Options Bootcamp 65: Revisiting Delta, Butterfly Breakdown and Your Questions

Basic Training: Delta Revisited

• A basic overview of Delta
• What is it?
• How does it impact your trading?
• Inspired by a Market Trader Mentoring newsletter article Delta Can Still be Your Friend

Mail Call/Options Options Question of the week

With $TSLA threatening $315 how are you leaning in your Options trades this month? Would you rather:

• 18% - Buy 1-month $300 put
• 25% - Buy 1-month $330 call
• 25% - Sell 1-month $300 put
• 32% - Staying far away from it

Listener Questions and Comments:

• Question from Joshua Shealy: Thanks so much for all that you guys do! Sorry if this is a novice question. I know that Delta is not literally the % chance of expiring in the money, but more so the rate of change for a $1 movement in the underlying. I noticed today looking at VIX Calls that the strike closest to .5 Delta is the 20 strike, a long way from ATM. I usually associate near .50 Delta with being near ATM. Is this just a nuance of VIX, or am I missing something bigger?
• Qustion from Brian Fortin: Options Boot Camp Dan is fond of saying, why trade options naked when you can spread off the risk and make the same money by doing it twice? I feel the same way about carrying a short position into expiration? Why try to carry 6 short contracts into expiration to capture that last 5 cents, when you can just trade 7 contracts and do the right thing?
• Question from Gameday Dog: Aww man My vertical put spread has gone bad. I have +3 options at 61.5 and sold -3 at 62.5. Yesterday it gapped down to 50. I now have +200 shares of LULU in my account plus 3 put options at 61.5 and -1 put option at 62.5. I thought it was a $300 max risk spread. Do I have to do anything? Do I sell the shares? Everything expires in 7 days. Please help. Thanks. So, I learned about selling shares and back ratio spreads and even got an $19 credit.
• Question from Elio: Confused. How did that guy end up with only two of his short puts getting assigned to him? If he was short 3 shouldn't all of them have been assigned?
• Question from JDog: I just got an options pitch that says that options buyers lose money seven out of 10 trades. Is that true?
• Question from Allen: Why would I trade options when 90% expire worthless?
• Question from AndersonIvesting: New to options. I use TD Ameritrade but currently I don't like it for options. I was looking at Charles Schwab. Any recommendations for an options newbie?
• Question from Sharkcake: I've been approved to trade options by my Brokerage but I have yet to execute my first trade. What trade do you recommend?