Answering my TOP 5 FREQ Asked Qs // PDT Rule // STOP Loss Order // SPY 0DTE Option Premium SELLER

[Music] what is up youtube friends thank you for coming back to my channel if you're new here i'm arianne and i am a retail day trader i focus on trading the ticker sps which of course is the s p 500 and i my favorite way to trade stock options is to trade zero dte contracts that is same day expiring contracts and i focus on selling credit spreads so i am answering your top five frequently asked questions let's get right into it thanks all right number one how do traders with accounts less than 25 000 get around the patterned day trading rule or how do traders with small accounts trade this strategy referring to a zero dte strategy i'm actually truly surprised at how often i get asked this question i think it's because people think that if you have an account that's less than twenty five thousand dollars that you can't day trade and you can day trade you just can't make more than three day trades in five business days so it also just so happens that spx has three weekly expiring contracts okay so you can trade one round trip on monday one round trip on wednesday and one round trip on friday and you won't violate pdt or you can do three trips three round trips on monday and then not trade again until the next monday and you'll be fine you won't go over your pdt roll so um every broker that i know has like a little count somewhere so you can keep track of your day trades if you're unsure so yeah also if you happen to be in like a credit spread or a trade that you don't need to close um sometimes i am in a spread that i feel will expire worthless so i don't need to close it then that trade will not count as a day trade because it doesn't have a closing order attached to the opening order something else i'm not sure most traders are aware of is that futures trading is not subject to pdt rules so you can open and close as many futures day trades as you want and you know maybe you can build up your account that way personally i think future trading is actually easier to learn than options spreads um i mean like the mechanics of it because futures trading is only two buttons you either click click buy or you click sell um though i've only ever traded s p futures um their tickers are forward slash es and forward slash mes and um you know futures trades six days a week almost the entire day so that could be an option for somebody as well to build up their account to get past that 25k level number two how do you get started trading spx i checked my broker weeble and cannot find anything about sps so as far as i know robin hood doesn't carry spx and neither does weeble which is unfortunate so then i often get asked can your strategies be duplicated for the ticker spy which is also the s p 500 but i i just i have to be honest i have never traded credit spreads in spy since spy is one-tenth the size of spx i would have to trade ten times as many contracts in spy you know to to get the same results and since everything i trade is two or four legs the commissions would absolutely kill me so i don't even really ever bother trading with spy also some strategies that i trade like the broken wing butterfly i trade i enter with the intention of not closing it and so if my broken wing butterfly if one of the short legs were to expire in the money it's fine you know my broker would just um settle it with cash but if it were to close in the money with spy then i would have to be worried about hundreds of shares being assigned so again svx does not have an assignment risk it is all cash settled so i'm sorry i really do get asked that a time but i just don't trade spy so i i just don't have any genuine advice to give all right number three um this viewer said amazing video thank you very much can you share how to apply a stop loss to either spread all right in thinkorswim you can set both a buy to close order and a stop loss order and i'll show you how really quick it's very easy but before i do i don't know if it's just think or swim i don't know if it's the case with spreads in general but my stop-loss orders never fill correctly all right let me give you an example for a vertical spread my average fill price is 50 cents so if i go in there and i create a stop limit order for a dollar fifty which is three times the premium received then what often happens is that if the price of the spread happens to reach anywhere near that level and let's just say it taps you know a dollar fifty my order gets triggered and then it gets executed at like a lower price so like the real the real mid price which is like 115 120. so on one hand you would say oh well you know that saved you 30 cents um but in my experience it often stops me out of an otherwise winning trade meaning like it just goes back to it just continues to decay but at one point you know during some spike in volatility it might have tapped that dollar fifty area so i don't know if the remedy is just to set my stop limit higher at say two dollars and then expect that it gets filled at a dollar fifty um truly honestly i just don't use hard stops what i do is i'm watching my spread and if the mark hits a dollar fifty i just go in and i cancel my buy to close order and i send a limit order for whatever the lowest debit price is that's just that's just how i do it but i'll show you a video on how to create an in a conditional order so that you can send both a um buy to close for your you know for me it's 10 cents and a stock limit order that maybe your broker executes differently or you can find a way to make it work for you let's set up both a buy to close order and a stop order so this is what a closing order would look like for me on a spread i'm buying back my spread and i want to take profit when the price of the spread has decayed to 10 cents and if you come here to advanced order and you scroll down there's an option for oco and what you would do to set up the stop limit order alongside this would be come here create duplicate order and now we'll set up the order in case the spread moves against us and so then come here to where it says limit click stop limit i'll talk about the stop here in a second and i want to tell td that if and when the price of this spread increases if the mark touches a dollar fifty send this order as a dollar fifty limit order i wanna be out of the spread but only at a dollar fifty right and then you can confirm and send it and you'll have two of these orders if this order triggers it cancels this one if this order triggers it cancels this one and so that's fine if you were to do a stop order now what you're telling td is if and when the price of the spread touches a dollar fifty send an order a market order to close me out of the spread but now you have no control of what the actual fill price is so that's why we do a stop limit order so i can tell td that i only want to be out of the spread if and when it touches a dollar fifty and for the limit price of a dollar fifty now keep in mind if it's a particularly volatile day there is a chance that it just blows right past a dollar fifty and then you kind of run the risk of not getting filled at all so please keep that in mind all right number three is do i prefer the butterflies to the credit spreads all right just to clarify an iron butterfly is a credit spread but i think what the viewer meant is do i prefer trading that strategy over vertical credit spreads and the answer is no i i trade both of them every monday wednesday and friday um i think it's just a matter of trading preference and i will tell you what the two biggest differences are for me and two things to really consider as far as if you want to pick one over the other all right number one is the margin requirement so to me that's the biggest difference the average margin requirement for an iron butterfly is three thousand dollars and for me i can pretty pretty easily make 160 bucks in one iron butterfly pretty easily in the vertical spread let's just say i'm using the same margin 3000 bucks that'll get me about seven contracts right and my average fill price is 50 cents so using that same margin in a vertical credit spread i can make 350 so do i use my margin to make five percent back or do i use my margin to make 12 and you know that's a that's a pretty significant difference and it may not matter to you if you're only trading one or two contracts but when you start to trade bigger size that that stuff matters and then also keep in mind that a vertical spread is two legs an iron butterfly is four legs on each side so that's still the commission cost um and sometimes in a vertical spread i can get away with not treat or not closing it at all right so i get away with that closing order but in iron butterfly i always open and close so that's eight legs for every one contract so keep that in mind so the second thing to keep in mind when comparing the two is the time in the trade in iron butterfly almost always profits within one hour a vertical spread takes if it profits within an hour that's fantastic that some that sometimes does happen but on average it takes probably four to five hours um so you know i'd be lying if i said that i didn't love being out of my trade by 7 30 in the morning here on the west coast but actually one time i was in an iron butterfly that profited in 50 seconds five zero seconds if i can find the um order i'll put it on here actually that was a day i think it was a tuesday or thursday where i will sometimes trade these iron butterflies but i'll like i will scout them like for a hundred dollars like lower profit targets anyways um so yeah keep the time in trade a uh consideration too all right the the other question that i always get asked a ton is do i run an alert service and yes i run an alert service with two other traders i don't know if there's like a stigma against you know trading signal services in this industry i don't know maybe i'm just imagining it but i remember when i first started trading and i came across ross from warrior trading this was like forever ago he used to trade like out of the attic i think in his house and i remember thinking wow this is so cool like i get to watch professional trade and mirror his exact trades and it gave me like the confidence to try new strategies because i had you know a knowledgeable trader in front of me and i thought that was cool um i didn't what i learned was that um ross was like a penny stock trader and he uses like lightning fast scalping strategies and he's got all these shortcut keys and it just wasn't my type of trading but i remember trying bunches of different things um you know tim sykes i don't think i was ever a part of his room but i was a part of like jason bond from raging bull lost a bunch of money that's okay i learned a lot um kirk from option alpha i really like him i learned a ton from him but i don't trade the way he does he's also an option seller but he trades lots of small positions in many different tickers over long periods of time that's great it's just not for me um so i don't remember i probably have tried lots of different services but like i said i didn't even know there were a thing but once i discovered them i was like wow let me try all these different things and see what sticks and that's how i ended up where i am now like i i looked back on everything and i was like what am i being successful with what kind of trading strategy fits my trading style i guess and i like zero dte um contracts because i'm not exposed to any overnight movement which you can't control and i like just having my money back at the end of the day and being you know all cash or whatever at the end of the day and i like focusing on one ticker so yeah i think it's just nice to um try bunches of different things and then look back and see what was the thing i was most profitable on and then keep doing that thing over and over right i mean yeah so anyways um thank you for watching this video if you have ideas for future topics please comment them down below i know i'm not the fastest youtube video maker um but i'm trying and also i do hop on to instagram almost every monday wednesday and friday and just update the trade that i took that day or trades that i took that day so you can check me there or of course you can email me and i'm happy to talk strategies with you and share your ideas so thanks again for watching happy trading you guys i will see you next time

Channel: Axe Options

Views: 8,312

Rating: 4.9906759 out of 5

Keywords: stop loss, options, spx, spy, sp500, daytrade, girl daytrader, female trader

Id: YHERJV3uQoQ

Length: 15min 40sec (940 seconds)

Published: Sun Mar 21 2021