Ultima Trading - Selling Premium Flashcards
What does it mean to be “Captain One Lot”?
“One Lot” refers to only placing positions with a single contract size only.
In essence, Place LOTS of little trades, Spray Capital and manage the aggregate risk
What is the EASIEST thing to do in this business?
What is the HARDEST thing?
The easiest thing to do is scale up your portfolio
The hardest thing is is getting back money that you put too far out into risk.
What is the high-level “rinse and repeat” tactic of Ultima Trading?
- Sell far OTM premium
- Use Risk Twist Spreads, VIX Volatility Spreads, and Gamma Irons to Hedge
- Distribute capital into multiple expiration cycles and over many strike prices
- Manage aggregate risk via use of Risk Array
- Close profitable trades and continue to allocate
What products should you sell OTM premium in?
/ES, /MES or S&P100 ONLY
When picking an underlying within the S&P100, what 4 things are you looking for?
- Massive liquidity
- Tight BID/ASK spreads (< 1.00)
- High open interest and volume
- Weekly options available
When looking at a candidate underlying, you want to check out the ___-day expiration and look for __________% Implied Volatility
30 day expiration, UNDER 90% IV
Sell premium ________ days prior to expiration
42 - 115
Sell Call options between _______ Delta
0.07 - 0.11
Sell Put options between ________ Delta
0.06 - 0.10
Scatter small inventory over ___________________
a minimum of 3 expiration cycles
When should you close winning positions?
a P/L Percent AT or BELOW 50%
When should you close losing positions (that are still far out from expiration)?
when it is approaching P/L Percent -450%
Do not hold a losing trade later than ____ days from expiration.
42
What 3 hedging techniques will you use when selling OTM premium?
Risk Twist Spreads, VIX Volatility Spreads, and Gamma Irons
Since we are selling mostly far OTM premium, what kind of risk are we expecting to protect ourselves from?
“tail risk”, outlier events, dramatic moves in the market
