Engineer Works Full Time, Trades Full Time Selling Wide Strangles

[Music] that was my friend WABAC rising star I'm very excited to be back serving how are you good how are you I'm feeling great I'm excited you're here week we probably evening the S&P is down seven that's something we haven't been able to see in days that hasn't happened in a long time take full credit for it with it well do you think we met about I don't know maybe three years ago Yeah right and I I think you know your chicago-based can you throw up on the screen bet the the little background yeah yeah yeah there you go give a little info on you if so so people can see it you stop by the office and you had a bunch of questions about trading and it was like you you're what you're somebody that that I remember it cuz we have a million people that come by the office but I remembered you because you were like I were the first thing you said is you talked to Tony and myself you said I love this business you're like you're like I still do I want I want to do that and you're like this is this is my passion I love this and some point I'm gonna be a rising star that's a that yeah and I'm here today so I man of my word there you go I love it I love it you work full time and and so the nice thing about that is we like people here that work full-time because I think it's important if people know that there's you know both sides people that train full-time people that work full-time when did you start not like investing how old are you right now 3434 when did you start kind of like actively trading well so like everybody else you know I started with buying stock share hoping that it would go up but you know how that works you know 50 percent of the time you're right yes percent so then I started it wasn't aggressive enough for me so then I started buying calls because then you know the the profits are not linear if the stock goes up and then again you know I would win some lose some then I came across that can video and then and then I watch the documentary on YouTube about the Blackshaw method taking risk against risk and all that so then I kind of got obsessed with it I I mean I watched that video a hundred times so then it just you know I just kind of read up on it read a bunch of books watched market measures and then I started trading the tastytrade way but what happened was the worst thing that could happen to a you know young inexperienced trader which is I made a lot of money right when I started yeah so that's when I got aggressive that's when I got aggressive and my size got too big and then you know there was a bad day the market always teaches you a lesson it absolutely does yeah so at that when that happened I didn't know how to manage or roll yeah I was just you know I would just sell all these pots I know think to myself that okay well this is way out of the money it's not gonna happen I would look at the probability I mean money would be way too low and I'll be like I'm safe then that happened and that's when I realized just how important sizes and to this day I think that's the most important thing I got a couple of emails from you over the years and I remember one email you're very distressed on sighs and you were like you know you're like I'm just not sure you know like like you had it very there were normal questions they were obviously important questions to you they're very normal questions that we get all the time and I still remember it because you're like yeah very concerned but your your your education was in it says on there in electrical and computer engineering and that is yeah just the electrical engineer electrical engineer yeah okay and that's and that's what you're still doing correct yes yeah I mean I work full-time job right we're right and so so but trading you know we have a lot of I would call them engineers so lots of different kinds of engineers but the math as embrace numbers right I mean yeah the cat what I'm getting at is the mechanical aspect you know the the transition from an engineering background to to a very mechanical trading kind of you know sequence of events the wait trade that was probably that was probably the easy part the hard part was ego discipline you know dealing with losses dealing with profits as you mentioned yeah absolutely Anna I mean I've taken statistics in school which is a major part of this game yeah the tastytrade way at least you know so that wasn't that hard but like you said you know the ego and you know when I first started like I said I made a lot of money and I thought that you know I could I could be the next Karen so you know I was just taking crazy risk and but then I learned my lesson and I made a few adjustments and and Dawid the only reason why I never I never gave up I mean my parents every times where my parents have begged me to stop the only reason why I never stopped is because I would look back every time and I would see the mistake that I had made that's the most important thing yeah you know if you make a mistake if something bad happens whether it's in trading or whatever else and you look back and you have no idea what happened that's when probably you should maybe consider other things but in really concentrating I always knew that I had made a mistake because then I would watch market measures and you would talk about rolling and fixing trades and then I'd be like well if I had a little bit I had some buying power I could have perhaps rolled that that put and I could have fixed that yeah so that's for that reason I never gave up because like I said I always find myself responsible that's one of the most important things about what we do is we put the onus of success on you because all we can do is research create enough research and create mechanics to essentially say you know hey the reason and most people think the reason are not successful in investing is because they just you know they picked the wrong thing you know that's the you know and like you said that's a 50/50 shot well we're trying to do something completely different which is which is to allow you to assess hey this is why it worked this is why it didn't work yeah so let's fast forward now to maybe about you know around two years ago yeah let's talk first of all about you know your approach to trading strategically like what kind of strategies do you employ the most what kind of underlyings do you use and we'll start with that yeah so I what what makes the most sense to me is strangles just the odds you know I don't I don't really I'm not a big fan of defined risk trades and you know when I say this people think I'm crazy when I say you know when I when they ask me and I say well theoretically the risk is undefined but with strangles it's just the thing that's worked for me you know and that's what I really do I saw and I like I said I watched the can video so I do a lot of the index as you know the Russell SNP Nasdaq but those they take a lot of buying power right so what I have transitioned over to over the past two years or so I still do some indexes but I'm saving that for the future when I have you know millions of dollars in the account for now I do earning trades oh I never pick a direction I don't believe in that because every time I have I been wrong you know it's supposed to be 5050 but I've been 100% wrong so I never pick a direction and I always put on strangles and I do it pretty conservatively because you know it strangles if you if you get it wrong you you're really serve ative lee meaning what delta v delta v delta yes you're way out I'm way out there and I stick with you know let me put it this way I have found something that works yeah I found the card that I've been milking and it works and I'm sticking to it it's good so I stick with high-dollar stocks okay you know like Priceline Google Amazon and you know I put on the trade right before the bell and honestly 95% at a time within ten minutes of market open amount which is beautiful I mean I I was talking to Jules backstage uh I was in Bali a year ago and I looked up the times because you know there's a time difference I put on it I put on a trade at that at my stop in Korea I took it off the next day in Bali and I made luck up it wasn't to my I made like a grand or two but it took like 15 minutes and I was like this is why I love trading because you can trade anywhere you know plenty of street this is open it's on me because I've tried to convert a lot of people over the years but it's hard for some reason people you know they they think that you know you'll have to be an expert they believe there's nothing against the bull market so yeah I know when you're competing it's a bull market I mean you're young you've only been in the business you know I mean after you graduated college we've been essentially in a bull market so so a lot of your peers haven't seen anything except the market that goes higher and against that you know it's a it's a tougher sell but you're you're much better prepared now in the future for when markets are more two-sided and there's you know and there's not a bull market every year that kind of thing yeah well not only that is you know if people think it's Rigas and evens you know but it's not of course not it's not you know I was to copy rigged where the markets are a penny wide absolutely great I I completely agree and I've tried to tell people that you know like the example that I always bring up is like you know nobody uses the travel agents anymore because you know you can book your ticket yourself and sure same you don't need to have a financial analyst of course yeah so what are your risk let's talk about your let's talk about how you handle situations that don't go your way yeah so let's say you put one of this positions on or any position cuz I'm not a fan of just doing earnings transit like you know obviously a lot more yeah yeah how many trades do you usually have on it once and and what is your approach to managing risk when things don't move your way yeah so uh we see a lot busier during earnings season then you know in between earnings you know any given day maybe three four but I always make sure that 50% of my buying power is free in case I have to manage and you know very rarely and I say that very proudly very rarely when trades go don't go my way because like I said I'll go I look at the expected move and I'm I round that up I look at out there's also another website that I use that tells me what historically what the stock has done and I go beyond that as well but when and you know sometimes it happens you know sure you do I roll I moved the under lap time roll up the untested sorry I mean I do what you what I've learned from you guys I moved the untested side so if it if it drops I bring the call now if it goes up I bring the put up and I roll out it's perfect and I I scrap I scratched that Nvidia trade that I was training that I was beautiful I mean I wish I did see you do you make sure that you trade every day at least yeah I do I mean every day I mean they're taking another key thing that I'm sticking with is taking profits you know right around that fifty percent sure don't you force yourself just constantly stay engaged absolutely absolutely I mean it tastes so as long as I'm getting paid I'm kind of getting arrested on the screen here it says that you're up over two hundred percent the last two years combined correct to honor for some that's pretty amazing but what did you do like what was the change just you kind of tightened up your mechanics like what's the change from the last two years well I found 2016 to be a great trading year in 2017 to be ridiculously hard what did you do in in like what was the big change that you made was it just going to a smaller Delta or was it you know you tell me well so there's two things that are extremely important and I used to you know when I first started I was aggressive I used to be like all Sarnoff is conservative but I learned over time that what you say is something that everybody should stick with which is size keeping your size and check and taking profits at around 50% so I stick with those bringing my size down is probably the most important thing that I use absolutely is because then you're able to economy the worker we got only to pick up two kinds of trades so you've got the good trades and the batteries we don't need to discuss good trades bad trades if you have buying power and you give yourself time and you manage those then you're only left with the only defense that it's the only defense you know it's so funny that because we never thought about this either we grew up in an area where where size was everything you know like whoever traded the biggest was the best yeah but what we didn't realize was you know that that's the that's the real killer that's when we always say that's when genius fails in absolute I mean I learned the hard way I've had margin calls they've called me they said hey you know you have to take the loss oh yeah sure or bring more money and so you asked what changed that for me just making sure that 50% of my buying power was free just so if I need to roll and manage that's one thing being more conservative you know in that carrot video she says trend is your friend and I wholeheartedly agree with that so for instance when I'm putting on these earning trades on the downside I don't go under you know put side I only go maybe 215 deltas because you scoot them a little bit to the upside yeah because you know it didn't these days you know they announced your company announces the results and it can go up 30% but if the results are not that great it'll never drop it seems like it's not going to drop there's a bull market so so I've skewed it a little bit that's another change I've made now you'll see when the market changes that that will quickly be the other way so then what I would do in that case is be more aggressive on the call side find the cost yeah so how did you take advantage of the last two weeks when we had this incredible volatility to the downside we're able to at least get some some positions on oh absolutely I and you know the funny thing is every time that happens I get a hundred text messages from all these haters all you losing money and it's like no I'm actually making money I love that I love volatility you know then the the the VIX jumps that's like a happy day for me yeah because then I can get super widened so what I did was I sold some puts and another tasty trade thing that I actually do you guys talk about cost basis reduction here a lot tours and so you know I sold some puts to finance some long calls just if the market was to bounce and it did so I did that I sold some ports and it was a great week for me although I do have one earning trade that hasn't gone my way that jr. has that trade on - which one is Netflix oh yeah Netflix has just been oh it's had a brutal rally Lesko yeah but it's fine you'll work your way see that's a certain level of confidence that very few people have by the way is that you have a bad trade on you're like I'll count work my way out you have to have some level of success to kind of course to that otherwise right of course but I mean you know it's just it's interesting to see people with that you know with that approach because it's not normal I mean you know something goes against you the rule in the industry was okay get out yeah and I need to be like that from if you got out every time something goes against you you're just locking losses you can't self no chance to be successful well I mean there is a what I think is stupid saying out there your best law your first loss is your best loss or something ridiculous yeah yeah I it's not yeah of course of course but that's an old saying that goes back to you know know the old let your profits run and you know your first loss is your best loss type thing both of which are wrong what are you going to do in the next for the rest of 2018 like with respect to you know like like are you gonna are you gonna increase or are you gonna change a little bit the products that you're trading you know as you start to gain some more wealth and as you start to become even more skilled you know products don't matter just where's the liquidity and worst of all so yeah so so what do you see yourself doing differently this year I'd be moving more toward and that's always been my goal towards the indexes because you know the honor that stocks is just too volatile right but right now that's where the money is asked for me and you know I just don't have the buying power to put on like a you know ten contract trade and the S&P yeah yeah but that's what I'll be I'll be I mean I guess I could do despise you know yeah sure but I'd be moving more towards that so so the the thought process there is that if you are trading individual equities that's better for a low vault so the market because you find some situations with higher volatility but if you're trading the indexes yeah most people gravitate towards the indexes when volatility gets higher less now yeah because you take significant less risk and you get the same with you're looking for yeah and you sleep better as well easily so very nice well this was a great discussion and you're the last two year I mean since I met you three years ago and I think it was around three years ago and and where you come in that short period of time you are a very nervous trader that nervous person but like you know you're a lot of questions about the business yeah and a lot of nerves yeah and you seem to be much more you know at this point you know settled and confident and completely different it's like a it's like a you know full turn and I think that's really cool and your results are amazing you should be trading my account Tony you're fired sure yeah I can't complain it's been good I mean I've just learned you know you win or you learn is what they say yeah that's awesome so thanks so much for coming in today for having me was great thank you so much for having me Frank we'll come back when we got next got the opening bell use taste real ad you

Channel: tastytrade

Views: 65,186

Rating: 4.9149799 out of 5

Keywords: trading, trader, stock, market, finance, learn to trade, beginner trader, options, options trading, tastytrade, profit, trading tutorial, investing, how to trade, interview, success, strangles, earnings, equity indices, inspirational

Id: Eqzmq_RkBaY

Length: 19min 52sec (1192 seconds)

Published: Fri Feb 16 2018