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Options Trading Pricing: GREEKS (Delta, Theta, Gamma & Vega) - YouTube
Channel: BestStockStrategy
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BestStockStrategy.com, enter in your
email address and receive over $400
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and improve their education and it also
helps spread the word so I appreciate
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that the reason why I don't look at any
options Greeks such as implied volatility or
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Delta, I do occasionally look at theta
just more out of curiosity but I also
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don't read any research articles like I
don't go on seekingalpha .com and I
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don't read any articles I don't look at
any of the Greeks that I'm looking at
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implied volatility and the reason is very
simple all of those metrics are
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reflected in the current option price
that you will receive by selling that
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specific strike price so just, as simple
as possible, all of those metrics, the greeks,
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they are inputs in the price in the
current price of the option that you're
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looking to sell so there's really no
point for me to look at Facebook
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when it's trading at $157 and recognize
that it has very high implied volatility
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when I know that if I just simply look
at the price I can make a determination
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and actually use my brain and say okay
if I sell this $145 put that expires six
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weeks from now and I receive $3
dollars per share so therefore my
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break-even cost is $142, do I think
that I'm being amply compensated
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for me
to assume that risk of agreeing to buy
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Facebook at 145 if the answer is yes
then I make that trade if the answer is
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no and I'm not comfortable with the 145
minus the three dollars in premium that
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I'm receiving therefore the break-even
point is
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$142 then I don't make that trade but it
doesn't make any sense to me to trade
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solely based upon high implied
volatility or even to look at the greeks
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because it's just like you're taking
away a lot of the thought process that
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goes into trading and I think that one
of my main criticisms of tastyworks and
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they lose track of their positions
because they trade so many positions
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just predicated on, Tony Batista, they
lose track of their positions simply
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predicated upon trading them because
they have high implied volatility but to
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me not all the opportunities are the
same so for example if facebook falls
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from $218 all the way down to a $157
which is where it's trading at right now
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as of Monday October 8th 2018 I believe
that that represents a much better
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opportunity when you trade a $500
hundred billion dollar extremely liquid
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company then if you trade Tesla which
has been everywhere from 420 dollars a
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share of three weeks ago to 260 dollars
a share and I don't even know where it's
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trading now because it's not on my watch
list and I don't I don't check it but
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the point is that Tesla might have
higher implied volatility well that's
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really weird that's never happened
before but Tesla might have higher
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implied volatility right now but that
does not mean that it's a better
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opportunity behind Facebook the chances
if you were gonna sell puts on Tesla
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with a strike price of like 235 you can
collect probably just as much premium
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that the probability that Facebook
trades down to 145 is significantly less
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than the probability that I Facebook
that Tesla is going to trade down into
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$235 so when you sort your trading
opportunity solely based upon
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high implied volatility you are really
doing yourself a disservice because
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underlying like I believe that Amazon
Facebook and like Lockheed Martin
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Raytheon JP Morgan those are really
high-quality underlines that are going
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to have relatively low volatility and
when they're trading down on the low end
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of their of the low end of the range of
the trading range that they've had over
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the past few weeks
like when Facebook is trading over the
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past few weeks from like 157 or 172 and
it starts trading down to around 160
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that is an excellent opportunity for you
to sell puts but even though something
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like Tesla has much higher implied
volatility than Facebook just three
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weeks ago is trading at 420 and now it's
turning it around to 60 to 70 I mean
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that's so much volatility that you can
be right and you can get scared out of
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your position if you sold calls and then
Facebook a rather Tesla wouldn't then
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suddenly be like 40 or 50 dollars in the
money you would then flip that around
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and sell puts with a strike price are
like 320 and now you're probably going
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to be like 50 or 60 dollars underwater
there's no point
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selling indiscriminately based upon high
implied volatility the only reason I
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theta numbers besides just that
curiosity I don't look at the Vega
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numbers or the implied volatility I
definitely don't read articles on
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seekingalpha.com because all you're
doing when you're reading those articles
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is it's just for entertainment purposes
you're just seeking validation that the
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trade that you made is correct I mean
there's nothing that you're gonna learn
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on SeekingAlpha.com that is not publicly
available especially for like on huge
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like Amazon or Facebook or JPMorgan like
these companies are hundreds of billions
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of dollars Amazon is a trillion dollar
company there's nothing that you're
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gonna learn on seekingalpha for that's
going to help you make a better decision
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all you're doing is wasting your time so
if you really want to be successful then
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you're gonna get shit done you're gonna
create things and you're gonna build
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good habits if you want to act like
you're busy then you're going to read
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bullshit articles on seeking alpha and
you're gonna try to compete on a
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knowledge gained meaning like sending
the emails and asking me oh do you look
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with all these Greeks like I don't even
know what yeah I'm sure that probably 10
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or 15 percent of my readers out there
know more about Greeks and I do like I
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don't even know like what some of the
Greeks mean that some people tell me but
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like I don't give a shit like I worked
as an investment banker and when they
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would ask me to do with DCF analysis I
remember having to Google how to do it
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because I only did DCF analysis maybe
like five times in the five or six years
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that I worked as an investment banker so
it's like all the stuff that they teach
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you in college which is super important
then the reality is that you barely use
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that stuff in the real world so if you
want to sound really smart to your
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friends and hang out at the bar and like
talk to them and try to make yourself
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look good by spitting out all this
computational bullshit and citing
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definitions okay fine do it but if you
actually want to make money then you're
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gonna focus on using your brain and
making good decisions and that's the
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reason why I don't read articles on
seekingalpha.com and why I don't look at
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higher implied volatility or volatility
I don't screen things based upon high IV
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nor do I look at Delta or theta or
anything like that because all of those
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inputs are reflected in the current
price so this is David Jaffee from BestStockStrategy.com
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BestStockStrategy.com you can go to BestStockStrategy.com and enter your email
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merci $400 worth of free training if you
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