Traders Ask: What Do I Do About An Obnoxious Bid Ask Spread on a Butterfly Trade?

Seth FreudbergGeneral Comments, Options Education, Seth Freudberg's Blogs, Traders Ask5 Comments

An Options Tribe Member  asks: Given that we’re about 55 days out from the  July monthly options expiration,  I was playing with a July 770-820-870 put butterfly on the RUT (when it was trading around 840).  Usually the bid/ask spread for ATM and OTM puts on the RUT is narrow enough, but the spread on the 870 put ($51.80 by … Read More

A Great Note I Received From One of My Mentoring Students

Seth FreudbergGeneral Comments, One Good Trade, Options Education, Seth Freudberg's Blogs, Trading PsychologyLeave a Comment

Seth – When I was in the military, I was assigned as the unit trainer (started with 70 soldiers).  To give a little more detail, I was a lieutenant in a patriot missile battery.  When we would train, it would be three different platoons in one confined area, all training toward one objective (getting our site, missile launchers, and engagement control … Read More

Traders Ask: Is it better to neutralize a double butterfly or simply close it?

Seth FreudbergGeneral Comments, Options Education, Seth Freudberg's Blogs, Traders Ask, Trading Lesson1 Comment

Martin asks: I have a question about one of your first webinars  involving  the February butterfly. At  the end of the trade it appears that   instead of closing the trade completely you just neutralized  it. What was the reason that you handled it that way ? What is the advantage of  neutralizing the trade  instead of closing it?: Martin is … Read More

Decoding Market Volatility: Navigating the Heck Out of Options Trading with Dan Harvey

Seth FreudbergGeneral Comments, Options Education, Seth Freudberg's Blogs1 Comment

When I first started trading options a number of years ago, I  became very friendly with a  great options trader, and an even greater human being by the name of Dan Harvey.  Dan,   a retired medical doctor,  is one of the finest options traders I have ever met. He is very analytical, very calm  and a very flexible thinker. … Read More

“Milking” an Options Trade

Seth FreudbergGeneral Comments, Options Education, Seth Freudberg's Blogs, Trading Lesson2 Comments

Every properly designed  income options strategy should have both a target profit and a maximum loss. Both are extremely important in order to maintain a realistic annual return target for a particular strategy. The skilled income trader is both disciplined at exiting when a trade has hit the  maximum loss threshold and skilled at what we alluded to in my last … Read More

Sittin’ on the front porch sippin’ iced tea

Seth FreudbergGeneral Comments, Options Education, Seth Freudberg's Blogs, Trading LessonLeave a Comment

It’s funny how non-directional  options trading differs from many other kinds of trading. For example,  most forms of   trading require price  change to be taken advantage of by the trader.   Day traders salivate when they look at charts that are vertical, in either direction. Directional options traders are the same way.  But,  non-directional options traders normally do best when … Read More

The key to winning options strategies is how well you handle the losing months

Seth FreudbergGeneral Comments, Options Education, Seth Freudberg's Blogs, Trading Psychology, Trading Theory3 Comments

All great options strategies will have losing months.  There is no getting around this simple fact, and it is critical to your mindset as a successful options trader that you accept these months as part of the game.  While non-directional options spread strategies are also known as “income options trades” (giving some traders the mistaken idea  that the strategies will produce  … Read More