don’t have to worry about dealing with the underlying. Mail Call: Listener questions and comments Question from Jim Horn: Hey boot campers! I keep hearing about a spread called a onebytwo. What the heck is that? Am I even saying it right? Great show. Thanks for educating poor slobs like me. Question from Tom Evans, St. Louis, MO: What does more volume futures or options? Also does one do more electronically than the other? If I'm looking to dive into one am I better off going with the futures or the options? Lastly can you clarify the difference between CBOE and CME and CBOT? They all sound the same to me. Question from Anon: On several of your programs you mention that it is important to understand the VIX cash level at a given SPX level. Can you please explain this further? As an example, what are the implications of a 12 VIX at 1800 vs. a 9 VIX at 1800? Likewise, how does a 15 VIX at 1800 compare?

Mail Call: This episode is dedicated to our listeners. Question from Neil Filasco - What sets do you recommend to hedge my retirement accounts, in clouding my defined contribution plans? The pickings in these accounts are relatively slim and there are no options to speak of. As one of the newly enlightened options masses, I thank you for bringing me into the fold. Question from Chandra Bajpai - Hey Mark, I love the Radio show...I find myself wanting the next show because I something new every episode. My question is: How should a trader handle stop losses on a naked call/put and/or a vertical spread. When should you call it quits? IBD mentions 8% for stocks, but what is the level for options. Thanks. Question from Hedger - I am a bit flummoxed when it comes to spreads. I listen to a show like this, that tells me to use spreads. I read a few articles about spreads, and I think I have the gist of it. Lets say ABB is trading for $50, if its going to $55, I can buy the 50-55 spread for $1, if the underlying moves to $55, that spread should be worth the maximum profit of $5. However, in the real world, my experience has been much different. In the real world, that spread would be trading around $2.50 or $3 forever! If I hold the spread, to expiration and all other things hold constant, I "may" get my five bucks, but thats hardly a given. I goes I am asking - What give with spreads? Question from ToothFish - Hey Mark and the Black Hat One. Loving the Boot Camp show. Why is it back to once a month? Should be daily! Anyway I have hear you guys bicker back and forth on dark side vs light side trading, but I don't think you have ever actually committed to one or the other. So gun to your head. Which way are you going - premium selling or premium buying? Question from Ing86 - Cool show. Learning a lot from all the options talk about XYZ and Apple. But what are some of the crazier things I can trade with options? Can I trade options on a big hollywood premiere for instance? I would have loved to be long calls on the Ninja Turtles or Guardians of the Galaxy. What about sporting events or elections? I would think this would be fertile trading ground for these products. Can I do something like this or is this too outlandish? Question from Chilly Palmer - Hey Drill Squad. Lets say I bought calls on Firm A, and then Firm B buts them out (something I am dealing with now). What happens to my calls on Firm A? That firm is doing away and the stock will no longer trade. Will my calls be automatically exercised for me on the day the merger is put through? Should I just sell them now rather than wait for the issue to be settled Question from Civas - What is the best way to handle a ratio vertical spread that has moved to my short strike? Close it out as soon as it hits the short strike, even though that means buying back two options on the short strike for every one I sell?Play the wait and see game to see if the underlying retreats and those short options go out worthless? Or add a long premium third leg to my trade to cap my risk - essentially legging into a short iron butterfly? I know Mark is partial to those. Enjoying the app. Thanks for all the shows and the mad knowledge.

Basic Training: Covered Strangles/Covered Combo What is it? Long stock, covered call, short put. Why do it? Collect more income than a standard covered call or short put. Why not to do it? Increased margin requirement, you will increase your stock position to the downside. Example: XYZ trading at $50. Option 1 - Sell covered front month 55 strike call for $1 - collect 2% income. Option 2 - Sell both front month 55 call and 45 put for $1 each - collect $2 or 4% income. Rinse and repeat. Note: Call and put should only be sold on strikes where you are comfortable buying/selling the stock. Listener Mail: Listener questions and comments Question from Tony - Mark, love boot camp. I was lucky enough to have a fairly significant weekly put spread position in DIA this week (long puts at 166-167 and short at 161-162.5). I was making good money on Wednesday and ran into a problem. The bid ask spread on my long puts were so wide, I could not close out, roll or adjust the trade. I thought about buying futures contracts to hedge my delta risk and suck out the theta. Is there any other strategy to adjust or hedge a successful trade without getting haircut on the executions? Should I just calculate the extrinsic value add a spread and put in a limit order for the long leg? Is it always harder to close out a spread trade in a volatile market… i.e. if I want to close a spread trade does one person have to want to enter the same trade? Or can the trade go to two counter parties? Question from Mukund Ambarge - Hi Team, I had question on theta decay. I understand that delta is in constant flux with every tick move in stock, the delta / gamma changes. IV is in constant flux with buying and selling of options and volume etc. So vega changes with option transactions. But theta decay is the only one which is always in a steady pace i.e. it’s not like it will decay quickly today and slowly tomorrow. The question is when the theta decay is really adjusted in the prices of options. Do the theta decay get adjusted at every tick move? Or every hour? If it is adjusted daily. Then when is the theta decay taken out of options. Early morning before start of trading? Or late in the day like last few minutes that whole days theta is taken out? Also I do not know when is weekend theta taken out of prices? Friday early morning or Friday ending or middle of the day? Basically when does market maker run the prices with the model and set the prices? Only once before trading starts or does he keep adjusting every minute/hour/tick based on demand/supply?

Mail Call: Your questions directed this episode. Question from Jason Kruse: Is there a Bootcamp episode that discusses OI and how it can affect expiration moves? I hear people talk about max pain and pinning like it’s a conspiracy. Would love to hear real info about how it works. Open Interest What is it? Why is it important? Why is it not important? Pin Risk What is it? How prevalent is it? When should you be concerned? Is there really a conspiracy? Question from Allen Manning:Hello everyone, I just started listening to the Options Bootcamp podcast, and I'm really enjoying it! I have a question about a strategy described in episode 20: Options in Lieu of Stocks. As a covered call alternative, I was interested in possibly buying a LEAPS with a 1 or 2 year expiration and selling monthly calls against it. When I looked up a few stocks and ran some preliminary numbers, I noticed that the cost to purchase a deep in the money LEAPS (about 80 Delta) option was usually higher than the total money I would make selling monthly calls for the duration of the LEAPS. What I did to get these rough numbers was to take the money earned from selling the initial 1-month call (after commission cost) and multiplying it by 12 or 24. I'm assuming one or more of these possibilities: The method I used to get these figures is wrong, even as a rough estimate. This strategy will only work with certain stocks/underlying that have optimal Greek numbers. This method only works when assuming the underlying LEAP also appreciates in value to offset its own cost. Commission costs make this strategy less successful (I have a TD Ameritrade account) Any information you can provide about this strategy is greatly appreciated. Thank you, and keep up the good work on a great program! Question from Ethan Kamen: My question may be a little basic for the esteemed Bootcamp drill instructors, but I would like to know about back spreads. It seems like the majority of the information online is devoted to ratio spreads. Is there a reason for this? Are back spreads not popular? Do you use them? If so, what scenarios are suitable for back spreads? Thanks for this show. I look forward to each new episode. Back Spreads What are they? What is the use case for them? When shouldn't you use them? Back spreads vs ratio spreads What is the difference? When should you use each? Are ratio spreads more common/popular than back spreads? Question from Ilythian: What is the ideal time horizon for trading options? My typical stock trade lifespan is 3-6 months? I have heard many people describe options as short-term investments. Is my time horizon too long to be trading options?

Basic Training: How to protect your profits. Easiest method: 1st buy a 2-3- month put ATM or slightly OTM put. Purchase an ATM put spread with the short leg at your break-even point. Easiest to do in a single stock or underlying. What to do if you have a broad equity portfolio? Its a little more complicated. Determine the effective beta of your portfolio an how many effective shares of that index you own. Rule of thumb - Expect to spend about 2% of your portfolio for effective 3-6 month protectionHow to reduce the cost of protection. Buy a spread instead of an outright put. Set up a collar. Set up a collar with a kicker. Mail Call: Listener Questions and Comments Question from Big Charlie - Hey guys. What is your take on the OH/Monster merger? What does this mean for the options landscape going forward? Question from Brian Collamer - Hi Mark, If I have a short call in $SPY on the ex-dividend date that is OTM, I will not owe the dividend correct? Thanks, Brian Comment from Justin - Hi Mark, Just heard my question on the podcast! Awesome! Thanks so much. Keep doing what you do. And I will keep listening. -Jay Question from Niles F. - How much of my portfolio should I allocate to defensive strategies such as protective puts? Thank you for answering my question and for producing this fine program. Story and Question from KAISERDOG76: Funny story- I was trading on my IPad. It is the Summer 2013. CNBC is on but I am not paying attention to it. I had some cash to play with and there was some electricity in the air that day. I settled in on Apple options. This was the first and last time I used mini options. In total I spent $2,800 in capitol for options. !,400 I spent on 3 or 4 regular Apple options. Then I spent equal amount on Apple "Mini" options. This was when Apple was trading below $400 if memory serves true. Well no sooner that 10 minutes after I had completed my order and was filled on those calls? Some guy named Carl Ichan came out and made his first "Famous Apple Tweet" LMAO. I got an instant $20 plus move on the stock. My Calls I had just bought? Exploded as they were now deep in the money. On the regular Apple options I instantly made several thousand dollars? You know what I made on those Mini's? After Commissions and such it was a few hundred bucks. I was so pissed and felt just ripped off. So I have never touched a "Mini" again. Why would I right? With that kind of move and you still cannot make any real money? Forget about it. Minis are Dead to me...The VIX flirting with $11? I wish I bought some calls today too. LOL...So If I do not have a futures account. What is best way for me to hedge using Volatility? Please help a hopeless Bull who wants to get into insurance.:) Thanks for all the insight and education!

Roll Call: Bringing in the Big Guns Our guest today is Jim Bittman, Senior Instructor at The Options Institute. He discusses: What sort of content/classes our listeners can access at The Options Institute What the number one options question is that he receives from students What is the number one options mistake and/or misperception students may have about the options market? What changes did he make in your recent renovation at The Options Institute, and what can our listeners expect from your new facilities? Mail Call: Listener questions and comments Question from Kevin Duggan - Hi Mark, Great show! I have been listening to episodes for months but it was only recently that I saw Dan’s picture- shocking! In my mind I have always pictured Walter White, as they sound exactly alike and, you always refer to his black hat. You can imagine my surprise when I saw Dan’s pretty face and those curly brown locks. Shave that bean, Heisenberg! Re: short puts (I'm already long calls) If I am certain the stock will move higher fairly quickly, wouldn't it be best to sell the big, meaty, long term puts? If I sell a weekly for .45 and then close it at .20, where's the fun? How do you balance term and premium in naked shorts? Thanks, Kev Question from Josh Norell - Hello everyone, enjoy the show, I am trying to work out the details with a diagonal collar, and its adjustments. I want to buy a stock, buy an OTM put several months out, and sell weekly OTM calls against it. If the stock rises, I get called away, all is well and good, and I can just buy the stock back next week and do it again. Where I am confused is when the stock drops below my put strike. What do I do? Because of the puts lower delta, for every dollar I lose on the stock, I am gaining less than 1 dollar on the put. So do I exercise the put and lose all its extrinsic value? Do I roll it down and hope for a retracement? Do I just blast out more calls? A little help, please. Josh Question from INC429 - VXX or VIX options? Which is the better hedge for a broad based equity portfolio? Question from Buckeye -I enjoyed the discussion about the percentage of a portfolio one should devote to hedging on the last episode. I do have a question about the 1.5%-2% figure discussed on the program. If that was for a three-month put, then you are talking about 6-8% on an annualized basis. Given that most funds only return about 7% a year, will that not eat up all of the profits in your portfolio? Or am I missing something? Thanks again for this excellent program. It truly is a unique source of options education. It makes my long train ride much more bearable.

Basic Training: The world of mini options What are Mini Options? (Just celebrated first birthday last month) Where do they trade? Which underlying names trade? What is the use case? When should you use them? When should you not use them? Pros vs. Cons: Unfortunately we cannot give many pros for mini options as of now. Mail Call: Listener questions and comments. Question from Maximus - Hi Mark, Hope you have been doing well. Following up in connection with my question in the email below, since I haven't seen a new episode of Options Bootcamp come out for the past several weeks, and have been waiting with baited breath for your expert comments on my question. :) Hope I didn't overwhelm you and the panel with my frighteningly complicated question, and the insanely large account balances I am referring to (sarcasm alert! :)) I did notice a mention of "Maximizing a ROTH IRA" in episode 331 of Option Block, which came out on April 21st. However, for some reason, this episode seems to end abruptly at just under 37 min, and seems much shorter than the approx. 1 hour duration of these episodes normally. Perhaps there has been a technical glitch causing the episode upload / recording to end abruptly? I am thinking the question you may have answered on this episode is either my question, or probably one very much related to mine. Would love to learn your and the panel's thoughts regarding my ROTH IRA question. Have a few other questions that I plan on sending in shortly as well. Once again - I think you and your panel do an absolutely fantastic job at spreading knowledge across the several podcasts on your network! Please do keep up the good work, and I hope you are able to produce more podcasts, more frequently! Thanks in advance for your assistance - look forward to hearing from you soon. Take care and be well. Maximus Question from Marco - This one is for the Boot Camp Drill Instructor Squad - probably John. Can I open two accounts at the same brokerage firm? Not an IRA and a regular account but two regular options brokerage accounts. I want to have an account for my regular income trades and an account for other more speculative strategies. It’s easier for my systems if I keep them separate. I am aware that I won’t receive offsetting margin, etc. Is this a possibility or is there some prohibition against this? Thanks for answering and thanks for sponsoring this show. It’s a great program that is helping a lot of people. Still can’t believe it’s free. Question from Lil Tim - Quick one about vol - Are realized and historical vol the same thing? Are there any pricing models that use historical vol? Thx Question from Avery - Help! My broker hates options! What should I do? Question from Joe - Love the show. I look forward to my fresh episodes every couple of weeks. It’s my treat during my commute. Although my wife thinks I listen to too many of your shows Mark. Anyway - I wanted to write in regarding the OIC conference. I have heard you mention this on several programs on the network. I do not live far from Austin, the site of this year’s conference. I am still a relative neophyte when it comes to options, although programs like this one are helping to change that. Do you think its worth it for beginners like me and others listening to this show to attend conferences like this. Is there any material there for me? Thanks for taking the time and thanks for the network Mark. You have got a listener for life./li>

Mail Call: All mail. All day Question from David Medley - I have listened to about half of the 40+ episodes. I do not recall hearing anything about how to get started professionally. I am a 38 year old software developer looking to change industries. The positions that seem to be open to me are commission-only and require a significant cash "Capital Contribution". I am actually OK with this. Some positions have hefty training and/or desk fees, which seems a bit scammy to me. Either way, it's not something I want to go into blind. If you have covered this, I would love to read or listen to it. Thanks! Question from Jay - Hi Mark, Options Bootcamp is a phenomenal program. I have learned so much it’s unbelievable. I do still have one question, and it stems from the fact that I am not a convert from the equity world. I am new to the investing world, but I could never wrap my head around equity trading because it seemed too haphazard. It was not until I learned about the flexibility of options that I really thought that I had found something worth sinking my teeth in. So, with that being said. How do you pick your underlying stocks? Is there a set of criteria you screen for among the all of the optionable underlyings, or is it better to really start learning about a few select stocks and then just applying a specific strategy towards the stock situation as you see it? So far I have just been using SPY as a starting ground but would like to move towards specific positions to play on the higher fluctuations in vol, inverse skew events, earnings reports and such. Thanks again for all of your work, and please send a high five to Dan, he is my favorite drill instructor. Question from Ted Schwartz - Hi, I am working my way through the Options Boot Camp, learning lots of good stuff. I was wondering what kind of options strategies exist to hedge my 401K mutual funds gains? Would it be practical to use protective puts on some indexes, etc. to offset my risk of fund losses? Thanks! Comment forwarded from Dan Passarelli - I am really glad that you participated in the options Bootcamp podcast and that I was fortunate enough to find it. Please convey my gratitude to Mark, (who has no idea who I am) when you get a chance. Question from David M - Hey, listening to your show has really helped me grow in my options knowledge. Two questions: (1) Do you have a platform you recommend? (e.g., Tradestation, etc.) - (2) I am currently with Tradeking. I did some long calls last year and lost some money. I realized I needed to learn more. So I stopped and started reading. Now I am ready to start trading spreads and selling premium, but Trade King won't clear me for that level of options trading, because I have not been trading live. Is it time to find another broker, or do I need to trade according to their rules until they clear me for more advanced options? Thanks! Question from Mark Radcliffe - Hello Mark, John and Dan. Thanks for providing your excellent options boot camp program it has done a lot to get me started with trading options. I split my investing between long term buy and hold for retirement, short term stock trading for side income and am now adding options. My question is about selling calls to simulate a dividend on buy and hold stocks in my retirement account. The recommendation is to sell front month or even weekly ITM calls to collect the time decay. The problem I see is that these near term options are extremely cheap. E.g. SBUX is currently trading around $72 next week’s 73 strikes ask is $0.26. Does this not mean that if that if I wrote a single call and it expired worthless I would make $26? (assuming no changes). Once you take away the cost of the trade itself you might make pennies or even go backwards on these trades unless you have many lots of that stock in your account. Am I reading this correctly? If so do you think that in order for call writing to really generate any real income you would need to hold several 100 shares of any one stock in your account? Thanks! Question from Darren - Hi, do you guys have option alert services? Comment from Martin - Thank you that you share this precious information on your site for free. A great job. Well done. Martin from Germany. Question from Tom A Bomb - First, huge fan. Second, question about the wheel-o-fun trade: Recently assigned on a short call in a collar position. Monday morning, I was long my protective put (a far-OTM leap), and decided to sell a weekly put that positioned me long about 25 delta. Now, I am wondering how all this will affect my margin SMA. From the margin perspective - is this a put spread, or is this a naked short put? After I put this on, I realized the margin was a bit fuzzy. Since I just rolled out of a covered call, I am obviously cash-secured, but I want to work this out before I find my foot in a bear trap. Thanks guys! Nice hats! Question from Jas Sol - How can you tell if implied volatility is cheap or expensive for a option? I assumed, from listening to the show, that a higher volatility means, the time component of the option price is more expensive compared to an option with a lower implied volatility. But comparing the Dec 27 ATM calls for Pandora (P) and Apple (AAPL) that does not seem to be the case. For example, P has an implied volatility of 113.6% and a time value of $2.57. And AAPL has an implied volatility of 23.8% and a time value of $10.84. Since P has a much higher implied volatility, why is the time value lower compared to AAPL? I assume the answer lies in the Greek's Vega, because P has a Vega of .02 and AAPL has a Vega of .48. But I am not sure. So is Vega how you can tell if an option is cheap or expensive? I love the show! Please keep up the good work. Thanks! Question from John B - Where do I submit options questions and the tweets that you guys read on your podcast? If this is the place to submit questions, here is my question: I recently stopped trading PCLN *(Priceline) Options because the spread ranges from $2.00 - $4.00. Is this to deter traders and why would the Market Makers keep the spread so high.

Basic Training: Options & Dividends How do option holders collect dividends? How do derivatives impact options? What happens to call and put prices when dividends enter the equation? If you are an options holder what must you do to collect a dividend? What are dividend plays and how do they work? Mail Call: International trades, closing positions, and more Question from Glenn Baker - Question for Options Boot Camp I've been listening to Options Boot Camp since the first episode & have been listening to the Option Block for about 2.5 years. I currently have a Schwab account where I primarily buy mining stocks. I would be interested in possibly switching to Sogotrade for the lower commissions. Does Sogotrade allow you to buy stocks on Canadian exchanges? Thanks and I really enjoy the show." Question from Nick Snow - Hello. First, thanks for all the shows. I used to listen to options insider years ago. Somehow lost the podcast and recently found it again. Good news there is I have been listening nonstop for the last 2 weeks. Second, for the real reason. I have been trading for a while (retail only) and in listening into your shows, particularly Boot Camp. I have heard "close your credit positions, if I had a nickel for every time a person came to me and said this crazy event happened and it wiped me out". I do close my credit positions at $0.20-0.05 every time. But I have wondered if outside of the commission, has anyone ever done a risk reversal? Or roll down to a lottery ticket? E.g. I sell bull put or bear call spread. I go to close the position at 80% of my profit and there's a day or two left. If I just closed my short leg and left the long on, or even just swapped my short leg for a lower short now making my spread a debit albeit a supper cheap debit spread lottery ticket. I could capture those freak events that you always talk about. By my count in options boot camp I would have 128 nickels for those freak events mentioned. :) Any thoughts? Am I missing something? Sincerely yours. Question from Abe - Can you make an episode on how to repair losing options trades? I enjoy listening to your show, it keeps me going while I am slaving the night shift at work. Thank you! Question from Greg S. - I am looking for some advice from an experienced options professional regarding stock replacement using American-style calls. Really the question comes down to- for a higher dividend yielding stock, should I be buying a LEAP or rolling out approximately every three months after exercising very close to expiration and capturing each dividend? I get that the dividend lowers the price I pay the longer dated the options are, but does not reflect as much as if the options were available as European-style. It seems that if the dividend yield is high enough, the American style can't fully compensate the option holder for the missed dividends as the value can't drop below intrinsic value. Does this call for the shorter term options to capture each dividend? The caveat seems to be that the roll out should cost more extrinsic value on ex-dividend. Since I have a buy-and-hold objective, euro-style or warrants would be ideal to avoid transaction costs, but again, not available. So far, I have been rolling an ITM call option position on a relatively high dividend yielding (5-7%) stock I have wanted concentrated exposure in as part of my overall portfolio but limited risk. It makes regular scheduled quarterly dividend payments and the timing of the annual increases is known to occur in Q1 each year. Well just yesterday (day before ex-div for my stock), I figured I would skip the dividend capture and roll out the May contract to the August one cheaper than I could today because today it trades ex-dividend. I confirmed this using the CBOE calculator, holding price constant. It showed the time value paid to roll should have been more today due to trading without the dividend vs. yesterday. Though just eyeing the bid x ask spread it didn't appear to do so by much and implied volatility looked to be the same.

Basic Training: Legging and Protecting Gains What is legging? How do you leg into a vertical call spread? When should you leg a spread? When should you not leg a spread? How do you protect you gains? How do you lock in a gain? Buy a protective put, but watch out for the cost. Do I write a call ITM, OTM, or ATM? Remember, a covered call is no a defensive play. How do you leg into a collar? How do you create a collar plus? How does your strategy change during a crisis? Mail Call: Hey Recruits, it seems you have some questions! Question from TelStorm: This question is for Options Boot Camp. Please do discuss when to adjust long protective put with stock. When to sell put vs. just close the position? Do you roll to a lower strike or to a put spread? Thx. Question from Alexander Samuels, Chicago - You would never know you guys are Chicagoans from the way you complain about the weather! But seriously, can you discuss which options tools you guys prefer for analytics and trading? Do you have certain products you use every day? Are they in the price range of a basic options trader? I trade maybe 20 times a month, mostly income trades -short puts, wheels, covered calls, etc. What should a guy like me be using?

Basic Training: Advanced Adjustments Spread adjustments When should you adjust a spread? Vertical spreads. Long and short straddles. Long and short butterfly adjustments When should you adjust your flies? Iron butterflies and iron condors. Calendar spread adjustments When should you adjust basic horizontal one-month calendars? Mail Call: The drill instructors will now take your questions Question from Dr. Anthony - I enjoyed you episode on the wheel trade. I would like to know more about your typical use case for wheel trades, particularly when it comes to the second leg. Do you write an ITM or ATM call, hoping for the stock to be called away quickly, thereby allowing you to begin the process again? Or do you prefer to write an OTM call and attempt to capture some appreciation in the underlying, while risking losses in the stock? Question from Nik_Miner - How much money should I keep in my account for adjustments? Does 10-15% seem reasonable in case I need to roll or trade stock against my options?

Basic Training: The topic of the show today comes to us courtesy of a listener question. Question from Dr. Toboggan: Love the podcasts. Would like to see an episode (maybe options bootcamp) that covers trade adjustments. This was been the most difficult aspect of learning to trade options for me, and would be useful now that you've covered most of the basics on this program. Specifically, would like to hear a discussion on how to adjust trades when the stock moves against you (i.e. price hits the short strike in a condor/credit spread, or the wings of a butterfly). Thanks Adjustments are where the rubber meets the road from an options perspective. What are adjustments? Why have an adjustment strategy? When do you make the adjustment? Basic Adjustments: Close positions and close portions the of trade. Adjusting into spreads. Good rolls vs bad rolls. Long premium vs short premium.

Options Drills: Options as an investment tool. Stock replacement strategy, Covered calls, Short puts, Collars, Covered strangles, Covered straddles and LEAPs Mail Call: Question from Charles Binder - Can you guys explain 60/40 tax treatment? What do I need to trade to qualify for this special consideration? Thanks for your help. Keep the show coming!

Basic Training: The Wheel Trade A great trade for novice options traders. Our friends at RCM call this the "triple income trade" or "the wheel of fun." What is it? Write a put to get long equity, then immediately write a call to sell equity. When should you use it? When should you not use it? This is a great way to add some extra bang to your covered call trades. Mail Call: Fabulous questions, insightful answers. Question from Bit Tim: You recommend closing out your shorts when they go your way. Do you advise factoring the closing price of the trade in to your calculations when writing options? For example - write a put for $.30, but know at the onset that you will only collect $.25, because you will close it out for $.05. If more people did that at the outset, they might be less reluctant to close out their winner for a profit. Question from Jack - I know you guys are not tax advisors, and so nothing you say can be taken as certain in any answer to this question. I am a small time trader, and at the moment cannot afford a CPA with trading expertise in options to do my taxes. So I am wondering if you can talk about the potential tax consequences of front spreads, especially when used as covered call replacements? I have had good success with this strategy, and I would like to move it into my margin account this year, instead of just using it in the IRA to avoid the tax headache. Question from Alejandro Garcia, NYC - Given Wang's experience in the Chinese market, I would be interested to hear John's take on the impending launch of listed options in China in April. Does he think it will be a success? What will the popular strats will be with Chinese options traders?

Options Bootcamp 37: Our Holiday Wish Lists Basic Training: Options Boot Camp Holiday Wish List John - Consolidation in the exchange market place. Mark - Better spread execution in the options market in 2014. Dan - Continued growth in the options business. Mark - Financial/mainstream media would abandon its perception that options are dangerous, complex risk-additive instruments. John - Customers close every expiring position. Dan - Continued growth in options education. Mark - Brokers would make it cheap or free to close out shorts below a nickel. John - Customers never (or almost never) trade inverse or leverage ETFs. Dan - I hope to be successful in guiding my students, and potential students' expectations of options. Mark - I wish more customers would break away from their fixation with VIX. John - I would like to see an end to the day trading rules. I also wish more customers had a trading strategy firmly in place before they put a trade on. Dan - I would like to see no crazy blow-ups like PFG, etc. Listener Mail: Listener questions to the Drill Sergeants Question from Ed - I am a call writer but I am having a hard time finding trades that suit my criteria in this low vol environment. What is your recommendation? How do I find more acceptable covered writes in this environment? Comment from Tom Giles, Newport, RI - I just want to thank you guys for putting together this program. It has really been helpful for me as I take my first fumbling steps into the options market. I have been mainlining the show on my commute every day and repeating episodes that are particularly suited to my trading style. I have already identified a few mistakes in my trading and also adopted a few of your suggestions, including stock replacements and short puts for limit orders. Thanks for the help. When can I look forward to a daily show? I have a long commute.

Basic Training: Here is a rundown of the major topics from the show over the past year: Greeks Pros/cons of buying premium Pros/cons of selling premium Speculating with an ATM/OTM call Hedging with a protective put Stock replacement strategy Pros/cons of basic vertical spreads Ratio spreads Front spreads/back spreads Stock repair strategy Straddles/strangles Spreads with wings: Condors, Flies, etc. Volatility skew Basic calendar and diagonal spreads

Basic Training: Lessons from the Trading Floor Paper flow rules all - Go with the flow! Being obstinate and refusing to adjust to changing market conditions will only cost you money. Don't step in front of the train! When in doubt, palms out!! There is such a thing as an upside crash. Calls are puts and puts are calls. Mail Call: Schooling traders, one question at a time. Question from George: Why were puts so expensive when TWTR options launched? Question from Niles F., Montgomery, AL - I saw an article recently touting a "synthetic covered call strategy" that essentially involved buying an ITM call and selling an OTM call against it. It was really just a vertical call spread. What am I missing? How is this a synthetic covered call? Question from Mr. Gif - Great show on volatility skew. What do you guys think of this piece? Should I, as an investor, avoid these volatility ETFs? Question from Buckeye - A question from John - Can I buy a stock on margin then write covered calls against it? Or does a broker like SogoTrade remove the 50% margin and make you pay the full price for the stock when you sell the calls?

Mail Call: All Mail. All day long. Question from Benjammin - I am currently a law student and have always been interested in options. I have read about options and am now listening to all of the Options Bootcamp podcasts, which is a great show, to prepare to start trading options! SCENARIO: Assume I sell a naked put option and collected $500 in prem. 1 week prior to expiration the value of the underlying has increased and it looks like the option will expire worthless and I will get to keep the $500. Is there anything I can do other than waiting to expiration to lock in my profits by sacrificing a portion of that collected premium? Question from Richard D - Mark and the Team, The shows are consistently great! Thank you! You may remember me from "the mega question" early in the month. I will be a LITTLE more succinct in these posts. Also thank you for that bootcamp episode on vol and skew! I think expiration and settlement could be a good topic for a future Bootcamp show. Could you discuss a little on how American style options stop trading on Fridays but actually expire on Saturday (at least the monthlies do)? Is anyone allowed, like for example brokers or large institutions, allowed to trade these options after they stop trading for the retail investor? I understand there are ways a trader can get hurt by this because if you hold a short option at the Friday close, even if it’s a covered option like a bear call, and the stop gaps up after 4 PM Friday, you will get exercised and then be short or long that lot of stock come Monday morning. Could your team discuss what happens if I'm holding a long position and hold it past 4 PM on a Friday? If it’s even a penny in the money it gets exercised, however how does the timing on that work. Here is a hypothetical example: I own a Nov 18 '13 100 call on stock XYZ. Stock XYZ closes on Fri, Nov 18 at 99.99 but then by 8 PM it goes up in after hours to 100.15. Is my contract automatically exercised? Alternatively, stock XYZ closes on Fri, Nov 18 at 101 but then by 8 PM that evening drops to 99.99. Again what happens? Question from Lil Rich - Can you explain the origins of volatility skew? Is it true that skew didn't exist pre-1987? Question from Eric Thamos - I love the Boot Camp show. It is a great resource for newcomers to options like me. I am listening to the skew episode on the train home right now. I am still puzzled about the actual fundamental underpinnings of skew. What is the bigger determining factor - the actual order-flow or the psychological factors? Also, is it possible to impact the skew myself? For example, if I see a stock where the skew is inflated, could I sell it and deflate it - locking in a profit in the process? Thank again for this insightful program. Question from Tim Santiago, Albany, NY - I am catching up on options basics including the Greeks (great book Dan). Most of them make sense but I'm kind of hung up on two - rho and delta. Why do we need rho? Is it me or is it really a superfluous variable? Have you ever encountered a circumstance where your knowledge of RHO came in handy and saved the day? As for delta - it seems like the super variable. It's a hedge ratio, a measure of price change AND the probability of expiring in the money all wrapped up into one shiny package. Is it me or is that just too tidy? Do you find this to be the case in real life or is this another example of mathematicians trying to extrapolate their findings to areas that don't really apply?

Basic Training: Trading VIX and Volatility Products What is the VIX? How is the VIX calculated? How are VIX options priced? How do the Greeks work with VIX options? What is the difference between VIX cash and VIX futures? The VIX is NOT a perfect hedge that offers pure inverse correlation of the S&P? VIX can be used as a kicker for extreme events. Beware of VIX settlement process. Remember to understand the context with which the VIX is being represented. Mail Call: How may we be of assistance? Question from Bicycle My - So how do you become a better trader? I have been trading for a few years now and although I am profitable, I have not seen phenomenal returns. Question from Hawkeye6: Can you explain what Maker-Taker is? What is different about it from the traditional methods? Advantages? Disadvantages? Thanks.

Basic Training: Let's talk fundamentals What is Implied Volatility and how it is derived? Why is understanding implied volatility is so important? Historical volatility versus implied volatility. What is skew? Why does skew exist? What is the put wing? What is the call wing? What is investment skew? What are other types of skew? #1 Options question from newcomers - I bought a call option then the stock rallied and my call lost value. Why? How do you evaluate skew? How is skew measured? What is reverse skew? What does reverse skew sometimes indicate? What is term structure? Mail Call: You have questions. We have answers. Question from Nick D. - I am a covered call seller. I have some people recommend that I should sell in-the-money covered calls instead of my usual 5%-10% out-of-the-money calls because of volatility. But why would I want to sell a call that is going to inevitably be called away? What is your thought on this strategy? Question from Charles Midler, Santa Fe, NM - I am thinking about hedging my short stock positions with short put positions. How do the drill instructors view this strategy? Am I on the right track? Can John discuss the margin requirements of such a strategy? Question from Nomad 6 - What are flex options?

Basic Training: Stock Repair Strategy Review Have a downturn in your account? Options can help make that money back. When do you use this? How does this differ from just holding the stock outright? Is there a better alternative to doubling down? Mail Call: Tell us what you want to know. Question from Nick - Can you explain the difference between a front spread and a back spread? Thank for the program. It has a regular spot on my podcast playlist. Question from Avalon 360 - I have heard a lot of talk about covered calls. They are in interesting income trade, but they seem to be leaving money on the table - namely the put. Why does no one talk about covered straddles? After all, if you are comfortable selling the vol or premium on one strike you should be comfortable selling both and collecting twice the income?

Basic Training: It's that time of the year again. The kids are back to school, so let's go back to school as well, and refresh our listeners on the options basics. What is an option? How do options work? What is a multiplier? What are the greeks: Delta, Gamma, Theta, Vega. Long premium vs short premium. Option Drills: A review of the basic positions: Long call - Short call - Covered call - Long put - Basic vertical spread - Collars. Others can be found in previous episodes. Mail Call: Question from Dave S. - In the Options Boot Camp podcast #28 and #20 you discussed buying deep in the money LEAPS and selling shorter term calls against them. If the calls you sold expire worthless everything is great. What happens if the underlying goes up and the calls you sold are in the money at expiration? Is it better to just buy back the calls or let them get exercised? Can you discuss the process if they are exercised? Do I need to sell the LEAP to cover the call that was exercised?

Basic Training: Trading Diagonals What is a diagonal? Why would you put it on? What adjustments need to be made? How is it performed? How does it differ from a typical horizontal calendar spread? Why would you use a calendar vs. a horizontal spread? How do the greeks differ? How do you choose the strikes? Mail Call: Fall in, recruits! Question from Richard D: I think a whole boot camp show on skew could be very helpful! Thanks! Question from Hawkeye6: Love the pair of calendar spread shows. Can you make it a hat trick and have a show on double diagonals and double calendars? I am especially interested in hearing about selection criteria -- what makes a good candidate, criteria for strike selection, when to pick DD/DC vs. Condor/Iron Condor, etc.

Basic Training: Pro Tips Swap LEAPS for stock when writing covered calls. Everyone, even pros, have losing trades. Never ever ever enter a market order in the options market place pre-market. Swap in-the-money calls for stock whenever possible to utilize trading capital more efficiently. Use implied volatility on all your option trades. Don't base a sale or purchase of an option based purely on the implied volatility levels without understanding the context on the implied. When looking at implied volatility, be very careful around expiration. Don't be a lemming and blindly follow "unusual activity". Often it's better to sell the strike where the unusual buying activity took place. Swap in-the-money calls for stock whenever possible to utilize trading capital more efficiently. Fit the strategy to the situation. When reverse skew flips, it's usual a big buy signal. Mail Call: Question from Ron Yuravich - I listened to the podcast on calendar spreads and would like to know what book do you recommend that is compressive on spread trading? I have never had much luck with spreads. I have done a few iron condors for credit and few credit spreads - I just let them expire. The concept of trading the spread and not the underline is new to me. I see that I still have a lot to learn, but I am determined to be a well-seasoned, successful option trader in the end. Keep up the good work - I respect your group for knowledge on options. Thanks, Ron Question from Tom Simmons - Just to clarify -- If I write a time iron butterfly in DNDN ahead of earnings with Sogo - sell the Sep 5 straddle and buy the Aug 4/6 strangle - Sogo will margin me as if I sold the Sep 5 straddle naked because the Aug will expire before the Sep. Do I have that correct? Question from Alan Dickerson, Provo, UT - Options are a derivative of stocks. Yet there are far more options exchanges than stock exchanges in the U.S. How is that possible? Why are there so many options exchanges? Do they all trade different products or serve different purposes?

Options Bootcamp 27: Calendar Spreads, the Sequel Mail Call: So many questions, so many answers. Question from Alpha_Dog - Let's say I buy the Ford August Week 1 17 call, and then sell the July Week 4 17 call for a $.07 debit. How does that position make money? I don't get it. Don't both calls make/lose money as the stock goes up and down? Question from Nevin Pierce - What is more important when trading time spreads - gamma or vega? Is vega the source of profit and gamma the source of risk, or vise-versa? How do I profit of vega without a corresponding large move that ends up costing me more with the gamma? Please help options drill instructors! I'm in over my head! Question from Tim Nettles - I am confused about time spreads. I don't really get how they work and how I'm supposed to view them. For example, in the XYZ July/Aug 50 call example cited my Mark Longo - what do I do after the July leg expires? Should I consider that or should I close out the whole position prior to July expiration? What if I was using the short leg to finance a longer term speculative play? Wouldn't it make sense then to leave the second leg on beyond the expiration of the first leg? Question from Ron Yueravich - On July 22, in FB, I will buy one Aug 23 put for $.32 and sell one weekly Week 1 July 26 call for $.16. I plan to sell the following after the short side expires - sell two Aug next week puts and then nine Aug 23 puts again. What do you think about this plan on Facebook? I feel there will be a little weakness in the stock before it climbs any higher. Thanks. Question from Mikos V - For John Critchley on Options Boot Camp - Does SOGO have any plans to alter the way they handle the margin for short time spread, to avoid the issue you cited where they are margined the same as naked short positions? This seems to waste a lot of capital and provide a disincentive to traders to take on these positions. Is there any way to provide better margin treatment, at least while the first leg of the trade is still active, or is that limited to portfolio margin clients only? Question from Emily Duncan, Fairfax, VA - So let me see if I have this straight - If I buy the Facebook Aug 26 call for $1.25, and I sell the July Week 4 26 call for $1.05. I've net paid a $.20 debit for a one month calendar spread. If Facebook rallies to 28 by expiration this week, I will have lost roughly $1 on my July calls and made about $.80 on my Aug calls. So I pretty much would have broken even, or am I completely off-base with my understanding of how this spread works? Question from Tim Anders - So if I have no bias and expect no movement, I should buy a time spread to profit from decay in the first month. Why not just short front month instead and save the hassle?

Options Bootcamp 26: Calendar Spreads Basic Training: Calendar Spreads This builds on the knowledge from episode 13 "Basic Spreads" and episode 14 "Advanced Spreads" from December. What is a calendar spread? Why would you want to use a calendar? Calendars are much more complex that basic textbooks tell you. The delicate balance between gamma and volatility in a calendar trade. Can't use P&L diagrams How do you manage a calendar?

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