Leaderboard

Welcome to Steady Options! Please spend few minutes to read this post, the Frequently Asked Questions and the Useful Links. It will be time well spent. SteadyOptions is a premium options trading advisory service. We offer a combination of a high quality education and actionable trade ideas. Our forums and the trading community are the heart of the service. The focus of the service is on non-directional strategies like Long Straddles/Strangles, Calendars, Butterflies, Iron Condors etc. We always trade defined-risk strategies, never naked options. You need to create a forum account to get access to the service. We are sharing our trades with full explanation of the Greeks, the risk/reward, the best time to entry/exit, price targets etc. Full follow-up is provided, including entry, adjustments and exit. You might expect 10-15 trade ideas per month. We will usually have about 4-6 trades open, some are short term (2-6 days), some medium term (3-5 weeks). We use portfolio approach and will have trades balancing each other in terms of theta/vega/gamma. Please note that suggested portfolio size for SO trades is $10,000-$100,000. We do NOT recommend trading accounts larger than $100,000 due to potential liquidity issues. We recommend using one of our other services for larger portfolios. We will also provide options education. I encourage you to ask questions about options trading. Please note that we don't provide auto-trading. SteadyOptions is an educational resource. I want my members to be in a full control of their trading. In addition, SEC considers newsletters that engage in auto-trading to be investment advisers, and I am not licensed to be an investment adviser. So most newsletter that engage in auto-trading are breaking the law and are exposed to lawsuits like this one. You can read more details here. The SteadyOptions forum has several sub-forums (access to members only): SteadyOptions Trades - this is where the official trades are posted. Any trade posted on this forum by any of the contributors @Kim @Yowster @krisbee or @TrustyJules is considered an official trade. SteadyOptions Discussions - This is where we discuss our trades. Unofficial Trade Ideas - This is where we discuss our unofficial trade ideas. In addition, SteadyOptions members have access to all Members forums where we discuss general issues, strategies etc. You can start topics and post on each subforum except “Trades Discussions” and “SteadyOptions trades”. You can reply on “Trades Discussions” forum. Each trade has a separate topic in “Trades Discussions” and “SteadyOptions trades”. The SteadyOptions Trades forum is used for posting our trades. To get notifications about my trades, you will need to follow that forum (by clicking "Follow this forum" button). Each trade has a separate topic, with our entry price, exit price and some comments. We will start a topic for each trade in the “Trades Discussions” subforum and you will be able to post your replies. You will need to specifically follow each forum you want to get updates from. When you follow the forum, you will get an email about every new topic in that forum. If you are interested getting emails about new posts in that topic, you will need to follow that topic. We recommend to follow all forums to get notified when new trade or trade discussion is posted. You can also follow specific members to get notified every time they post. SteadyOptions model portfolio is based on 10% allocation per trade (some trades are 5% and considered half allocation). Average of 5-6 trades is open at any given time. Performance returns are based on the entire portfolio, not just what was at risk. Please note that we usually don't hold our trades through earnings, unless specifically indicated. More details: Why We Sell Our Straddles Before Earnings Why We Sell Our Calendars Before Earnings Our goal is to share our experience and to help you to become a better trader. The trading notifications are based on our real trades that we are sharing with subscribers in real time. SteadyOptions is not a recommendation letter and I am not a financial adviser. However, let me give you few general tips: We encourage you to do your own homework before following any of our trades. If you are new to options or to those strategies, start with paper trading, then start small and increase your allocation as you gain more experience and confidence. Try to understand what we are doing. Ask questions. This is why we have the forum, and we welcome questions and discussions, no matter how basic they are. Don't wait for our notification if you like the trade. Enter if you like it. Exit based on your own profit targets. Our advice to members: learn the strategies and make them your own. Do NOT blindly follow the trade notifications. You need to understand what we are doing in order to adjust your entries and exists to changing market conditions and be proactive. SteadyOptions is a trading ideas generator rather than an alert service. If you are using it as a pure alert service, you are not taking advantage of all the wealth of knowledge and learning we offer. If you expect a pure alert service where trading alerts are just delivered to you without any effort and time commitment, this service is not for you. You will be expected to invest time and effort, please do NOT sign up if you are not willing to do it. I recommend reading My Seven Stages of being an SO Member to get a better understanding of how veteran members are using the service. My commitment to you: I want to make money with you, not from you. All I ask from you is to give me a fair chance. If you decide that you like the style, give it some time to work. Don't give up after a couple of bad trades. We are here for the long run. Don't concentrate on short term performance. Concentrate on your education. Concentrate on managing risk. If you do that, the profits will come. How to make the best use of SteadyOptions For the benefit of the new members, here is how SteadyOptions works and how to make the best use of your subscription. We use a limited number of non-directional strategies, described in the following topics (access to members only): SteadyOptions strategies How we trade straddles and strangles How we trade pre-earnings calendars How we trade Iron Condors How we trade Calendar Spreads How we trade butterfly spreads Full list of "Must Read Topics" is displayed on the right side on the main forum page. Please make sure to read it. You will need a margin account to trade most of those strategies. Here is how we trade the earnings trades: Every week we post post a list of trading candidates for the next week in Earnings Trades Discussions forum. We have some general discussion about the candidates. We will post a separate topic for each candidate I think it suitable, with analysis of the suggested prices, average move, previous cycle etc. The topic will always include a link to one of the relevant strategy topics above. This allows members to do their homework and to see if they like the potential trade. If you agree with the analysis, you can go ahead and make the trade. We will try to get the trade at the best possible price. When we do, we post it under the Trades forum. You should follow this forum to get email notification about the trade. We recommend that you try to get the trade as close as possible to the alert price. We don't recommend chasing trades. We cannot tell you what is the maximum price you should pay. It is your decision. Sometimes you will be able to get the trade the next day cheaper. Sometimes you will miss the trade. We make about 10-15 trades each month in our model portfolio plus similar number of "unofficial" trades. Don't feel obligated to take all of them. After entering the trade, please set reasonable price target. We usually start with fairly aggressive target and lower it as we get closer to earnings. Please look at liquidity, especially if you trade large amount of contracts. For our earnings trades, it is very important to close them before earnings to avoid significant loss. Here is an example of a discussion topic: And a following trade notification: In addition to earnings trades, we also trade different non-directional strategies not related to earnings. There are also many unofficial trades in a dedicated Unofficial Trade Ideas forum. Those trades are not tracked but they are integral part of the service. They are usually posted by me or one of our Mentors and are based on the same strategies as official trades. They don't make it to the "official" model portfolio for various reasons, such as: model portfolio full, size of the trade too big to fit the $10k model portfolio etc. We set different profit targets and stop losses for different strategies, and we also recommend that members set their own price targets. The best way to use SteadyOptions is to learn the strategies and make them your own. If you do that, you will be able to take full advantage of our service. You will be able to make your own decisions, based on our discussions. Getting good fills is part of the learning process. Over time when members gain more experience, they learn how to get better fills. Many members started as complete novices and now they take the trades even before I do and get better results in some cases. But those things take time. I highly recommend following the discussion topics to see how other members utilize the service. I also recommend following our Mentors for valuable tips and insights (more about our Mentoring Program). If you cannot get a fill on the exact trade, there are many ways to trade the same strategy (using different strikes, different expirations etc.) If you understand how our strategies work, you will be able to do it and see what other members do. I see the community as the most valuable part of the service. New members, please spend some time getting familiar with the forum and the strategies before jumping into live trades. Why SteadyOptions is different There are many services that trade exclusively one strategy, like credit spreads. While they might make decent returns 9-10 months per year, 1-3 bad months when the markets make sharp moves can wipe out months of returns. At SteadyOptions, we offer a complete portfolio approach. We use a diversified approach by trading a mix of non-directional market neutral strategies and balancing the portfolio Greeks. In order to hedge our theta positive gamma negative trades (like Condors and Calendars), we will always have gamma positive trades like straddles or strangles. We will discuss the following key elements for our earnings trades: Which strategy is appropriate for the specific stock. When is the best time to enter. What is the optimal entry price. Backtesting of previous cycles. What is the appropriate adjustment. What is the profit target. How Theta, Vega and Gamma impact those trades. Please make sure to read Frequently Asked Questions for more details. Finally, a quote of one of our members: I see SO as an educational course with live trades examples and the ability to discuss them with a like minded community. I don't expect or frankly care to perform as well or the same as the official returns, for the most part I don't even enter official trades unless it fits with my own strategy. Or the sectors/symbols that I like investing in and a myriad of other factors. So far, I learned a great deal directly and indirectly from SO and see a good ROI from both trades and knowledge accumulation. The truth is that about 90% of options traders will either breakeven or lose money. The same applies to any competitive sport or business, 90% will give up and stop playing, 9% will be considered average or good players and the top 1% the pro athletes will thrive. The copy and paste approach doesn't work for options... there are no shortcuts. Don't expect to look or learn how a marathon runner is running and expect to be able to run the marathon faster or even at the same pace. A person search for a one solution fix all or the "holy grail" is futile, there is no such a thing. The only thing that works is hard work, dedication and continuous learning. Every athlete will tell you the same.

I'm asked many times how I choose between Straddle, strangle or RIC for my pre-earnings plays. It's always a balance between risk/reward. As we know, those trades are supposed to be sold before earnings. They benefit from IV jump and/or price movement. The biggest (and basically the only) enemy is the negative theta. When buying a strangle, we are buying calls and puts with different strikes. The strangle will have the largest negative theta (as percentage of the trade value, not absolute dollars). Further you go OTM, the bigger the negative theta. If the stock moves, the strangle will benefit the most. If it doesn't it will lose the most. I found that if I have enough time before expiration, deltas in the 25-30 range for both puts and calls provide a reasonable compromise. For lower priced stocks, I would prefer a ATM (At The Money) straddle (buying the same strikes). For example, strangle on a $20 stock might be very commissions consuming, plus the negative theta might be too big. Please note that when I'm talking about the theta being larger or smaller, I'm always referring to percentages, not dollar amounts. In absolute dollars, the theta is always be the largest for ATM options. However, since those options are also more expensive in dollar terms, percentage wise the theta will be the smallest. For higher priced stocks (over $100) I will usually do RIC. Since you sell a further OTM strangle against the purchased strangle, this reduces the theta of the overall position. It might be the least risky position and still benefit from IV jump like AMZN trade. I prefer to have spreads of $5 for RIC. Since I don't know what will happen with the stock I play, I prefer to have a mix of all three. In case of a big move, strangles will provide the best returns. When IV is low, RIC will provide some protection against the theta while still having nice gains from time to time. Remember: those are not homerun trades. You might have a series of breakevens or small losers, but one down day can compensate for the whole month. This is why I want to be prepared when it happens. In August I had 4 doubles in two days (but I played mostly strangles). Generally speaking, RIC is the most conservative trade due to lower negative theta (the sold strikes reduce the negative theta). But if the stock moves sharply, strangle will produce the highest gains. It also might lose the most if the stock doesn't move and IV increase is not enough to offset the theta. Let me know if you have any questions. This post has been promoted to an article

Here are my stats for the PCLN Double Calendar compared to Double Diagonal. First a few notes on the numbers: Prices were noted each day around 3:00 and used mid point prices (although we all know that PCLN option prices jump a lot during the day and mid point prices were not always easy to fill). Commission not included. No trade adjustments were made (although if this was a real trade adjustments may have been warranted). Earnings Date -5 Days Stock Price $905.00 Dbl Cal $3.65 Short Aug9 890p/920c, Long Aug16 890p/920c Dbl Diag $7.35 Short Aug9 885p/925c, Long Aug16 890p/920c Earnings Date -4 Days Stock Price $910.10 Dbl Cal $4.75 Gain = $1.10 (+30.1%) Dbl Diag $9.15 Gain = $1.80 (+24.5%) Earnings Date -3 Days Stock Price $927.30 Dbl Cal $5.00 Gain = $1.35 (+37.0%) Dbl Diag $9.15 Gain = $1.80 (+24.5%) Earnings Date -2 Days Stock Price $937.90 Dbl Cal $4.25 Gain = $0.60 (+16.4%) Dbl Diag $8.80 Gain = $1.45 (+19.7%) Earnings Date -1 Days Stock Price $927.50 Dbl Cal $4.55 Gain = $0.90 (+24.6%) Dbl Diag $8.70 Gain = $1.35 (+18.4%) Earnings Date -0 Days Stock Price $933.80 Dbl Cal $5.00 Gain = $1.35 (+37.0%) Dbl Diag $9.15 Gain = $1.80 (+24.5%) Some observations: For both the DC and DD, the price jump after the first day was the biggest jump. From a percentage perspective, the DC did a little better when the strikes were OTM or ATM. When the strikes got deeper ITM, the DD started to fair better - implying that if the stock price spiked up and didn't give you time to adjust your trade then the DD would be better than the DC in this case. DD strategy only makes sense for very high priced stocks or for moderate priced ones where strikes are available in $1 increments (instead of $2.50 or $5.00 increments). Otherwise, the difference between the premium you are buying vs the premium you are selling is too much. The DC appears to generally outperform the DD assuming the pre-earnings stock moves are not too much and are not big spikes in short time-frames/overnight that don't give you time to adjust your trade. The DD does offer protection for earnings leaks or early announcements coupled with the corresponding large IV drop. For example, if PCLN earnings came out early and the same stock move occurred then the DC would basically be worthless (100% loss) but the DD would still be worth approx the difference in the strikes $5.00 in this case (32% loss).

Chris has posted about doing something like this. It was mentioned in this thread: http://steadyoptions.com/forum/topic/322-holding-thru-earnings/ If you compare the implied moves right before earnings to historical moves of the stock after the results come out, it will give you a better idea of what type of trade(straddle, IC, calendar) to hold through earnings. You can probably be successful with this as long as you make sure commissions don't take away much and your allocation is small.

I have a question on theta and vega and I am trying to understand how these two may work together. I am looking at RUT August 755/765 puts. On the IB, for the 765 puts, theta is -0.28 and vega is 0.72. So, if I sell 765 puts, the value increases by $28 the next day assuming everything is same. But if the IV goes down by 1% the next day, will the value increase by $72 (for vega) + 28 for theta for a total gain of $100 for a day (assuming everything else is the same). I would apprecaite your thoughts. Thanks.

you are spot on, when you are short options you hope the underlying doesn't move much so you receive the theta without losing on the delta and/or gamma and you hope for IV to collapse.