Using Net GEX and DEX to Trade Options

[00:00:03.16] - Speaker 1
Good morning, everyone. Happy new year. Happy 2025. Welcome, Dan. Glad to have you.

[00:00:09.18] - Speaker 2
Welcome. Hello, Fabio. Hello, everyone. Happy to be back and yeah, a great year to everyone with a lot of gains and yes, a lot of learning and yeah, good results.

[00:00:21.25] - Speaker 1
We're very excited and this is our first live of 2025. Very excited to have you, Dan, because I love the way you simplify really complex stuff. And today we're going to talk about option strategy. We're going to go into more of the vertical spread stuff. We're going to talk about DAX, Delta, NetDex and so on. We're going to show you some tools. But before always, let's put the disclaimer for a few seconds. All right, so welcome everyone. As always, please send us a comment or any questions. We're going to do a live Q A at the end as well if we have any, any questions from the audience. But yeah, Dan, maybe like a short introduction about yourself, about your trading kind of style, trading strategy and then we go into the presentation.

[00:01:21.25] - Speaker 2
Yes, for everyone who hasn't attended one of the lives or hasn't seen me trading, my name is Dan. I've been a while at memphiq and at the options game longer and in the stock market and equities market far longer. About my style, I mainly trade theta and volatility. We'll dive into that. And yes, since finding out about how the open interest is poured into gags and especially Dax was which is one of my favorite things and the expected move, I have advanced a lot in my trading and been doing a lot of stuff with, with Doc, you know, and from our discord and yeah, we run this options, this options channel with a lot of other traders. And yeah, my style is basically set up things with high probability. Let the mathematics work, don't engage too much. And that's the thing we want to talk today. So start with very basic so we can advance them this year with more advanced strategies. But to give you certain advice about how to use the Mentor Q's tools better for your strategy, how you can implement that and if you understand the strategies and you see all the things you have at hand at Mentor Q and then you can see and do even far better trades than maybe Dark and I are doing because we all only try our best.

[00:02:53.26] - Speaker 1
Absolutely awesome. Yeah, I don't know, Dan, if you want to maybe share, we're going to share your screen first and then yes.

[00:03:05.29] - Speaker 2
I'm going to share my screen now and give me one second, I'm opening one thing Here. Yes, I have a very small presentation. I'm not a fan of presentations. Do teaching next to all the other stuff. I got a legal background. So yes, we like to talk. But yeah, I have some things open here for you. Let me. We were. It was working before and it will work again. My mouse was slow. Thank you, Apple. I hope everyone can see my screen. Can you confirm, Fabio?

[00:03:41.23] - Speaker 1
Yeah, if you just want to take away the stream yard. Sorry, no, because we can see everything. So I think.

[00:03:52.29] - Speaker 2
Okay. Okay.

[00:03:55.19] - Speaker 1
Yeah.

[00:03:56.06] - Speaker 2
So yeah, let's. Let's dig in. The first thing, I hope everyone can see my Q dashboard, which is also had a happy new year, rebranded, refreshed and comes in new shape. And besides from changing the color, I think this also. You can do that on your own. But I like the black here. I would like to start from here and I think this is a good entry point. And Fabio will definitely give me questions. You can shoot questions at me. I have a very small presentation at some things we can look at. And we will look at two things today. I got the data for that. So the first thing I do is yes, I have my own screeners from other things from days far beyond man three Q, which I correlate with Mentor Q to give better trades. I share actionable trades every day and get a lot of questions about them. But I always say this is just the tip of the iceberg. We need confluence in everything. Before we set up a trade, we should really sit down and I said to Fabio before we started here that today I just need a phone to trade, which is good, but I do my due diligence, write my things down.

[00:05:14.17] - Speaker 2
I have my documentation. So it's good that you just don't take a trade because someone does it. You should really take a deep dive into it. Is the width good for me or not? Like Paul does 20 wide spread on SBX. Me too. Other people would prefer the 5 or 10. So what does that do to your spread? Is the probability better or not? This is the things we will look today. What we look specific. We won't look at SPX and the other stuff. This is the domain of Paul and other people. I like that too. But I think a lot of stuff has been shared there. So the first thing I will do in the morning is, besides some other things, I look in volatility and SKU is to open here the month and queue dashboard. And yes, you get greeted. You can ask things here, but I like to just keep it old style. I will say it like that. And the Things I'm used to. And take a look at the put screeners, call resistance screeners and look for ideas. And if I look at that, we have Starbucks for example which have a spot price like with barely 8, 8 pennies above the put support.

[00:06:26.09] - Speaker 2
So yeah, we can take a look later at the pre market. What happened? Did a dive, did it jump up from there? We can look at Netflix which is just $1. I remember it buying for I don't know, $40 or less years back and or even less. So this thing, this is a very nice thing giving you. Where, where are we? We might get a bounce here. We already see the call resistance. So this is very nice. You see, this is where something might happen. We have the 5 and 20 day swing model. We will look, take a look at that. We have our put support for the for every day. But as we will progress today you will see I like a bit longer dated spreads for the reason that gamma doesn't kick in that fast and then you have more control, especially over your short leg. So this is something to just give me first ideas and things. I will take a deep dive in later. So for today I just picked Starbucks and Netflix. This is something we could trade. And another reason is look at the market capitalization of these ones.

[00:07:41.29] - Speaker 2
These are huge companies and these are highly liquid options. And if it comes to liquidity, this is liquidity's king. I might prefer monthly options from weekly options because you have more liquidity there. But something you should always keep in mind, you buy a liquid option and sell a liquid option or set up a spread. The most important thing is that, is that the moment you set that up, you pay a difference between bid and ask. And this is something you. This is already. If you get a premium, this is something which you have to take off the premium or if you pay a debit, this is something you have to add to your debit. So if you have high liquidity, this is good for your trade because if something goes wrong or you want to roll or you want to change your trade and you find yourself out of liquidity and then it's really hard, you have to keep on to some trades you don't want to. So that would be the start. And I will be happy to take questions because this shouldn't be a monolog only today.

[00:08:42.07] - Speaker 1
Yeah, absolutely. And yeah, please send over. We don't have any so far, Dan. So yeah, don't worry on the screen once we get them.

[00:08:54.06] - Speaker 2
Yes, wonderful. So what are we looking today? We're looking at vertical Spreads, just basic things. I will open a presentation soon. We will look at Gamma and Dax. And we will take a dive in decks when we set up something. But I promise Travio that we will do a certain, certain here, live for decks. Because this is maybe one of my two or three most important, important indicators. Before taking a bias trade, you listen to the word bias. I don't take a bias trade. I will still look at dax. I'll just trade the expected move or something around it. And I don't care where the stock goes, just if it stays in range. But today, spreads are always with a bias. If you don't set them up on two sides for a condor or something else. And we will take a very small look at the hedge ratio. A lot of people might know what that is. But not only the width of the spread. So $5, $10, it's how good is the short leg protected by the long leg and vice versa. But we will focus on the credit spreads. And yeah, let's take a dive in there.

[00:10:08.23] - Speaker 2
This shouldn't be something too academic. It's super easily. I've kept it very easy. So we will go very fast through that. You see only 11 pages. If you come to one of my law lectures. You will find yourself with 300 pages. But it's necessary. So the first thing is, which I want to emphasize for everyone, trading options. Or which are new to options. Is that you should always think that you make yourself available to the market. Yes, you can go on in a direction. But you always should think the reward comes from the risk. So the higher the risk, the higher the reward. So I won't take a deep dive in the money, at the money, out of the money. But these are terms, I guess everyone knows. But if you take a trade close to add the money. And let's say you take a bullish trade and you go at the money. Yes, you have a. You have a very high risk reward. High. Which means your reward is high. But your risk is also high. So that's why we provide your levels. That's why the swing model, which we'll take a look later.

[00:11:26.01] - Speaker 2
Shows levels which are far away from the money. Yes, maybe the risk reward is less. But your probability of a winning trade is higher. So what do we want in the end? We want a lot of mathematical, statistical trades. Which, if you put the numbers down before you trade, should give you an advantage. So if you lose 300 bucks on two trades. Which you lose out of 10, but you make 400 or 350 statistically. From the others, then you're still going to be a winner on the long run. And this is the thing, it's a marathon. It's not speedy trading. So yes, for speedy trading you can buy buy a naked call or a naked put, which is perfectly fine. This is just not my style. I know a lot of good people who can do that. But I prefer to either sell naked premium or that are something which we will dive in today. So what do we have? We have debit spreads. A debit is when you pay money to the market maker to set you up. This means in the end that you want and we will and I will emphasize when it's a good time to take a debit, when it's a good time to take a credit.

[00:12:36.11] - Speaker 2
When you have a debit, in the end you pay. This is what you should remember. And if you have a credit, you receive money. Most people would prefer to get money in a credit spread because they already. It's a psychological advantage and there's a lot of statistics around that. But credit spread and the debit spread don't work well in every environment of volatility. This is something we will also look to probability of profit. Yes, I know a lot of people who will trade with low probability of profit but high risk reward. And this can also work. I prefer a good probability around 70%. 50 to 70 I wrote down here. But 70% is always good. I just use these things as an example. Basically I have thinkorswim but I also trade mainly because I'm in Europe on interactive brokers. So you use your own platform. There are a lot of good tools to do and look at these things. One thing just to take a look at is it's which is different from naked long options and naked short options. Is that what you risk? The ratio should be 1 to 2, 1 to 3, sometimes 1 to 4.

[00:14:02.21] - Speaker 2
You will see a lot of my trades are 1, 2, 3, 1 to 4. But these are highly, highly probability traits. And these are trades which like work out in 90 of the time. And where I see from the positioning in DAX and in gags on the long run or the market is in a in a moment I'm taking the trade that even if something unexpected happens, I can adjust this trade and make it a winner. I will talk about the trade which in the end looked like a loser very fast because I forgot something which always happens to someone and in the end paid for some nice drinks. But let's take a look at this implied volatility. I prefer IV rank Sometimes, but most of the times I prefer IV percentile, but a lot of people use implied and the, the ivr. So that's why I kept it here. I won't take a deep dive why I prefer the other one. But the thing is like if you have a credit spread, what do you want? You want volatility to be high, so you get a lot of credit, a lot of money. But as we said and stated in the beginning, risk reward, if volatility is high, something is about to happen.

[00:15:21.27] - Speaker 2
Might be earnings coming up. Is it smart to sell close to earnings if you have a bias and you think it will happen and you have the position on your marketing side, might be. But sometimes of the times, if you sell credit and the volatility even goes up, then the premium will go higher and you will have difficulties getting out of the trade. So that's the thing. You should always understand why the IV rank or the IV percentile, which I prefer is high. And that in the end why you receive the premium you got. If it's low, good for a debit. Why? Because if it's lower than the historical volatility there in every, every broker's account or it's. You can get these things for free. You can see what the historic volatility was. The thing is that if you pay for something, take the idea of a naked call. Buy a naked call, which is, let's say, out of the money. Normally people buy at this 0.70 delta in the money call. But let's say you stay out of money because you believe Tesla will bounce back. It jumps so high, will bounce back. So is it good that volatility would rise?

[00:16:40.22] - Speaker 2
Yes, because it will inflate this option price. And with you, without doing anything, not just the, the, the. The premium is going high because the stock is moving. It's also going high because volatility is inflating. So everyone who has traded around earnings or earning taken earnings trades, you will see how things have light it up. I don't know, Papio. If there are questions, I will make it brief and fast so we can deep dive into some proper action.

[00:17:13.29] - Speaker 1
Yeah, no questions so far.

[00:17:16.12] - Speaker 2
Okay. Yes. So another thing is I want to really, really stress know your breakeven points. Why is that? Let's forget the spreads for a moment. Just take the naked one. It's, it's the purest form. Let's say you sell a put in the end. This has unlimited. There's an unlimited loss. So in the end, break even point is really easy. Easy Calculated also for a debit spread. You will see how easily is calculated for a credit also. But if you take another. If you buy a long call, let's say again on Tesla, let's say Tesla is at 400 and 410 is the call you're buying so out of the money. So when do you make money? When do you break even? If you paid let's say 20 bucks the moment you go to 420. That's the thing. So this is the thing, you should always know your break even because when you break even point is reached and beyond that you are in loss. So that's the thing, you should, you should know that. So sometimes and we will see that with the levels it's very helpful to know if you set your break even point close to important levels.

[00:18:37.22] - Speaker 2
Why is that? So in the end, normally let's say this, we, I showed you to. We can go back here for a second look at the Starbucks and look at Netflix. You set your, if you set your price, your, your break even point here around this put support. Let's say we take a very, very short trade with a five day swing model for five days and we set it here. The statistics are there that in the end we get some good premium because we are not that far from at the money. Plus the other thing is because we're basically at the money and the other thing is like that what happens here is that most probably gonna swing back from here because this is a major reaction level here. It's called support level. So what will happen? We get good premium and probably we're gonna jump up. So want to be safe. And this is what the swing model does. We will take a look at that soon. We can do it now. Basically that's a good thing. For everyone who hasn't used the swing model we will see something which is very nice. We see a lower band bullish trade.

[00:19:50.17] - Speaker 2
Wow. Isn't that incredible? This is great. So why is this why this is great? We're close to at the money at the put support which is. Which shows that the stock has taken a small dive as we can see here. Yes, it will go up. But if you sell here or put your break even point here, then you're really, really, really most probably gonna win this trade with a high probability. And your risk reward is maybe not that high. But the screen model has made it very easy for you to find a proper trade. You want to be a bit more aggressive. Yes, you can put it right here or elite, very close to this one. And in the worst case, most probably it will bounce back from this lower band and in the end your loss won't be that big. But this is something you should keep in mind. So yeah, this is something which is, which I always can stress, know how much you can lose, know how much you can make. Because I see a lot of people, let's say in the SBX section that will have a, let's say 1k 100k account and they will trade 20 wide SPX spreads and they will trade like 20 of them.

[00:21:05.13] - Speaker 2
Yes, you have margin, you have everything. But not the nicest thing can happen in a ferocious day. So a lot of people, yes, they might be getting problems with that. So always know how much you're going to trade. So I would suggest, I haven't put this in here. You take a vertical which has already, that max loss is planned in. If you have a five dollar spread, five dollars and you can lose maximum 500 and you have made 150 on that. This is what the premium is giving you. And in the end, subtracting the long, the long side for which is your security, then how much is your max risk? 350. So this is already the safety net you have put in. But you don't want to lose 350, you want to keep your 150. So you will set it up accordingly. So for a debit spread, this is something which has really helped. I won't take a deep dive into the deltas and thetas and everything, but just for you to have heard these things, this is something which has worked for me nicely. Keep it in between here, the, the short leg and for the debit spreads somewhere here, the long lag.

[00:22:22.25] - Speaker 2
This is something which comes from my short strangle trading. I love to trade short strangles because you can do a lot of stuff and you can really make awesome things, but you should be aware of the risk. So an important thing is theta. It's the Greek which tells us that the time and clock is ticking. So if you have a credit spread, so if you sold, if you sold the vertical in the end and we got a premium, then time is on your side. For a debit spread buyer, time is against him because that's the thing. As time moves, rushes on, you have problems. That's the thing. So keep these things in mind. So in the end, capital efficiency is something you can always take a look at, especially if you trade naked options. We're going to talk about verticals today, but how do you, how do you calculate this? Yes, Return on margin or return on your capital efficiency. So these are some metrics which are not bad to keep in mind. So last two things and then we can jump into the other things. DAX and gags. So a lot of people know the gamma levels.

[00:23:43.00] - Speaker 2
So before I show a lot of stuff here, this is what you see are here gamma levels. They derive gamma derives from Delta. But we won't take a deep dive into that. This is something you can take a look in here and you see all these are gamma levels. So there's a high concentration of open interest there which can act as support or resistance. So let me get back to the presentation. The dax. What is DAX Dex Methodism, Markets, Net Delta. This is how I put it down. So I trade DAX a lot because it shows where the market makers have positioned themselves and mindful makes it easy. It gives us some very nice statistics. So where you and the nice very plain look at it. So you always have in your mind are we are in a more bullish or in a more bearish environment if you want to go on a buyer side. And what happens if some major levels are breached? Either the market makers, because they are that long and that short, they will have to do something about that because they have to clear the books. So that's why it's always good to know where the market makers are.

[00:25:05.03] - Speaker 2
And I want to take a deep dive into that for, for you it's like. And just to have this in mind, I can share this later or Fabio can share this later. So you can just take a look at it. Oh, I just want to emphasize for you, before you just set up a trade, you can just use the, the, the five day swing model if you want to go longer or do something more complex. This is something to look at. Where are the levels which are important to us? Do they align with a strike price and the expected move? I will talk about the expected move soon and so on. The other thing is which we use this gags, which is where the net gamma exposure is and for us what is favorable. And these are things I want you to remember. High positive gags. If we are in a positive GAGS environment, we have low volatility. So yes, this can favor credit spreads. On the other side, if we have volatility, this can favor a debit spread. So take a look at these things. We have a lot of things that Mentor Q Academy you can use to understand these tools, what MentorQ provides and then implement it when you want to trade something here.

[00:26:23.25] - Speaker 2
And the last thing I would like to, to talk about and we going to look at some other, some other spreadsheet. Very fast is the hedge ratio. So what is a vertical? A vertical, let's say take a credit spread. Is there always two options? We look at a credit, you're going to sell premium, which is closer to at the money, but still normally out of the money. Sometimes you can sell in the money, but classical move would be to sell at some lower deltas. I showed you 10 to 30 out of the money. And in order to not have the undefined risk of a naked, of a naked lag is to buy the closest or somewhere close around 5, 10, 20 wide long legs. So depending on the break even you want to have or the levels you have looked at, this can help. But what else can help? The hedge ratio. So sometimes one leg works better for the other. So I take a very fast look at that. So if we look at this, this is just an example. So we have different strikes.

[00:27:34.25] - Speaker 1
I'm sorry, do you want to make it bigger?

[00:27:36.13] - Speaker 2
Yes.

[00:27:37.00] - Speaker 1
Yeah.

[00:27:37.12] - Speaker 2
Yes, I'm going to make it bigger. Sorry, Fabio. Let me see if I can make it a bit bigger here. So we gonna zoom in, make it even bigger. So yes. Now what is that? Let's say, if you are, let's say we, we have the 350 here. The price is 10 or the Delta. We said we like the 30 Deltas. This is theta. What is theta? What happens here? You make $12 every. If you, if you sell 340, you make $12 every day. That which is ticking. So then we take theta with versus price and we get a very nice understanding how theta and price work together. You see, the further we go down, the higher this is. But what is good for us if we want, if we set up a vertical, we want a good hedge ratio. A good hedge ratio. So this hedge ratio here, we have the 350, let's say the 10 wide. And you have a hedge ratio of 85, which is similar here because 10 and 10, you have 20 wide. This is higher. If the hedge ratio is smaller, this is better. For a certain reason, the smaller the hedge ratio, the longer your long leg is going to protect your short leg.

[00:29:11.21] - Speaker 2
Because what I wouldn't suggest is keeping this trades on till the last day. I know a lot of people who sell naked options and keep them till the last day and go for worthlessness, which is nice. Nothing is nicer than to keep all the premium. And a lot of people who do that very successfully. But in the last 10, 14 days, tasty always talks about 21 days. A lot of things happen and things become more violent without deep diving into the grids. And this is something, this is, this has the formula here. I will show will share for you and if you can just download your options, the prices and all these Delta and Theta which you can get for, for free in many sites or from your broker if you have set some XLAB or something through the API before you take a trade. You put these things on if you know where you want to sell your levels and then you recheck again. How good is my head ratio? And you will improve, massively improve the statistics of your, of your trade. Okay, so this is something I think we took a look at.

[00:30:23.22] - Speaker 2
I, I have here the Starbucks. The Starbucks numbers. We can take a look at them later. We can put them in. But I think Fabio, maybe if there are questions we can take a deep dive in or just take a look how, let's say we could take a trade here on Starbucks. How we can set that up and what makes sense and what doesn't make sense.

[00:30:45.27] - Speaker 1
Yeah, we have a couple of questions. Done. So I'll post the wonderful. So how to find the best premium on cash cover put when the price I guess reaches low end of the DAX level.

[00:31:00.29] - Speaker 2
Okay, I have to. I'm seeing that too. I have to take a good look at that. How to find the best premium on cash covered puts. Okay, so someone has bought, has sold a put which is just cash covered when the price which is low end of the DAX level. This is a good question. Yeah. As the best premium is basically the best premium is as close as you can get at the money. Is this what you want? Yes, you can do that. But you are specifically about the deck. So if you have, I don't know, I don't see any name. But if you have a certain deck structure you want to take a look at, share it. But we will do something else in that time. We will just take a look at our box.

[00:31:53.20] - Speaker 1
Do you want to make it a little bit bigger?

[00:31:55.27] - Speaker 2
Yes, yes, yes, I try to make this bigger. I think we are in focus still. This is a Woody Allen movie. I'm laughing with Paul about getting out of focus. But this is for some other time. So first thing is what we see here. This is the DAX profile you see here. It's on the side which is very nicely. What is on the other side. The Gags profile which derives from Gex, derives from other. Delta is the mother of the child, which is Gamma. So what do we see here? We see the call resistance here, and we see the put support. We see the spot price, which is very close. So let's say you sold the 90 on this one. You're very close to it. The money. Yes. The best premium would be here. We can take. I have Starbucks open, so we can take a look at the premium. But would you do that? This is positive tax here. I would prefer to go here. Yes, you can sell here because you will say, all right, this is my put support here. We will bounce back, which is perfectly fine. This is something you can try out.

[00:33:13.01] - Speaker 2
And most probably because as you see the structure here, this can be a resistance, and this can be another resistance. But most probably, if we surpass that and we are above that, we had a drop here. If we are above that, we're gonna magnet here. We're gonna magnet here. We have to look at the gag structures too, but most probably gonna magnet here. And this is very nice support here. We can look at more bullish setups later, but this is very nice. So you're very confident and check other things. Yes, I would suggest you can sell here around, because there is something here, 92. But do ask me. I would prefer the 90 or even do what we did before. I would try to get my break even point here, around 88 or something like that. Yes, your risk return might be lower, but you will get a winner. I remember Fabio did some nice hack testing on all the stocks they had for the indices. They had 100 winning rate. Yes. Maybe you will make 10 or 20 or 30 bucks and not 50. And risk 500, which. Yes, it's not the ratio one to two or three.

[00:34:35.06] - Speaker 2
One, two, three or one to four, but you can do that. But. And the things I said. But if you start out and you want to make some wins in the beginning and you want to trade the levels here, this is something I would emphasize doing and still don't forget. We're here in a bullish regime because we have a lower band. If you look at this. So one last thing. And I'm gonna get back to the. I have to make it smaller because it is. I do wear glasses, but. And blindness should come with good age. But hopefully later, not that fast. So, yeah, most probably later. So you take a longer look out, a peek out, it's 82. If you go on a longer. Further out. Yes, on the further out, you will get more money. We looked at the five, and we looked at the. At the. We looked at the. At the level for five days and 20 days. But I didn't know now which time frame you have. I always suggest have a longer time frame but not too long. Another thing, if you are unsure what to do the first thing and basically my favorite here tool is this one.

[00:35:54.00] - Speaker 2
I love it and I love it not only because it has the expected move which is my maybe most favorite matrix. It just gives me a simplified view within seconds where we are. So if we. Let's say here and this is. I love that as a strangle seller you sell around here monthlies either 35 or 55. I most probably would go for the 55. Yes. I would check how much time is there till the earnings and in which regime we are. But you see a 90 support here, you see another 90 supporter. So the 90 area is really, really, really good. So if we go back to your question and we saw the DAX perfectly fine to sell around 90 or even go safer with a swing model to 88 or something like that. So this is a good premium and to wrap that up we're going to go out and take a look at the Starbucks. As you can see, you see here we have the moneyness and the other things.

[00:36:59.08] - Speaker 1
So do you want to make it a little bit bigger?

[00:37:02.08] - Speaker 2
Sorry Then yes, I'm trying. I'm trying to make it a bit bigger. So yes, these are the puts. So the thing is this is the put here. So let's say we want to sell puts. We want to sell puts. This is this. Just let me see which expiration is this? Yes, for three months. So which did we say? The puts. We can take a look at the. Let me give it a moment. The deltas something around here. So yeah, this is pretty nice. You will get the 90 like we said something in between. So your break even point if you sell this buy. This would be around 88 and this is pretty nice. This is something I would do. I hope this answers and helps you with your question. Okay. If not, please let us know.

[00:37:58.26] - Speaker 1
Yeah, we have another question now. Where can I get the edge ratio.

[00:38:04.04] - Speaker 2
That you showed the hedge ratio. This is very easy. I will just share it here. This is a very, very easy. We can make a. We can make us. We can make a. If people have questions about that and how to use it with the level we can make another live here. But I will just share my. Just share my Excel with you. It's no secret. And if you have questions to it, let me know. I think I can do it here even Fabio.

[00:38:32.02] - Speaker 1
Okay.

[00:38:33.13] - Speaker 2
Yeah.

[00:38:34.11] - Speaker 1
Shall I share your screen again or.

[00:38:37.08] - Speaker 2
Let me see if I Can it doesn't. It doesn't take it. But Fabio, I don't know. Can you. Can we put it here in like the Excel, it takes PDFs. Maybe we'll just put in the options. I would put it in the options room, guys. And you will get it here. You can see live. I'm doing that. So edge ratio. Okay. Are there any more questions we should cover or should we just jump into something?

[00:39:16.07] - Speaker 1
I think. Well, we have one question from Mark. Do we need daily bias to make money with options? I guess you answered those questions already. But if you want to add the.

[00:39:27.28] - Speaker 2
I will, Yes, I will. I will add more bone to it. Okay, let me go back here. Okay. Do we need daily buys to make money with options? If you wanna. If you wanna get my answer, my honest answer as a trader, most probably. I don't know. Fabio comes from the industry, so I don't know if you know it or maybe I'm wrong. But if you professionals, they do not have a bias. Which are the most. Which are the best players? If the market is not a casino, but the casinos always win. So we want to be something like the casino. But what. Why do casinos win? They have high probability, low risk games every day. And what happens? They give out the money and the chips and they win in the end because they have high probability. But whatever else do casinos have? Casinos have one one advantage and I don't want to deep dive into that. They know in the long run they make money. So I prefer if you ask me if I can do that all the time, I will say non directional. You can't do that all the time, but you don't need to have a bias every day.

[00:40:42.13] - Speaker 2
A bias can help you, for example, if you see something like a good swing or something. That's why we have the swim model. I do trade trade bias and Mantaq helps you with that, but it also helps you say to stay non directional. I think, Fabio, it's a good moment maybe to use the swing model and to show how we can do a bias. Maybe build a vertical credit one and show maybe how to use also the risk trigger or the levels. We have to build a condor or something like that, which is skewed, so you make use of the full potential of it. And I won't build a butterfly. This is Paul's dominion. He's the man for the butterflies. We can do that another time. Would that help? Just give. Give us a quick, quick, quick.

[00:41:37.15] - Speaker 1
And I think to add to that, I think then options are the only Maybe probably asset where you can actually make money even if the price doesn't move in your action or even if it goes slightly against your direction because you could actually make money in kind of like risk neutral scenarios where the price maybe moves in a range but doesn't really move above that range. And if it stays in that range, then obviously you make money from the premium. So obviously the Condor or the spreads is a very great way of doing that. I also pasted in the comments some of our backtesting results from one of the past session that we did over our swing trading model where we actually did that, where we did have a bias, but we actually use kind of like a range and we show you how successful that model was based on that rank. But I'll pass it then back to you, Dan.

[00:42:36.27] - Speaker 2
Thank you. Thank you, Fabio. These are really great things. Take a look at these things, guys, because they're pretty helpful and I study, I need to study more option type and their use. Thanks for the information. Yes, you begin with options. It's so exciting and it can be devastating. So my, my, I really want to urge you, try to avoid buying long options, not because they're not good, but because you, you have a lot of things working against you. So that's why we started with verticals. The good thing about verticals is, especially if you sell the right condition and using the levels here, you will get wins, you will get high statistical wins and your losses won't be that big and you will slowly advance. It's better to make $50 a day than to make 1k a day and lose 5 on Friday. I have, I have a buddy which is a great trader and he loses most of his money on Fridays because he's exhausted and other stuff. So I posted the. The Discord or I posted it in the Discord. I will link it right now.

[00:43:51.02] - Speaker 1
And, and if I can add to Mark's question, if Mark, you create an account and you can go on our, on our guide session, we actually have all the different strategies. So we have neutral strategies. So these are strategies that you could leverage in a neutral scenario where you don't have a bias. You obviously have the bearish and bullish strategies right here, but here you can find basically all the information you need about, like all the different strategies. So Iron Condors Dan is going to talk about. Everything is available here.

[00:44:26.26] - Speaker 2
So yes, everything is there.

[00:44:29.11] - Speaker 1
Yeah, everything is here.

[00:44:31.01] - Speaker 2
Oh, you just need time. That's the thing when you start trading. And yes, you can do paper trading, everything, but nothing feels like being in the game and nothing let's say it like that. If you lose money the first two, three years but you develop a good strategy based on the levels see it as tuition fees, nothing else. You make money right away and you have a good strategy shop all to you I'm going to take off my hat which I don't wear and but that's the thing on the long run you will have winners and losers. But if you take a proper risk management that's the thing we can. We'll talk about this in a future life event how to proper risk take do risk management with options and but the pros two things to end that is they would try not to take not to take a side if you see some big trades with an unusual options many times they are holding stocks on the other side or in the end it's some hedging or something else. So if you don't know the full pictures I trade actionable ideas or every day which derive from various scanners I have and I'm asked yes, give me the trade which is your trade.

[00:45:42.05] - Speaker 2
I will say no, I won't give you a trade because this would be false. You need to take a deep dive. Look at the levels FAQ provides and then you can take a proper trade because otherwise you would be blind. Just because some institution buys millions of shares and the premium is high. Does it mean anything? No, it doesn't mean anything. They would push up a Stock to from 2 to 5 if it's a penny stock and let it drop to one. Are you in the game? Yes, you might be in the game. You might be a winner for a day and then the other day you are ruined. So stick to the levels I can calculate obtain the hedge ratio myself. I want to have it for underlining. Yes, write me a Dirk from your name I suggest maybe you from German parts. You can write me in English and German. Write me a DM if you are a mentor Q user and I will share some background on that. But if you take a look at the. At the Excel I shared there are. The calculations are in there. So if you just put the things on but I can give you more info.

[00:46:49.04] - Speaker 2
I have a couple of pages written down for that we have I think 30 minutes left before the market opens. And this is always when the bell rings we are leaving people go to trade. So I think we're going to do maybe set up one look at the Starbucks trade and look how we can transform it into an iron condor maybe and then wrap it up and maybe take a deep dive if people want to see more verticals or see what are the actionable trades for the week or. Or other stuff and yeah, that would be a thing.

[00:47:25.29] - Speaker 1
Yeah.

[00:47:26.13] - Speaker 2
Okay. I think this is a good thing. As always time passes fast. This is no here advertisement or something. This is something I just find very practical. It looks like Optionstripe which I also am not a professional user. I use my own things. But it's easier to do it here in the browser. So yes, first thing is we gonna. We said we. The 90 was a good thing. The 85 was another good thing. So we will put. Let's go here out to the 2021 of March and we're gonna sell the 90 and we wanted to make a five dollar wide spread. So this is very easy. We get 100 roughly 150 we got. Our max loss is 350 of it. Index 135 probability 61. I said I prefer 70 but okay with very close to the money. But do we feel stressed? If you asked me a couple of years back I would have gone further out but today I looked at the again we will go back here. We looked at this things here and you have to see that this is a trade which doesn't end within five or ten days. Yes, you can end that very fast.

[00:48:55.05] - Speaker 2
But what do we see here? You think of this trade which is here 55 days and I would suggest you close it around 20. So we have 35 days to go on that they put support is always above your break even. Isn't that wonderful? Just beautiful. Because we can. Yes, we can look at the expected move. This is another thing I will talk in a minute about. But yes, you saw negative decks here. But you see here positive tax. You see positive X. Yes, you see here some negative decks but get closer to what we want. We have positive delta here. So this is a good thing. Our swing model is bullish which helps us. This is a 82. Okay, I will go a bit closer for the beginning because we looked at the DAX and this looks nice that it might pull up here. It's just a might. This is the bad thing with biases that everything is a might. But let's go further and look at other things. Let's take a look at dax. I will make it bigger in a moment for you guys. Oh, what do we see here? We see here.

[00:50:06.20] - Speaker 2
Yes. How is it changing? I have a small child but he can say a couple of words. But in two years if I would put it this to him, he knows the colors already will turn two in a couple of weeks, not two months or something like that. So what would he tell me? And this is the thing you should ask your grandmother. She would say, oh, green is increasing. Yeah. Here it might get bumpy. Yes. Around the 17th, but what happens gets more greener. This is just simple now. This is nothing professional. And pro would say, what is he talking about? But this is just simple. Just. That's why mentallyq has made it simple for you. This gives you confidence that you can take a bias. But what is the other thing you can do? And this is something I learned from a very senior trader, which I like. He said, okay, I know you. You're the guy who trades the expected move. I said, yes, I love the expected move. So I set up strangles. But this is something we won't do today. If I take a look here and I want to get out around maybe here the expected move of $13.

[00:51:18.22] - Speaker 2
So yes, $13 from We Are close to. Let's go back to here. We're at 92 $30. Let's say this is 93 would put us at 80. If I want to be 100 sure, I would sell the 80 naked to keep out of the expected move. But most probably I don't want to because I see a bias here. We're gonna bounce my strawberry from this is nothing bad happens here. And the other thing is why I'm interested in the expected move. I will see if it goes $13 up. I also look at my call resistance though. We see a 94. 97 was probably. If we go up, this is somewhere here where the upper move will get problems. And this is also something we saw in the decks. This is something here. We saw in the decks here that around here it might get a bit. We might get drawn here but might be stopped out here. That's why I love the model here. You have a risk trigger here. So what would I do? I would do two things. I would put my break even point at 88 or something around that. I said from the five day swing model and from looking at the levels.

[00:52:34.22] - Speaker 2
But you can do it also here. And I would take my money as my risk taking off. If let's say I had only one contract, I would take it off with around 100 something. I'm in profit. Why stay longer? Deploy my money somewhere else. Because the thing with verticals is it's a risk defined strategy. You can lose only what you either got or what you paid. But in the end, if you get paid, you lose a bit more. But if you pay for something, you can only lose that. But the thing is, the max loss is already calculated in, but also your max profit. So when is it good to take these things off? A lot of people want to go to 100, especially when selling premium. I would take these things off 25, 50%. That's why I sell more contracts. Always 2% to 4%, depending on what kind of stock it is or if it's an index of my portfolio. And then we take one at 25 off, the next at 50, and maybe leave a runner to 75. And if I'm really in a good mood, like, I had a lot of good Nvidia trades a couple of years back doing this.

[00:53:45.23] - Speaker 2
Simple strategy. Yeah, I would leave some for worthlessness and just have a good beverage if the last one came home safe. But this is something where we know something might happen and we bounce back. If we go above that, then we know maybe we can sell even higher. But this is something for a further lesson. So what would I do? I would add. Let's say if we go here to an iron, we can add. We can sell a call. Let me just duplicate this and duplicate that. So we have the 85. We have the 85. So same expiration. We go to a call and we gonna. The quantity is one, the strike is 100. Sorry, it's minus. We're gonna go to 100. I'm gonna do it like this here now 100. Okay, wait a minute. So I don't ruin that with minus one. I think this is the original one. Okay, let me put this to call. And we gonna sell the 105. Are we gonna buy the 105? If I put my things correctly, I will. You see, the condor is coming inside. Okay, so, yeah. Oh, this is a condor. And you see, we have a bigger risk on the downside, a higher, better risk on the upside.

[00:55:32.05] - Speaker 2
We receive more premium. And this is the thing. This is where the risk trigger is. And if you want to be super safe and just tell a call higher and just to not be totally wrong, you can go to 120 or something like that, like 10 deltas or even higher, and basically take a bullish bias trade. But like a friend of mine, which is a very senior trader, said, with the other vertical you sold up there, you just paid for your fees. And this is wraps it up. What I said, try to find low, break evens and bid ask. So find low bid, ask so you don't lose too much money on Setting up a trade. And if you want to get paid for that and not be wrong totally. And use these levels here, then take something here around the risk level or the expected move, which we take. We are at 93 plus 13. Then you are further higher than I am, which is okay. Which is just fine. You can sell the 110 and buy the 105.

[00:56:42.03] - Speaker 1
Yeah.

[00:56:42.12] - Speaker 2
Okay, Fabio, this wraps it up. I will just change this and we take a look at what other people might have in questions.

[00:56:50.10] - Speaker 1
Yeah, I think we. So the edge ratio we answer. I think. Let's let us know if you guys have any other questions. So I think just to recap, and we have a few minutes, what Dan used is the data coming from the Mentor queue dashboard and Discord where you can find basically our swing, swing levels, our GAX decks, our levels, our, you know, gamma levels, all of that stuff. So you can actually access all of this here. You can also ask access our data. Now we have intraday models. Obviously we haven't talked about it yet, but we do have intraday gamma levels. So again for those who are monitoring a day trading, you can also get access to the intraday data which is being released last month. And then obviously of course you can access all our, all our academy and guides and all of that documentation that we share for today. We still have our Christmas and holiday promotion. So for those who are interested in joining us, we also have a promotion going on until the end of the day. So you can find all the information on our website. So yeah, let us know and then I don't see any.

[00:58:04.11] - Speaker 1
Any more questions yet. Done.

[00:58:06.08] - Speaker 2
But.

[00:58:09.02] - Speaker 1
Yeah, I think that, that was awesome and I think how you, you use obviously the, the swing model, the data, the next one we are gonna focus more on decks. I think we're gonna do one specifically on how to use the net decks and, and Gamma together with building strategies. So I think that's going to be a very good one. We'll post it in our calendar. And as always guys, we're gonna have some really cool event this week and next week. So we're gonna have. Our SPX daily plan is gonna now be live on YouTube from tomorrow. We're also going to have two sessions, one tomorrow, one on Wednesday with some of our user. We're going to share out there using Mentor Q. Other trading with Mentor Q. We're also going to have a very interesting event next week to talk about quant strategies. We're going to talk with Tarsis who is an expert manager to Sigma and other Quant funds. So this is going to be a very good one. And then obviously, we're going to have a bookmap session at the end of next week, so. Very, very, very interesting. And I think we're gonna have more with you, Dan, as well.

[00:59:12.13] - Speaker 1
And we're also gonna have some micro sessions with Tim. So we're excited about the lineup for this year.

[00:59:19.08] - Speaker 2
Yeah. Thank you, Fabio. I'm looking forward to. And we have a lot of ideas, and we kind of come up and we're gonna come through and we're gonna make this experience even greater. And thank you, Fabio, for having me today. Thanks for the questions. Please DM me. And with a close of the bell, whether we're going to close this.

[00:59:40.23] - Speaker 1
And if you want to look for Dan, you can find Dan within the options trading room or within our discord. But mostly you're active in the. In the option side, so.

[00:59:51.12] - Speaker 2
Yes, options, options, trade structure, some SPX daily, and I have a lot of threads there, so take a look there and enjoy.

[01:00:02.01] - Speaker 1
Yeah, yeah. Absolutely. Awesome, guys. Thank you so much for your time, and thank you, Dan, as always, and see you very, very soon.

[01:00:11.09] - Speaker 2
Bye. Bye.

[01:00:12.25] - Speaker 1
Bye, guys.