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So here we are, July 14th, 2020 options bootcamp number two, number two, number two. I hope you guys enjoyed number one. So let's get further into this and now we are actually at the end of this going to be able to pick our own strike prices and understand exactly what we're going to do and how to choose the options that we want to trade in the particular stocks we want to trade. All right. So days to expiration, DTE. Obviously Bow is not here this week, but it's not DTF. It is DTE, days to expiration. So definition is date upon which the options contracts expire and will exercise into shares. Remember, as options traders, we are not trying to exercise our options into shares. We are trying to trade the premium or the increase in price for those contracts. We're simply just trying to buy the contracts for cheap and flip them on the spike and then on the push to the upside. Buy low, sell high. It's the same difference. We're not trying to buy low, exercise into shares, and then sell our position. No, we're trying to buy the calls at a low price, sell the calls at a higher price. Kai, Kai, Kai, sorry, I don't know why I said it like that. Kai. All right. So we're going to talk about three expirations here, three most common ones, weeklies, monthlies and yearlies, all right? Weekly contracts, weekly expirations, monthly expirations, and yearly expirations. One thing to note, a monthly contract can become a weekly contract once it comes into that week expiration. So it could be a monthly X amount of period of time. So just remember, this is always a revolving door. Revolving door this week could be an expiration of weeklies that were also monthly contracts, so on and so forth. Now options expire every Friday. Weekly contracts, weekly expirations have the highest amount of volatility, okay? The highest amount of risk as well, yet the highest reward, which is what we want. High risk yields high reward in most cases when you're trading properly. If you have high risk and low reward, you're an idiot, and you should stop what you're doing right now. But it is the lowest premium cost. So it is the most affordable options, which is why people tend to gravitate to it. So for example, someone that wants to grow an account usually goes and trades small caps, right? Why? Because they're cheap. Why else? Because there's high reward. Why else? There's high risk. I can buy more shares for a smaller amount of money. It's the same thing for options. In large caps, a lot of smaller accounts, they gravitate to options. But again, if you can't trade stock, you can't trade options, okay? That's not what I'm trying to explain here. The reality is, is that people will gravitate to options because of the exponential growth and percent change that they normally have, and how low the cost of contracts are versus what you can buy for cash. And so, most commonly, we use weekly contracts, so we use this week's expiration for day trading. If our idea is to trade intraday, we want to buy low intraday and sell high intraday, we're going to use a weekly contract, okay? Next is, if we plan to swing, okay, we're going to get into this in a second, but there's also a monthly expiration, also known as the standard expiration. Most companies have monthly contract expirations. Only the extremely liquid companies will have weekly expirations in the options. Some companies don't have weekly expirations, they only have monthly. So standard expiration or monthly expiration expires every 30 days. Can sometimes be every 60 days, can sometimes be every 90 days, but it's every 30 days, every 30 day increments, so on and so forth. There is a fair amount of volatility in these, and there's a fair amount of premium costs that goes along with this, okay? They cost more to trade monthly options, but they're less volatile. They do have a fair amount of risk, not very much. The risk really comes into the monthlies if the stock goes nowhere. If it goes nowhere or in your opposite direction, then it's going to decrease heavily and you're going to feel the burn because you paid more premium, the price went nowhere, the stock went nowhere, and it may even have went against you in that period of time, so it's going to exponentially lower in value the closer it gets to expiration. So fair risk, fair reward, most commonly used for swing trading, okay? You're mostly going to choose expirations somewhere yielding around monthlies when you're using options for expirations, okay? Yearly contracts expire next year. That's just how I explain it. Lowest volatility, they do have the lowest volatility. This is what you're going to use if you're using this for, if you're a long-term investor, you can always buy yearly calls and hold it for that period of time. They do have the lowest volatility, but they are the lowest risk, yet the lowest reward, however, and they do cost more, of course, because it comes with the odds. The odds are greatly in your favor that it reaches that price in that period of time. But this is a situation where people will use yearly contracts and yearly expirations when they are focused heavily on becoming an actual shareholder in the company in the future, but having that option to sell the contracts before expiration or let it convert into shares depending on what the stock is doing, depending on how much you're up on the position, depending on if you want to lock in, depending on you have a lot of choices with yearly contracts, monthlies and weeklies, not so much, okay? Not so much. Note, all options expire on Fridays, okay? At the close on Fridays. However, some have non-standard expirations such as Wednesdays after the close or Friday morning. This is very important to pay attention to so you don't get caught in an expired contract that just goes flat, and it's out of the money and all of a sudden you lose everything, okay? So if you just pay very close attention to this, this usually only applies to indices, okay, like the SPY, QQQs, everything, so on and so forth. Those will usually have the shorter term expirations that usually only applies to indices, okay? And just to clear this up, this was a question in the chat which I thought was a good question, so I'm going to actually bring this into the presentation here. If a holiday falls on a day of expiration, it will exercise the prior day. So let's say a holiday falls on Friday. Well, guess what? All Friday options are expiring on Thursday, okay? Because you can't do anything on Friday, and they will exercise on Monday. You will have the shares in your account on Monday if you have enough equity, so on and so forth. I'm not really going to get into expiration, though, okay? It's not part of what we do. It's not part of the strategy we're going to talk about. It's really no strategy that I'm going to talk about in any of this, okay? We're going to talk about three different situations, day trading, swing trading, and long-term investing. So if you are a day trader, okay, if you are a day trader, you are going to be trading intraday or maybe holding overnight. I consider a day trade still an overnight hold, like you buy at the close, sell at the open. To me, that's still a day trade. Some people would call that a swing trade because that's technically an overnight hold. But in reality, you weren't really, yeah, you didn't really swing it that much. You were basically buying the close and selling the gap, which is still an extremely short period of time that is actually happened. So an overnight hold is, you know, that's still to me a day trade. So in these cases, if I'm going to trade intraday, I'm going to trade this Friday expirations, okay? If I'm planned to hold it overnight, I'm usually going to choose next Friday's expirations or I'm going to choose something that expires this Friday and I'm either at the money or in the money so I don't have any decay overnight, okay? Swing trading usually one to two weeks or two plus weeks. So if you're holding for, you know, three, four, five days, five, six, seven days or longer than that, the one to two weeks options, you're generally going to choose options that expire between eight and 10 trading days, eight to 10 days to expiration. If you're trading two plus weeks, if you plan to hold it, plan to swing it a little bit longer, you can choose 30 to 45 days to expiration. Now I will say this with this swing trade category here, these can kind of swap back and forth, okay? You could choose to actually trade these 30 to 45 days to expiration. You could actually choose to trade those in a one to two week timeframe. You could still choose to do this if everything is favorable in this expiration timeframe. So there's going to be more things that we play into this as we go along. But long-term investing in between six to nine months, if my plan is to hold six to nine months or if I'm holding longer than nine months and just one to two years or longer than that, I'm going to choose 180 days to expiration or if I'm planning to choose longer than that, 365 days to expiration. Okay? Yeah, that's a wrap, guys. All right. I appreciate it, everybody. Y'all have a good one, Rod. Thanks for having us. See you next week. We'll talk to you soon. All right, guys. Later, bro. See you guys. Bye-bye. Thank you so much for watching our video. If you want to see more of our videos, please subscribe to our YouTube channel by clicking the button here. We do our best to post a new video every single day. 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