Episode Details

Options Bootcamp 21: Playing Defense

Basic Training: Playing defense with options: it’s very important right now!

• Basic Defense: Protective Puts (full overview in Ep. 3)
• How do you hedge your position with protective puts?
• Intermediate Defense: Put Spreads and Ratio Put Spreads.
• Covered Calls - (full overview in Ep. 4) How do you generate income with a modest hedging impact?
• The Power of the Collar: combining the put and the call into a beast of an option. This is the favorite defensive strategy of most financial advisors who use options.
• The pros/cons of repeatedly doing zero cost collars.
• Volatility Defense: VIX Options/Futures. The myth of VIX's perfect inverse correlation- there are problems with relying on volatility as your only hedge, i.e. black swans, days when VIX outperforms, etc.
• The pros/cons of direct defense vs. indirect defense.

Mail Call: Hey recruits, what do you want to know?

• Question from Tina K. - When (if) should I consider volatility products as a hedge?
• Question from Mr_Zen - Can you explain the difference between iron condors and iron butterflies?
• Question from Alan O - What do the drill instructors think of the Minis so far? Are they worth exploring for basic options traders?