SMB Options

Which Options Model Are You Relying On?

Nov 3rd, 2016 | By | Category: SMB Options
Every week, options traders like you are sending in questions like one of these: Which options model should I use? Which modeling software is more accurate? Why are my Deltas different than yours? To best answer that question, we should leave the theoretical world and move into the real world... Several of the top performing options traders on our proprietary trading desk have a few things in common: Several of our top traders can manage their trades with any Greeks model. Their strategies have positive expectancy because of risk control and could be managed effectively using any of the popular options Read more [...]

Next Step to Improve Your Playbook

Sep 20th, 2016 | By | Category: SMB Options
Yesterday we talked about how market neutral options traders usually generate their best returns when directional equities traders are struggling to find opportunities. Here's one practical way you can begin to add market neutral options to your playbook. Action: Use midday as options time The best opportunities for short term equities trading is at the open and close of each session. The middle of the day is typically quieter and is when options traders actually like to negotiate their adjustments. Establishing a routine of thinking about market neutral options opportunities during the middle of the day is a great Read more [...]

How this Bearish Strategy Beat the Index by 288%… Even in a Bull Market

Feb 8th, 2016 | By | Category: SMB Options
Please note: Trades discussed below are hypothetical and simulated for educational purposes only. Review the options risk disclosure. The graph below compares the Bearish Butterfly vs. the S&P 500 index. If you had traded the rule-based Bearish Butterfly Strategy for the past 5 years, you could have outperformed the index by 288% -- even though the market was bullish during most of this study. And this even includes trading at half size since there are times you may be trading two different expiration cycles at the same time. What's most interesting is that the strategy only under-performed the index one year -- Read more [...]

Heightened Volatility is a Double-Edged Sword

Jan 18th, 2016 | By | Category: SMB Options
Volatility (both real and implied) has been stepping higher. While not at extreme levels, the S&P 500 Volatility Index ($VIX) is at a precarious point. Volatility is one of the more reliable market segments for a mean reversion bias. Most of the time, the VIX lives somewhere between 10 and 30. However, when it gets above 30, the index can become very disorderly. The spikes above 30 can be enormous, reaching 50 to 80 in short order (as seen in August 2015, August 2011, and October 2008). In the 2014 Options Tribe Community Survey, traders were complaining that low levels of volatility were making it difficult to trade neutral Read more [...]

Which Options Strategies Is SMB Invested Into?

Jan 14th, 2016 | By | Category: SMB Options
A few years ago, we partnered with a hedge fund, The Kershner Trading Group, to expand our resources and capital for trading. At about the same time, the partners were noticing that John Locke's options strategies had been showing great results for several years. The natural next step for SMB was to connect these great strategies (and great traders) with the capital they needed to trade bigger. The SMB Options Desk was formed. We're adding traders on a regular basis and allocating more and more capital to these strategies. Many trading firms provide capital to retail traders, but require the trader to put up some Read more [...]

SMBU’s Options Tribe Webinar: Dave Freitag: The DAVE Options Trade—Delta and Vega Neutralized

Nov 25th, 2015 | By | Category: Options Education, Seth Freudberg's Blogs, SMB Options
This week, Dave Freitag returns to the Options Tribe to present his unique DAVE (Delta and Vega neutralized) trade which he developed personally and trades each month Read more [...]

SMBU’s Options Tribe Webinar: Steve Papale of Optionvue Systems, International: How Implied Volatility affects the Options Greeks

Nov 19th, 2015 | By | Category: Options Education, Seth Freudberg's Blogs, SMB Options
This week, Steve Papale returns to the Options Tribe to discuss the often misunderstood topic of how the options greeks are affected by options implied volatility. Read more [...]

SMBU’s Options Tribe Webinar: John Locke: What is holding you back from becoming a successful options trader?

Nov 11th, 2015 | By | Category: Options Education, Seth Freudberg's Blogs, SMB Options
Today, John Locke returns to the Options Tribe to discuss his view as to what are the necessary steps options enthusiasts must take to become successful options traders. Read more [...]