Options Strategies during Earnings

[00:00:04.12] - Speaker 1
Good morning, everyone. Welcome to this session about options and earnings. And welcome, Dan, nice to have you here. Before we start, as always, let's go through a very quick disclaimer. So, Dan, very excited to have you here. You've been part of the community for quite some time and you really showed some really good skills that you have in options trading. And I think for those who don't know you right. Do you want to introduce yourself and tell us, you know, your experience, why you like options and what, what is your strategy? And then we're going to go into looking at earnings, looking at some of the companies that are reporting and your approach to. To earnings.

[00:01:03.20] - Speaker 2
Yes, gladly, Fabio, thanks for having me. Hi guys. A lot of you know me from personal messages or from the different chats. Been starting to be more active to my background have nothing to do with the financial industry. I came to it through stock trad holding long positions in ETFs. I always gravitated to mathematical things. Although I have a background in law. Trading is not. I'm not a professional like many among us. I'm I would say a retail trader. Drifting to becoming a professional. And why options? I. I have a German and a Greek background. I'm sending greetings from Berlin here in Germany. So. But why options? It's not the Greeks, which is something I would refer to, but it has fascinated me. Not only the legal part, but the clearness of this product and the things you can do with it. And I know a lot of you are future traders here at Mentor Q and with. With Paul Doc, we're trying to advertise and trading options not only ODT but also long, longer terms. And I've gravitated to options because you can do so much multiple things. It's not. You don't need a bias.

[00:02:32.29] - Speaker 2
You can stand on both sides simultaneously and let time work for yourself Theta for example. And you can. And that's one of the main things for me. You can still do that also do that with futures. But I prefer to do that options is to in the end trade volatility. This is something I advertise a lot and we will talk about earnings and earnings are volatility because it's one of the main events four times a year where you have a prime time and the market is just looking at that and everything is inflating and deflating. So I will explain some of my strategies later. But I will give over to you, Fabio, maybe to go on with some other introductions of things and we can become more specific later.

[00:03:20.26] - Speaker 1
Yeah, no, thank you so much. And I think we've been very impressed with your work, especially within the community. You've been very active in our options training room. So I think today what we want to do is it's going to be a very big earnings week. We started yesterday with some interesting company. I think we're going to show an example on Ford. But today and tomorrow is really when, when the action kicks in, we're going to see a lot of the tech companies reporting this week. You know, we had Tesla last week, so really interesting things happening. And then we have election next week as well. So it's going to be an interesting couple of weeks and we're going to prepare a lot of live stuff and we're going to update you guys very, very shortly. But I think what we do is maybe then we're going to discord and we show how kind of like you prepare, what kind of data you look for and how you read the data that you use.

[00:04:15.28] - Speaker 2
Yes, yes. Thank you, Fabio. So first things first, you can use MENQ data and everything which is offered there for various things. And I'm very happy that we got a swing model. So as I said, I do sell theta and I do sell volatility which means I try to be as possible as, as, as I can get to market to be market neutral. But if, if someone has followed the trades I put on here, you will see that I do put trades on which have a bias and for some time and I do hatch. But because these are risk defined easy trades because we don't have so much experienced options traders among us, I do share easy to follow trades. And this is something you can, even if you're just a couple of weeks in the game, you can easily follow. And if something, let's say if the trade goes against you and you don't roll or change the setting, you won't lose that much. And things I advertise always is in the beginning. There's nothing like skin in the game. And a lot of people do paper trading which is not bad. But if you risk small amounts, it's okay.

[00:05:28.28] - Speaker 2
And always risk 1 to 2% of your account on these single trades and on specific speculative trades and maybe even less. So how does Manta Q help me? So basically you can prepare for any event and other events will happen which you haven't prepared for. Like if you have seen the market yesterday, there was a lot of, there's a lot of volatility right now. So what I do is basically, yes, I do wait for The Daily Brief. So I can read through that and I read also other sources. But what can you do with Mentor Q? The thing is you can get a very clear and good picture with two things. Two things I always do in the beginning is look at the SPX and, and the QQQS and, and the VIX or maybe the ndx. So just to get a picture where we are right now. So every day trade or every trade starts with a basic day trade in the whole basically complex we are in. And if we go back to what Fabio and his team have been here posting for us, then we know that the market is moving in a certain direction.

[00:06:43.27] - Speaker 2
So I'm trying to grasp the things from today. Give me a second. Yes, we are here. We have the swing trade model. So. So first things first. The gag stacked structure and especially the deck structure. This is something I love to look at because you see the call and put reaction zones and you see the high volatility level and just by the graphics how things have been shown you can get a very fast and clear picture where is the market drifting to. So we would say here, yes, there is risk in the market and risk is priced in. But what we have seen is a gravitation towards higher levels. And if volatility is dropping after elections and nothing happens in the Israeli and Iran conflict more than what has happened, then volatility should drop sharply. So you get a very nice and clear picture. Not to be bullish in any bias, but where the market would be drifting to. This is a very nice thing and here what I like just with one look, this is enough for me. I can look at these things and see what is going on. So I want to get a more clearer picture of the market.

[00:08:00.04] - Speaker 2
I would always go to the multi exploration just to see where we are. And if some people have followed here in the discord, they have seen that I've been selling further out ODT trades inspired by, by someone I would call a mentor. And yes, you don't need to do ODT which are very nice and I do like but if you want to feel, let's say more safe or you're not afraid of the overnight risk if you have and we will look how you can place this trades and where to place this trade. It's very nice to know where is the market drifting. And you can see, yes you can see here that we have some, some movement in the lower put levels but you see it drifting to the higher levels. So one last, two last things and then we. I will get give over again. Back to you. The swing model. And why do I like the swing model? Even if I'm someone who likes to sell both ends of the candle. In the best case, strangle or a straddle, let's say it like that because I want time to work for me and volatility.

[00:09:10.11] - Speaker 2
But these things do risky sometimes and the market always has a bias. Maybe on the long run it will move more up than it will go down. But the swing model is for closer ranges and to give you a very fast picture where you can place a trade. So I want to place a trade. We can look at other companies later where things are easier placed. But you want to place a bullets trader because we see that the swing model is advertising that we have a bullish bias. Right now you would want to go below the lower bands. But what do we see in the end? You see all red candles which indicate that yes, we did have some volatility and yes, we fell down after we touched the. The. The risk trigger which is also factored inside. So you see that the market is not so sure about the momentum. And that's why we see if you have some VIX trades going on and VIX has been low, then you're very happy right now. And last thing and then I will give back over to you. This is something I really, really love, especially as a premium seller for different ETFs and.

[00:10:29.26] - Speaker 2
And especially for the certain stocks which bring some liquidity and other stuff. With one look, I have all these expected move. I love the expected move. The expected move is something I cherish on. But I also get a very clear picture. What are what I think how is GEX structured? How is Dex structured right now? With one look, I don't even need to look at the numbers and how is the money flow coming in and not. And if I want I can look at the level. So if I could pick something of all of these things I would pick the matrix and it gives me all the information I need. So if you are a good reader of the options train, then this thing is something for you. And I will talk about this queue and other things later. But again I would give over to you Fabio, because otherwise it would turn out into a monolog.

[00:11:25.18] - Speaker 1
Yeah. Can I. Can I ask you a question? Like one of the things I will always speak about Jack's gamma levels. It's interesting to me on how you use DAX for your trades. So maybe like yes. And go over like we also have our net decks chart and we also have like Dex information here, matrix would be great to see how you use that. And I just open my screen just to show the matrix a little bit bigger so that people can view it. But yeah, let me know would be interesting.

[00:11:57.17] - Speaker 2
Yes, yes. In the beginning when I got acquainted to this kind of data, I was a bit overwhelmed. And we can take a brief look to Ford and other stuff. Ford was reporting yesterday it dropped. I haven't looked how far it dropped, but I will explain how I set up a trade which has, in the end what we do, we. We live from options traders, especially options traders, live from probability. If you just look at the certain probability your broker will show, you will see 75% or all these other stuff which I put in, let's say one second take here. Tsm, Bear Cold spread. This is a breakout trade. You will see a chance of proper 65% which. What does that mean? Doesn't mean that your chances of winning is 65%. Your chances, mathematically speaking, are that you will make at least one cent. If you take. Put that into perspective, then you know that we're still in a speculative environment, but still we can tariff on these things. And if we have mathematics and levels on our side, we can do great things. Things. So how do I use Dax? Why Dax? What is Dex?

[00:13:16.22] - Speaker 2
Please, Fabio, elaborate more than I could ever do. Dex is basically the Delta hedging of the market makers. What do we know if certain levels are breached? Because the market makers are on the other side, they will need to hedge. And this will either. This will either give a catalyst to. To a downturn or to. To a rise, or in the end they will hedge. And this hedging, maybe in the short term will help hold some levels. So if you want to add something, Fabio, just, just cut in. This is not a monos. Okay, Yes.

[00:13:53.00] - Speaker 1
I don't know exactly. So the. We have. Obviously Delta is a very important Greek for the delta edging activity. And Gamma, it's like the derivative of Delta. So like, we use a lot of the Gamma levels because gamma dictates how fast Delta changes. So it's very relevant in terms of delta hedging. But also delta is very important and delta also can give you some directional bias as well. So we also have net Delta exposure, as you can see here in your screen. In this case, I think you're showing the fourth example. So yeah, would be great to see how you kind of use this chart and how you read it and are you leveraged for your trade.

[00:14:35.10] - Speaker 2
So if we look at this chart and we were just market neutral. Before we didn't look at any charts. Like yes, charts do have the charm but in the end, like most indicators, patterns and other stuff, things are lagging. And in the options chain and in the positioning you can see what the market is pricing in. So this is what we really want. We want things to know where the market will drift because we're not smarter than the market. We want to go and flow with the market but still not be surprised. So how would I read this? If you look at this profile and please correct me here, Fabio, I see that the bias of this whole construct, this whole structure is more leaning towards the put side. So we have a more bearish bias. And I will maybe I, I don't, I'm not sure if I showed it but in the beginning of the week I make a fast and go through through important earnings and put in some stuff and put it into a spreadsheet and we will see that Ford had a negative bias. And statistically, yes, for more than 75% drifts to the negative side in recent five years.

[00:15:49.08] - Speaker 2
If I remember my due diligence correct. So from this Dex chart I see a lot of concentration of negative delta hedging above even this, the spot price. And this means we always have to read it like a mirror. There's the. The market makers are sitting on the other side. So if some levels are breached, the algos will start selling or buying and the market makers will have to hedge which will fuel the move. So that's why in this case for me, if I want to sell premium and I want to sell premium and I will explain that why I want to sell premium here I will try to put a bias if I can't stay totally market neutral for a move, let's say 10, 10 up and 10 down. I will try to put let's say or hedge here at a point where this 10 are in. But I would put more effort to hedge on the lower side because this is the position which will be breached. And why do I want to sell or prefer to sell premium? And so we're drifting a bit to earnings. As you know, we have volatility. I will try to show something.

[00:17:11.11] - Speaker 2
Let's see if I can do that here in my screen. Give me a second.

[00:17:18.13] - Speaker 1
And I think that Dan, I think I want to show also how you can kind of use the swing model. And if we look at the example for here we have our swing model and if we go back to last Thursday we had this is at 10:24, we had kind of like a positive bias still towards Ford. We had the lower band right here. And then if we go Back to the 25th, which is Friday, then we shift to a negative bias. So I think at the end of expiration on Friday, people have been kind of like preparing towards earnings and they kind of shifted. So we see like the shift in the upper band right here. And then if we keep going to the Monday, Monday 1028, we also see like, like a negative bias right here. And if we look now at the price, we're down 7% in per market. Obviously, earnings were yesterday. So as you mentioned. Yes.

[00:18:20.00] - Speaker 2
Oh, a very quick look here, I'm using a, I'm using a paper trade account for this. So I won't do anything, any bad stuff here. So if you look at this, we see here the expected move which we saw in the, in the, in the, in the metrics. And this is nothing of magic here. This is just things. And what do we see? We see here all these blue little things. They are always earnings. And again, we have a dive here. We had a dive here, we had a dive here. But what you see here, and this is the interesting thing, always earnings, you see volatility rising. And this is something you could always. It's not about earnings only, but if volatility is high, then something has happened most of the times. Either we expect a special event like earnings, or let's say something bad has happened. People are hedging. That's why volatility is rising. But if volatility is high and everyone who knows about the bell curves, things drift towards the middle line. This will go down. So prices are high here. And because we have an IV crush in the beginning, we have an IV rush, volatility is going up.

[00:19:36.26] - Speaker 2
So prices will rise. If you buy here, even if the stock doesn't move much, the prices will go up and here they will deflate within hours. So you just make money from this event deflation. So that's why if I know statistically that a stock is moving less than its average move, I want to sell premium. But how do we do that and how do we level. That is the interesting thing because just historic statistics don't help you. So I will switch back to my other screen so we can take a look and look at the other things which we were looking at, which were more interesting having the, the levels we had here in Man WEQ Discord. So I hope everyone is seeing my screen. If not, let me know, please.

[00:20:28.00] - Speaker 1
Yeah, absolutely.

[00:20:30.02] - Speaker 2
Okay, so we saw the DAX and What else do I like about the DAX thing? The thing is that like because we know Gags is that the gamma is a derivative from Delta. I don't want to make it here difficult and make my benders. We right away we see where the resistance it's called and support. I call them reaction zones. So if I want to place a trade and I know that the trade will deflate most probably and I want to be a seller of premium in this kind of case because historically I know for it moves, let's say April up and down 8% and I can place my. My bats that it will stay in this range. So sell around 9 to 10%. Then I will double check that with these levels. Because what happens at these levels? These levels can and do act as a support and resistance. What they are named here, but also they do work as a catalyst. So sometimes if these levels are breached, we know from the Dex chart, if we have a flush down and this put support here is breached, then yes, there's a hedging and sometimes they.

[00:21:45.22] - Speaker 2
They will lift it, but sometimes it's not enough. The Algos are really selling. So the market is putting a lot of pressure in there. So like in physics, if you put weight on something it goes down. So from that I know that I have to specifically take care of this. So where would I put my. Where would I put my break even? I would put my break even if possible around here or maybe a bit lower. And if not I will look at some levels and I will look not only at this is because this is one thing we also have to say this is cumulative. This is for all the expirations, the resistance and support. I will look specifically and we will do that with the GEX chart and the matrix at what happens on this Friday and what is the expected move? So I will try to stay within the expected move and use the matrix and use the other stuff and use the swing model to get a bias. This is the nice thing about this whole thing. So we can move on to these things. But please cut in Fabio. And if everyone likes we can take some levels here, swing levels and Gags levels and put them on the trading view chart.

[00:22:58.28] - Speaker 2
But I think for the beginning it's good just to use the bot. Don't lean too much on the charts. This is something for your confluence, for your active trading. But if you put on these trades, do use the things the bot is offering because everything is there. You don't need anything else.

[00:23:16.29] - Speaker 1
Yeah, and I think that's great. And then maybe like you also mentioned obviously the skew chart that you use and obviously swing trading. So maybe like if you want to show us or so how you use those would be great.

[00:23:31.04] - Speaker 2
Okay, I will do this in a second. I would just, I would just go here to, to this here. If we look at this, you see the positioning here we have for Friday and you see yes, you see some bullish bias but you see also a lot of heavy leaning here towards the lower levels. And if we go back and look at this Ford, what do we see on the first thing? You just need to look. You see a negative change in the one day gags and Dax which indicates please head to the lower side. Yes, you could. The easiest thing was if you want to take a 5050 flip, do a bullish trade because most probably we're gonna end up there. So what did I do? I looked at the call resistance here at 12 and 10 and I placed my break evens of an iron condor below them. But I skewed to the lower side. So that's the good thing. If something happens, I have, I'm more relaxed on the lower side. This is what at least I learned from the professionals. So as Fabio advised, now we're going to take a look at the 20 day and 5 day swing model.

[00:24:47.01] - Speaker 2
So what do we see? The swing model was right. Even the long term swing model we have an upper band which means yes, we're gonna have a bearish bias here. So wonderful. So either you trade, trade it with a barrel spread for example and you harvest premium and in the end this trade would have gone well for you. And the even 20 day swing model was showing you that. So this is a nice thing. And if you placed your bet around 1350, you would have made some decent money without risking too much. What I you can go back here in time and look how things have evolved. But I always double check and for these earnings trades I love to take the 5Amodel because we are closer to the actual price. But still we know there's a lot of resistance here. There's a lot of things happening and ca and all the levels are speaking of we were gonna go down. As I said, earnings are an event where a lot of things can happen and a lot of things can go wrong. Let's say the wrong words along interpretation and the Algos will sell.

[00:26:00.11] - Speaker 2
As you most of you know, it's not us humans anymore who take most of the decisions. Everything is automatic. So you have to be prepared. That's why I like to do skewed Skewed trading setups. And that's why we can take a look at SKU later because a lot of you might have used sku, but SKU is a great thing which helps you level things and monthly queue makes it very easy for you to use these things. And this is a thing for earnings, but you can use it for any other trade you set up. So I don't know, Fabio, we can take a dive into this kind of stuff or go on and look at coming earning earnings or explain these things better. I don't know if there are any questions up till now.

[00:26:46.13] - Speaker 1
Yeah, let's see if we have some questions and then yeah, maybe we can go and look at some earnings given that there's going to be some really big companies reporting. And then we go back and look at this queue as well if there's questions.

[00:26:59.27] - Speaker 2
Yes. So I will try to stop my sharing so I can read. I don't see any questions here in the chat, so that's okay, no worries. Things are complex, but you can shoot questions even later. So I think, Fabio, we can switch over to the next to the next presentation.

[00:27:32.02] - Speaker 1
Sure, I. Will you share your screen or you want me to open it?

[00:27:35.22] - Speaker 2
I, I, I will easily, gladly share my screen and I have. Yes, let me share my screen. Wait a minute. What happened here? Oops.

[00:27:49.08] - Speaker 1
And in the meantime, for those who haven't look at dance, you can find all the, all of his posts right here in the option trading room. So Dan is right here. So you can find him directly into this.

[00:28:07.10] - Speaker 2
Yes, I've put up a lot of things. I have been a bit, I've traded shown a bit less lately due to family demand. So let's go over to some things. Let me open the spreadsheet. I'm a fan of having things automated, but sometimes the spreadsheet can make your life very, very easy. So let me open this one. All right. Things are slow, guys. I'm very sorry. I'm getting acquainted to everything, so hopefully everyone is seeing a spreadsheet. Fabio, can you see the spreadsheet?

[00:28:50.06] - Speaker 1
Yeah, maybe. I don't know if you want to make it, but maybe zoom in in the spreadsheet.

[00:28:54.05] - Speaker 2
Yes, I will zoom into the spreadsheet and we can go here. Okay, let me make it even a big bigger. So we see here. What did I do? I took the most important companies, the, the date, the estimates, earning numbers and as we talked about investor sentiment and I, I got this from various sources, but especially from ntq. What is the levels telling me? So what is the expectation, what is the expected move? What are the other things? I've come up with something so we have a nice investor sentiment and Ford is not here among them. But as we can see all these big companies they, they do look good. There's a bearish bias a bit on Microsoft and on Apple. I've put some other things here later and we're going to look at the decks to see how things are. What I like to look is the short interest change. So short interest change indicates that we might have a bearish bias and even if we expect a beating of what the market is expecting, you know sometimes companies beat what the analysts have predicted and still the stock goes down. And you, you don't understand why your bullish bias trade is going up in flames.

[00:30:19.19] - Speaker 2
So this is a thing why it's good to know where the market has placed the bets and you can skew in order. So what I've liked also is to know how the stock is moving, how the possible momentum earning is and where the 200 moving averages. I'm not a big TA guy I do use some indicators just for entry and exit sometimes but some of the basic thing is like the 200 day moving average like the 20 day EMA there are some things which are resilient and even the algos look at and another thing we know it from you have seen it on the Mentor Q webpage there is a thing which is called unusual options activity and people who follow my trades. I do love unusual options activity. Not all trades work out but you can do a lot so take a peek and if you want we can also take a peek in the end of this time or in another webinar at unusual substance activity and how to make short term trades using the swing model and other stuff. So this thing helps see at least it helps me with a fast look before I put on a trade did the market change something did they put a big bad this big bets here?

[00:31:37.14] - Speaker 2
So I like to know where, where the bets are and to see if there is a bullish or bearish bias. So we'll make this a bit smaller just so we have it here. I think we can start with Amazon which has basically a bullish bias and we have some it's above its moving average very nicely and how I would, how, how I will. How I would look at this trade if I had to put on a trade and how mentally Q can help me. This is something I think we should do now. So let me, let me jump back to the. The discord and the bot. So I hope everyone is seeing the bot now. Yep. Okay. So the thing is what I like to do is first of all take a look at at the matrix. So just by looking at this very small metrics. Metrics. So we have made it a bigger matrix. We see it looks green. Surprisingly there is a bearish, a bullish bias here. So wonderful. We know that the market is pricing in not only a beat but this. The beat will be significant in a way that Amazon should move in a positive way.

[00:33:07.02] - Speaker 2
So next thing as I told you is I would look here we have the 195 call reaction zone and the 180 reaction zone. So if you would like. And we have a nine nine dollar move for the expected move. If you want to have a bullish trade here, you could set your trade below the 180. But before doing this I would make my life easy. We have couple of tools here. I would take the swing model enter let's say here for Amazon and voila. What do we see? The swing model is smart. It has placed us the lower band below the 170. The 180 we saw. So you can still make money putting your bed there. What I would do is if I go back, even if we have a bullish bias I would. Let's say I would put on a trade which is on both candle sides. So I would put a trade and either I would put. If we look at an iron condor. An iron condor is. Some say it's just. It's just two verticals put together. I like to think of it as a. As a short strangle with wings because I love short strangles.

[00:34:32.20] - Speaker 2
But if I had to put one up I would place one here at 180 or below because the. The five day swing model was here. I would try to go far out from this because I believe we gonna have a break of the 200 most probably. I would like for this trade not to go up in flames because it broke up too much on. On the upper side. But two things will help would help us in a trade like this. I told you Ivy Crush, we get a good premium. Now even if we breach that and we stay within our break even we just make money if on Friday we stay within our range because the things will just deflate. And that's the good thing. And here the matrix can help us. So I would just put a bet here most probably to be a bit non directional skewed to the upper side in order just to be a bit more safer. If the market is wrong if my data is wrong. No one is right all the time. So if we go down a bit, I still have a safety net on the upper side.

[00:35:41.28] - Speaker 2
But you don't need to do that because they're risk defined traits.

[00:35:45.28] - Speaker 1
And then obviously this is obviously for educational purposes.

[00:35:49.23] - Speaker 2
Yes, it's.

[00:35:50.20] - Speaker 1
No, yes, it's just an example on how you would.

[00:35:54.04] - Speaker 2
Just examples. Yes, exactly. Like everything we do in the discords here, everything we share is mainly for educational reasons. So you can learn how to level these trades. I don't advertise you to take an Amazon trade most probably because, and I will say this very open. I see here a lot of money flowing into the upper side, but if I look at my data, I don't see the edge that Amazon has stayed within a range of the average move enough or broken the average range. So this would be a trade most probably I wouldn't take. This is my thing. So that's why I'm just trying to see how you can use this for earnings, but use it for your everyday trade because all the data is here within a short reach. So maybe one last thing we can do on this two things is to look at the, the decks structure and what do we see? The things we saw in the swing model, the things things we saw in let's say in the matrix. And another thing is you see here the put reaction zone even lower. So if you take this into consideration, maybe go a bit lower even than the swing model if you set things up on the long run.

[00:37:12.09] - Speaker 2
And you can see we have a lot of positive decks here, overall expiration which is giving us confidence in this kind of setups. And one last thing, something we haven't looked at a lot is the skew. And I like to for this kind of stuff look at the one month but all the other ones are perfectly well. So we see here, and this is something. Yes, it gives us a bit of caution. I talked a lot about bullish stuff and other stuff, but the monthly skew, we see a red candle. So if I see something like that and I want confluence with all the data and this is the lovely thing which Fabio and his team have put together for us all, is that we can look at the first. I will always go on the higher, see what happens on the higher skew. Yes, I see a candle here too and I see a drop here. So with that I will look at the ODT SKU so I get a clearer picture of what is happening. So the picture here is nearly the same which. But Risk reversal is moving a bit. So this, if we zoom out again and look at the things we see and the SKU has signaled to us, yes, it's perfectly fine to have a bullish bias, but yes, do be careful because markets tend to go in both directions.

[00:38:44.17] - Speaker 2
So you have seen what we can do with these tools and it works like magic if you know how to utilize them and put them into your daily routine.

[00:38:55.19] - Speaker 1
Great, thank you, Dan. Let's open it up with some questions now and see if we have anything from, from the audience. We have, I don't know if you want to talk about Apple as well. Maybe we can look at.

[00:39:24.29] - Speaker 2
Yes, let me take a look. Okay. The casual way. Okay. We couldn't look at Apple. Yes, can sue this philosophy with an example of Apple. Okay. We forget, I don't want to talk about fundamental technical stuff and other stuff. So we just will do the same drill as we do here. Maybe Fabio, if we still have time in the end we can, we can look at that. But maybe here for Joel Rosenstock, Tesla, two things, the decks and GX level are nothing. They're not telling us that things will stay in the expected move. The expected move is just telling us, let's look at s spiders and spx that in 68 of the time we will stay in range. For Tesla, it might be a bit lower. And if you had placed a short, short trade like on Ford, like you're selling premium. This is what I mean with sword, yes, you would have been exposed with Tesla and other people are cheering from the Wall street and community taking naked calls, buying naked calls. But that's why these levels are just a guideline for earnings to know where things might happen, might not happen. If you want a bigger picture, you need to look what's happening in the chain.

[00:40:54.07] - Speaker 2
And yes, we saw a mispricement of the Tesla options, so we knew something big was happening. It was too cheap not to move and these levels were helping us, building up a bias and putting on even a non directional long trade in this, this I, I, I sadly had not sadly, but I, I had some emergency family situation so I couldn't post about that. But I promise in the long run we will do that. So you know these levels. I do do work, but they just put on an eyesight. They're no magic, it's just the market. So this, you have to know how to read them so it's not the levels fold. If something happened wrong with Tesla and if something goes on, we just can work here. And yes, I have A lot of friends which are very skilled in trading and I showed them all this, these levels and they're very happy about but earnings as you said, special prime time event and these levels give us an extra site which we don't have. That's why please take them with a grain of salt. It's an extra site. It's not magic. It's different from day trading or putting on a normal options trade.

[00:42:11.21] - Speaker 2
This is. I want something to stick with you. So let's look at Apple. I will try to share my screen again and. Okay, let me share the discord. So I hope everyone is on board for Apple. What do we do with our, one of our favorite companies here? So again it's very nice green picture but if we remember a bit from Amazon, we see a bit less change in the positive dax. We see a good change in the, in the, in the, in the, in the gags kind of section but it looks green. This doesn't mean that Apple will a beat the, the, the, the, the the estimates plus the stock will move in the direction we want. So this is just that the market has priced in the stock to have a slight bullish, bullish bias. Again, how would I, how would, how would I look at it? I would take a look at the levels and see where I could place, where I could place a trade. If I want to place a trade here. I would especially take a careful look at the expected move, not to forget this one because the expected move is something the market takes always into consideration.

[00:43:31.14] - Speaker 2
The next thing is we would take a look at the swing model which most probably should have some bias, some bias to, to the upper side. Let's see. It's, it's still, still gathering the data and there it is. Yes. What do we see? We see the lower band here. Okay. And we see that even though we have a bullish bias and that's why again a bit of cautionness here. We see yes, the lower band is close and we could push up but we are close to the lower band. So this is something you should, if you put up on a trade and you want to sell premium, then you should take this as, let's say as a, as a caution candle that even though we have a lower band and in most cases like we saw here in the last 31, 37 days, it worked out fine. But earnings are earnings. You should be cautious because we are close to the lower band and what happens close to reaction levels on the upper and the lower side etching in the DAX environment. So let's take a short look at the DAX and as a perspective from a user.

[00:44:46.25] - Speaker 2
In the beginning I was just because I was doing a lot of stuff with DOG and we do a lot of trades together. I was focusing on the gamma because it was talking about gamma explaining for me the Dex level. They helped me a lot and I was wasn't giving them the. The attention they needed to. So you see again here we have. We have about a positive DAX environment which is a nice thing and again we see some caution and again we see overall expiration, some lower puts put and call reaction levels. So again if you want to do something skew properly and look a bit at statistics. If you don't have statistics on that, look up the last two years what happened with Apple did it beat the implied move or not? Because the expected move is something which is happy Happily here from from Mentor Q is always shown in the matrix. It's something which has been shown to work on the long run because expected move is good old fashioned price finding someone is buying, someone is selling. And this is something which is very clear and something very nice to start looking at these things too and puzzle your thing, your.

[00:46:01.12] - Speaker 2
Your trade together and if you want to do it, do the trade. If not step away hesitant about the trade. The best thing is not to do the trade. This is. That's why we can only explain things here. So two last things. I would look at the net net of multi expiration to get a picture what will happen next. So we see again we have more bullish bias but differently from Amazon and more differently from Ford which was more bearish. We see that here the market is also pricing in a downward move in both sides. So again skew properly. And as of talking of skew again the first. The first move. So yes you see here the green candle which is very nice but if you look at it has stayed in his in its range. And the thing is it can go both sides again. So again this queue, a look at this queue helps us to see where we are and maybe where to look at and see the confluence among all those levels. So yes we can also look at things on trading view if people want that or we can answer more questions.

[00:47:30.06] - Speaker 2
I will just end that.

[00:47:31.15] - Speaker 1
So I think we have more question. Let's put on this one from Drew. I don't know if you can read it then a very difficult part is to figure out the DTE for the trades. So how do you come up with the expirations that you look for and what is your process there yes, as.

[00:47:52.11] - Speaker 2
I told you, I try to sell volatility and I try to sell feta. And what you are implying most probably is you want to have theta either on your side or if you are buying, this works against you. So I won't advertise the. The results of a certain brokerage firm. But for myself I've seen longer durations. Yes, Theta works slower. And always when we talk about the DTE it's the. @ the money options which are priced in and always referred to. But I would try to go not as far out as possible, but get something. I try to try to close my trades around 20 days to the expiration. Because then we know Gamma Gamma is working is it's is more important. That's it like that. We talked about a lot of Gamma levels here. But we know that yes Theta is working faster. But the each swing is getting more rapidly. And that's the thing with options. And the dangerous thing you can even in the end if. If you have a trade, the Trade is running 45 days and in the end it stays above your short strike. If you sell premium, let's say we have a bear call spread.

[00:49:18.17] - Speaker 2
So you sell. You sell a lower call and have a buy a longer call. So you. Even if you're right and you stay the. The. The. The stock stays below that. Then the problem is in the end that if your short strike is breached, you might get executed exercised. And that's happened to me too. Even if it's a risk defined trade. So I like to have time, I like to take the break even into consideration. And the thing is about. If you sell premium and you sell naked premium, the good thing is that you can adjust but you have a higher risk. If you sell verticals like the back hole spreads or you have butterflies or other stuff, you always need to adjust more legs. But this is possible. You go out in time. And I do take a look at these things. Either if I reach about 20 days because then gamma kicks in more or I try to. If my break even is coming close, I start to pay attention. Because if your short strike is breached, you're not exercised right away. You still have time, maybe it swings back. And that's where I get great help from the monthly Q levels.

[00:50:35.25] - Speaker 2
I will take a look at the five day swing model. Has something shifted rapidly. If I have a bullish trade on. So if my long term bias is still bullish, but the trade is working against me, then I might close the trade or take it out of time. If my bias and my Direction is still right. So that's why if you ask me, for premium sellers, around 50 days, 60 days is something which has worked well. Even longer ones if you have the right swing. If you buy options, if you buy options, then time is working against you. Then you want volatility on your side. So you want low volatility. But if you have few days to go. That's why institutions and we don't need to wanna, we don't wanna be smarter than the smart money. Those so called smart money, they normally buy three months out of of of of options and further out sometimes you see one or two years because data doesn't affect them that much. I hope this answers your question. But if you have specific questions we can go on a you on my trades, how I do.

[00:51:44.15] - Speaker 1
It. I think Dan. So we are a couple of minutes from the open so maybe let's see if we have any more questions. But I think, yeah, I think this was very, very useful. And we're gonna do more of these with Dan as well. So please send us your feedbacks on things that you want to cover. But just as, as a thing here. If you wanna join our Discord and join our community, just create a free account there. You will also get access to a lot of the guides and tutorials that we spoke about today. But let's see. Yeah, I think Drew says thank you. Perfect. Thank you, Drew. Yeah. So all of these models also can be found within our membership. So you can create an account. You can try it for seven days if you want to. And we're gonna cover earnings. We're gonna also have another live on Friday to look at earnings and the results. So we're gonna be there live on Friday as well. Great, great feedback. Thank you. All right, thank you.

[00:52:53.11] - Speaker 2
Dan. You're.

[00:52:54.24] - Speaker 1
Welcome. As. As we saw you can find if you want to look at dance and the things he does. If we go back one second, let me go back to Discord. If you come back to our Discord, we have our options trading room right here and here you will see what Doc and Dan post throughout the day. So you can access that. Yeah, see, see what, what it does there. So yeah, really thank you Dan. Thank you for your time. This was very helpful and yeah, see you back in the room and thank you guys for joining. And we're going to have some exciting things coming up this week and next. So stay tuned and see you guys on the session on.

[00:53:40.07] - Speaker 2
Friday. Okay guys, see you on the other side. Market is open. Good luck everyone and use the levels right see you, Fabio. Thank you very much. And thank you so much. Bye. Bye. Enjoy your.