Rise2learn – Options Mastery #2: Business of Options & Verticals

Rise2learn – Options Mastery #2: Business of Options & Verticals

Description of Options Mastery #2: Business of Options & Verticals

Learn to trade options vertical spreads

Vertical spreads are a basic foundation to trading options successfully. In this course, we give you a critical foundation to understanding how money is made from vertical trades, how to set up verticals, and manage vertical trades when they go against you!

What will you learn in Options Mastery #2: Business of Options & Verticals?

Video 1: Introduction to the Course

Module #1 is an introduction to the course.

• We cover the big picture mindset that you should have when trading options
• How education plays a large role in your success with options
• The process that many people go through to learn the business of option trading and how you should do it differently

Video 2: Tools & Platform You Need

In this module we focus on the three things that you need to get started with trading options. Topics we will cover include:

• Recommended internet speeds and connection for trading options
• How much trading capital is recommended to start trading options
• The necessary requirements of your trading platform to trade options effectively

Video 3: Words of Wisdom & Why People Fail with Options

In this module I share with you some words of wisdom and things to watch out for as you get into trading options. We cover topics such as:

• The leverage mindset that people have when they first start trading options
• Educational problems that many people have with option trading
• How to properly think about setting up a trade with a plan and treat option trading like a business

Video 4: What Type of Trades You Can Do with Options

When it comes to options there are various types of trades that you can create and setup. In fact, the type of trades that you can create are unlimited. Here are some of the topics we cover in this video:

• Why options were created and the variations of trades you can create with options
• How options can give you virtually an unlimited number of trade setups
• How options can make you money even if the stock does not move from theta decay

Video 5: Three Parts to an Option Portfolio

In this video we focus on the three parts to creating an options portfolio and the different ways you can structure your personal portfolio. In this video you will learn:

• The three components to your portfolio when trading options
• The type of portfolio that is best to have when you are getting started with options
• How to think about your portfolio allocation as you put on trades
• Why you need to look at your own risk tolerance before creating a portfolio

Video 6: Intro to Trading Options Like a Business

When you start looking at trading options like a business, this is where you shift your view from trading as a hobby to making trading work for you! In this video you will learn:

• The two main components that grow any business including the option business
• To start seeing where you can make more money from a business perspective
• Why consistency is a critical key to long-term profitability
• Why your goal is not to find the golden goose, but to learn how to improve what it is you are doing
• How being self-aware helps you improve faster
• Key questions to ask yourself if you are not trading consistently or profitability.

Video 7: Trading Options Like a Business

In this video we get away from looking from a general business perspective and start looking at the core of how an options business works. The topics that we cover in this module includes:

• Business concepts to selling option premium
• How segments within the insurance business like auto, health, and home insurance operate and why option trading is similar
• The process of selling option premium at the upper and lower ranges of your stock price

Video 8: Why Adjustments are Key to Success

Not every trade will work perfectly, so it is important to know how to adjust a position when it goes against you. In this video lesson we will cover:

• Why adjustments are important when it comes to option trading
• Why doing too many adjustments could create a problem for your portfolio
• The right amount of adjustments to your portfolio at any given time

Video 9: The Big Picture of Trading Options

Module #9 is about sharing the big picture behind trading options and trading vertical spreads. In this module we cover topics such as:

• Risk to reward ratios for selling insurance premiums and how this relates to trading options
• Various position setups when it comes to risky, normal, and safe trades
• How the management and taking profits of your options allows you to reduce your risk and brings you higher profitability

Video 10: Growing as a Trader

Module #10 is about growth and development as an options trader. It is about looking at yourself and how to properly grow personally within this business. In this module we cover topics such as:

• The growth process of improving within options through time
• How many contracts you might want to start with and the time frame to increasing the contract size
• The different stages you might go through personally as you learn options
• How many adjustments and the type of trading you should do when you are just getting started

Video 11: Profit Potential & Growing Your Account

In this module we take a look at the profit potential that you can make when it comes to various option trades and get into growing your account. In this module you will learn:

• The growth process behind fine tuning a strategy and improving it
• Why having a higher frequency of trades can improve your financial growth
• The impacts that the percentage of your wins will have on your account
• Why reducing your drawdowns is important to growing your account

Video 12: Long Term Profit Potential

In this video we take a look at the long term growth potential for your account across multiple years within Microsoft Excel. In this module we cover the following topics:

• A realistic view to calculating your financial growth across multiple years based on your percentage of return
• How compounding each month helps accelerate your financial growth
• How to estimate the time it takes for you to achieve your trading goals
• How the growth curve is different when you have a large or a small account compared to your daily life

Video 13: Option Prices & the Vix Effect

Module #13 focuses about how options are priced and how the VIX and volatility effects those prices. In this video you will learn:

• The 3 primary things that determine an options price
• How the VIX plays a key role to pricing options
• When should you be a seller of options vs a buyer of options based on the VIX
• How to evaluate volatilities on a variety of stocks and understand their pricing

Video 14: Basic Options: Calls & Puts

In module #14 we take a look at the profit pictures behind calls and put options and how they work so that we can build on these concepts in the future. Topics we will cover include:

• Reviewing the profit picture for a stock
• The profit picture for a call option and how a call option works
• The profit picture for a put option and how it works
• Why people buy single call or put options and why you should avoid single options

Video 15: Dangers of Buying Single Contracts

In module #15 we go on screen to look at the dangers behind single option contracts. The topics we will cover in this module include:

• The risk profile picture for a single call and put option.
• We look at multiple examples and evaluate the delta, gamma, theta, and vega within buying single option contracts.

Video 16: Selling Puts & Calls for Premium

Module #16 is focused on selling puts and calls for premium. This is where we get into trading options with the right approach and putting things together from the earlier lessons. In this video we cover the following topics:

• What the profit picture looks like to selling a call and selling a put
• The basic option greeks behind selling option premium
• How to have time decay work in your favor when you are trading options

Video 17: Win/Lose Scenarios for Single Options

In this module we look at the win and lose scenarios for single options when it comes to buying an option vs selling an option. The lessons we cover include:

• Tip to remember the profit picture for buying a call or put vs selling a call or put
• The win and loss outcomes for buying and sellings puts and calls.
• Looking on screen and comparing buying a put or call and selling a put or call

Video 18: Intro to Vertical Spreads

In this module we get into the basics behind vertical spreads and what the profit picture looks like. In this video we discuss:

• The profit picture of a vertical spread vs a simple call option
• Win / Lose outcomes for vertical spreads
• The craving for unlimited profit potential when it comes to single call contracts
• Healthy and realistic movements within a stock
• How the core of our option business stems from the strangle

Video 19: How Verticals are Constructed

In video #19 you will learn how verticals are constructed. In this module we get into combining a multi-leg strategy so that you see how a dynamic trade is created from buying and selling options. We cover the following topics:

• How a vertical spread is constructed
• How to widen the vertical spread by manipulating the strike prices
• Where to position or start your vertical position
• How many days out should you get into vertical spreads
• How to setup a balanced vertical spread where your risk to reward is 50% / 50%

Video 20: Selling Vertical Spreads

In module 20 we focus on selling vertical options and get into looking on screen at why you typically want to be a net seller of option premium. In this video we cover:

• The review of the strangle and how it is the core to selling option premium including verticals
• How to create a selling vertical strategy within a trading platform
• How you can combine selling multiple vertical strategies from the call and put side to make more money and create even more advanced strategies such as the iron condor

Video 21: Big Picture of Trading Verticals

In module #21, we get into the big picture overview of trading verticals and the flexibility behind them. In this video we cover the following topics:

• Variations of different trade setups and compare them to the vertical spread
• The capital requirements and differences for the different types of trade setups
• Comparing the risk to reward scenarios based on the capital you use on a per trade basis
• How to vertical can be adjusted to compensate for the risk you want to take on

Video 22: Finding Vertical Trades & Spreads

In this module we focus on finding vertical trades and setup opportunities. In this video you will learn:

• The critical things to check prior to placing an order for your vertical spread
• How to spot liquidity issues and problems within certain options
• How implied volatility plays a role within selecting your option contracts
• My favorite stocks and indexes to trade options on

Video 23: How to Study & Take Notes as We Do Trade Reviews

Module 23 is about sharing with you another variation to taking notes on our positions as we get into entering simulated trades, managing our positions, and taking profits. Within our trade examples we recorded our positions in a chronological order, but you could take your notes based on an individual trade basis.

Video 24: Intro to Entering Vertical Spreads

In module 24 we start entering into our simulated example trades so that you can see how to properly go through the process of managing a vertical spread. In this module we cover:

• How to properly select a trading vehicle and choose the appropriate strike prices
• The best time to enter an options trade including the best weekday and time during the trading day
• How to negotiate and get a better fill rate on your option spreads
• The maximum amount of positions that you want to trade when you are first getting started

Video 25: Entering More Vertical Spreads

In this video we continue to enter and put on more vertical trade opportunities for our trade examples. Our key focus with this video is to:

• Add more positions to our trade examples and simulated trades
• Choose our stop loss as we create vertical spreads so that we know when to get out
• Evaluate where our ideal zone is to take profits

Video 26: Statistical Probabilities

In module #26 we get into statistical probabilities and looking at the chances behind our trades working out and failing. In this video we will cover:

• Standard deviation basics when it comes to statistics and how it plays a role in stock trading
• How to evaluate your chance of success before you put on an option spread
• How to evaluate the potential move of a stock or equity based on the standard deviation
• How to properly select the strike prices for your options based on the statistical probability of your trade working out in your favor

Video 27: Big Picture to Adjustments

Although we focused on some basic concepts to adjustments earlier, in this module we focus on a bigger picture view to adjustments along with some adjustment problems that you might run into like inversion. In this module we cover:

• The most dangerous thing that can happen to you when adjusting options!
• Looking at adjustments for risk reduction – not just a change in position
• The number of adjustments that is recommended as you are getting started or if you are more experienced with options
• The external costs to adjustments beyond the financial costs

Video 28: The Greeks: Verticals

Video #28 we focus in on evaluating the greek risks such as delta, gamma, theta, and vega on our vertical spreads and positions. In this video we cover the following topics:

• The core reason you want to watch your greeks when you have active positions in the stock market.
• How the delta and gamma work together to show you the price risk that you have on your positions.
• How theta shows you the time risk you have our position and how it works within verticals.
• Understanding your vega (or volatility) risk and how to get neutrality on your position.

Video 29: Managing Verticals as a Portfolio

In module #29 we focus on evaluating and managing our vertical positions on a portfolio basis. This will give you the big picture view to all your positions at once. In this module you will learn:

• How to evaluate your trades as a portfolio beta weighted position
• The adjustments you can make to your portfolio if the market has a sudden change against you
• Variations on how to hedge and create a neutral position with your portfolio

Video 30: Daily Review on Our Verticals

In this video we review the positions that we entered earlier in the course. In this video we cover:

• Which positions you might want to take profits on to reduce your risk
• How many contracts or how much of your profit to take off when you are reducing your positions
• Why you might want to adjust certain positions and not others
• Which positions you want to be extra careful about and what to watch out for with risk-averse positions

Video 31: Review of Our Trades & Taking Profits

In video 31, we continue to review our positions across multiple days. The things that we discuss in this module includes:

• The strategical mindset to managing your portfolio
• More profit taking concepts within your positions
• Additional insight to hedging our portfolio against a negative market move

Video 32: Trading Verticals on Cheap Stocks

In module #32 we focus on how to setup vertical spread strategies on cheaper or less expensive vehicles. In this video we cover:

• How theta decay is different on cheaper stocks than expensive stocks
• How to properly setup your strike prices when there is little selection from the option chain
• The advantages and disadvantages to trading options on cheaper stocks

Video 33: Trading Verticals on Expensive Stocks

In module #33, I will share with you insight to trading option spreads on expensive stocks and the things you should watch out for. We cover topics such as:

• How to trade expensive stocks even when you don’t have a lot of capital
• What the advantages and disadvantages are to trading expensive equities
• How open interest, fills, and bid-ask spreads effect your entries with expensive stocks
• The problems you may have with volatility and price movements on expensive stocks and how to counteract the problem

Video 34: Final Review and Summary

In this module we do a final review to the concepts, theories, and trade setups we covered in this course. I strive to hit a few key points from various modules so that you can put the big picture concepts together.

This is a great module to review a few times after you finished the course because it will help you remember the things that we covered throughout the other modules.

Video 35: Final Words & Thank You

Module 35 is the final module to this course. We wrap up this course with some final words of wisdom along with a few resources that you can use to move forward with your trading education and journey.

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