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Send mark adjustment

good evening folks thanks for joining us for another option trading presentation tonight we had Marc Sebastian with us and Marc's going to talk about the butterfly spread and he's going to share with us his thoughts on at least one you're gonna do one adjustment right heart one yeah one specific adjustment I figured rather than go through you know all the multitudes we could just kind of concentrate on one specific approach okay well I'll just remind everyone that this is a educational presentation and you know Mark's gonna share with us his nos but he's not going to be giving you training advice and that's something you kind of need to take care of on your own and with with the people you rely upon if you're ready with your presentation Marc I'm gonna throw the presenters of ball over here sure thing you should have it and I do clean alright everybody so today I thought it'd be you know I wrote a piece that is going to be on it's gonna be featured in stocks futures and options magazine I believe in the March issue and I thought that it might be fun for to do a little preview here on managing and and dealing with butterfly in a spread that I like to call the room an adjustment that I like to call the reverse Harvey now I'm gonna explain why I call it the reverse Harvey as we go through but it's a really interesting way and great way to retain profit which is one of the things that I find more often than that when I'm dealing with traders they have almost as much money almost as much trouble hanging on to trade hanging out of the profits of trades that are already in as they do managing in and out of trades it's it always kind of surprises me how difficult the time people have just kind of keeping traits you'll have you'll have people that are too quick to jump out because they want to keep like their little profit and then when they lose they let the thing run or you'll have people that will let us let a fly run run run run run and then one day it takes a big move and they lose a bunch of money so today we're going to talk about is my one of my adjustments to retain profits and it's called the reverse Harvey okay so the problem okay as time passes on a successful butterfly the sensitivity to larger changes in price begins to increase you may not know this but if you look at your the slope of your curve as time passes your trade actually becomes more sensitive to changes in price now you don't know is this because you're above that zero line but it actually is and so you become very susceptible to larger price changes all right this makes doing nothing with a profitable butterfly a dangerous proposition okay it there's nothing worse and and tell me if you've seen this before you are in a trade okay you're making a bunch of money you're doing well alright you're a 5% 6% 7% you feel pretty good about yourself you know can't complain too much the next thing you know you walk in the next day and the S&P 500 or the Russell 2000 has moved you know one and a half standard deviations and this trade that was up five or six percent is now flat even or even you know even money we'll possibly even losing money anybody ever seen seen that my guess is there should be resounding yes all right so that's why it's such a proposition the idea is that that gamma okay from those two short options you have that are at the money that if that increases as time as time passes it gets exponentially higher all right the other problem is those winged elephants become less reliable you have this issue of what I like to call fake Delta and hidden Delta okay and I'll kind of gloss over that concept but but yeah those dolts has become less reliable that makes a butterfly trade a real problem all right so here's a good example this is a Russell trait I just kind of threw in and if you look at the different days passing so the white line represents today and you see this is from a program called think or swim that you guys may or may not be familiar with I don't know any of these guys think our swim traders I'm obviously kidding and you know the answer is yes you can see if you look at this white line if you look at this white line it's got a really smooth sloping curve okay as you switch to something like you know as time passes you can actually see that this slope begins to get steeper the change from here to from 782 792 change in on your profit is bigger than the change in your profit from 787 90 on that first day you're saying well mark but I'm up money well that's not a that's still a problem though because the next thing is that the change from 790 date it is also lats deeper okay it doesn't take much of a move to wipe out almost everything you would make and that blue line which is represents two weeks from now and they yellow line same thing as we pass you can see it really starts to kind of taper off so our profit that we are making on the 11th of February at 790 versus 800 that is there's a substantial difference so as we stayed as the longer were in this trade okay we're making money that's a great thing but the risk is staying in that trade increases okay the risk of your now not only in danger of kind of giving up your investment you're giving you you're in danger of giving up everything you've made okay which is the most frustrating thing you could see okay so what is the problem as I was saying as time passes and we make money larger moves could potentially make a gain a catastrophic loss notice the slope of the lines increases days pass it is great that we are making money but our risk of giving it away is high if we do nothing okay it's extremely hot what will we do alright well there is no perfect adjustment there are some things we can do however before one what one can understand the right adjustment one must understand time decay now one of the things that is most commonly missed taught among fashion mentors all right actually option traders because this this is something that I saw miss taught two guys that were working for professional trading firms it's the time to catch I see time decay you know I see it not taught properly all of the time okay and here's why okay I think we've all seen this chart right I mean if you if you're a regular reader of my blog an option pet then you should have seen this chart a hundred times and you may even know where I'm going because I'm very open about the fact that time decay is not taught properly but this chart basically explains how you know as time passes the slope of decay gets faster and faster faster and it loses a you know as you can see a big portion of its decay from 30 days to 0 days all right if you look it's about 3/7 of its decay according to this chart okay now is that true does it really lose this much did you do options really work this way well you know the answer is that chart is wrong okay well it's kind of wrong all right that shirt applies to the decay of app the money options okay so if you're looking at a butterfly all right if we're going going back all right that chart applies to this option the seven 80s okay it does not apply to the seven forty fives it certainly doesn't apply to the seven hundreds it doesn't apply to the a or eight 15s that we've got here and it definitely doesn't apply the eight hundreds okay so the options move very differently all right so this is kind of this is the best drawn example of out of the money in the money decay that I've been able to find okay now what do you guys notice about the the language on this graph that I borrowed if anybody can tell me that language I will buy them a mai tai okay what language is that no Chuck Eichelberger was the first answer Italian all right that that's close but not quite I like Chuck though I'm still gonna you know I'm still I'm gonna fight Chuck of my tie anyway all right now we got James hammer says it's music well it's not music either okay Norberto says portuguese Norberto is correct it's Portuguese I bought it so I borrowed this from the Brazilian Stock Exchange okay so it's Portuguese good job no bears oh and you know it's very easy Portuguese Italian estate you know tempo and pres Oh actually could be out of Italian out of an Italian book - so anyway I like Chuck he's gonna I like all people I have Norberto - actually um so you can see what do you notice about this chart though yeah you know what at the money is really fast inside of 30 days but these out of the money's and in the money's if you do the math there's actually more decay from 60 days to 30 days than there is from 30 to zero all right in the money's are just out of the money's with big Delta so there's really no difference it's just drawn with kind of that that extra value there all right that in the money is going to go to zero premium it will have parity value but will still go to zero premium doubt and so when so the reason why I pointed that out is that I had to find a smart guy in Brazil that had drawn up this chart in order to find one that I didn't have to do myself okay you trust me I have very bad graphic design skills so you do not want me to design my own all right let me be very clear on that but that is how poorly this this concept is taught in the United States okay so the point is is that when do when do most people and our butterflies truck since 30 days Chuck is correct Chuck gets to my ties now I'm sending Chuck home in a very very expensive cab but yeah 30 days so if you look what do you think the advantage is of putting on a butterfly why does it work so well well it's not just that that meat has more to premium it's that that meat also decays faster okay that is a really powerful advantage and you know I'm the only one teaching this and now you guys know it all right along with my students all right that's right time decay is much more linear on out of the money options relative at the money all right this now has tons of applications for butterfly management I mean it really does okay I could get into a lot of the different ways but I'm gonna kind of stick to one specific way okay the story okay alright now one day does anybody know Dan Harvey who Dan Harvey is he's a really great guy I have to say you know one of the sad things about starting this business is that I no longer got day-to-day contact with Dan Harvey who is just a great kindred spirit and a real brilliant trader okay so one day Dan and I were talking and his approach to managing butterflies is that over time as the butterfly became profitable all right smooth out that curve what he would do is he would buy the meat of the you know the what the thorax if you will of the butterfly and he would sell the wings out further he'd sell that meat out further so on the butterfly that we were looking at earlier if Dan Harvey was doing this he would buy back the seven ATS and he might sell the seven 90s or the eight hundreds and then sell the seven 70s or the seven 60s now generally I always do iron butterflies I think it's really the reason why I like iron butterflies so much is not because there are any different than butterflies all right anybody who knows anything knows the butterflies and iron butterflies are synthetically the exact same trait why I like it is that it's really easy for me to think about the position I can think about it you know like I said it you know the mcdlt didn't anybody remember the mcdlt I'll tell you my brother John what almost cried when they killed that killed that sandwich because he loved it so much but it was a big pitch was you keep the hot side hot and the cool side cool well by doing iron butterflies that lets me keep kind of in my head and actually when I'm teaching keep a put side and a call sign so when I talk about a trade on an Iron Butterfly it's the callsign okay well that's up here and that's the put side which is down here and so I actually speak that way with regular butterflies - all right they're synthetically really the same thing so who cares all right so what Dan would do is he might buy his at the money call and then sell you know the seven 90s or the eight hundreds and that does in fact really smooth out this white line or the red line or the yellow line okay um and then he would buy back the put and then sell the seven seventy or the seven sixty and again that really smooths out the downside of the curve all right it's a really it you know it's a nice little adjustment but you know as he and I were talking about it and and something didn't sit well with me all right I never ever ever like buying an expensive option to sell a cheap option okay hey there's something about it okay I really really hate buying expensive to sell cheap alright and that's what you're doing when you buy an athame option you sell an out of the money option you're giving up a ton of premium alright you're paying for a lot of premium right now let me be clear on what I was just described with Dan this that is a extremely oversimplified explanation of what is a very complex trader who really knows what he's doing okay he knows his stuff but you know it's just this one thing he found it that's something that he liked and he was doing it and it was doing well he made money doing it but all the time he pitched that his goal was to keep that white that this smoothness in that profit curve so he wanted this these lines to be as smooth as possible okay so he I like to call them as Mark Sebastian as possible because I'm so smooth so I don't know if you knew that Chris but that that used to be my nickname in college was mark smooth Sebastien did you know that I won't ask you how you got that well first off I never got that that wasn't my nickname but but I kind of wish it was so you know I I looked at what he was doing and I said to him I said Dan what if we went the other way what if we reversed what you were doing he said well mark what do you mean and I said what if instead of buying back the meat and selling wings we sold the wings out that we were along and kicked them in he said well you know I never really looked at that before and I said well I had neither so then he and I spent a nice period of time messing around with it and we realized hey you know what this is a pretty good way of smoothing the chart okay and and the next thing you know you know I said to him obviously because Dan is a dancer good sport I said let's call this the reverse Harvey and he said Marc that sounds more like you know something you that you know the varsity football team would do to the freshmen as a hazing and I said now now now now it just it has a real good catchy name so we began I began calling it the reverse Harvey and Dan Dan laughs this laughs this himself silly and thus was born the reverse Harvey okay and now I'll show you kind of how it works okay the first key is to get the butterfly moving your way so you want the butterfly to make money okay generally the reverse Harvey is a money capturing adjustment not a money saving adjustment although I will show you how it can be used for that as well okay all right so what's happening is as the butterfly makes money those wings begin to lose value okay now once the K is a wing that once the wings decay down two units all right they're no longer a true hedge of that butterfly do we all remember what a unit is or do I need to explain that all right what unit is a inexpensive option that has unreliable it has very small or non-existent unreliable Greeks okay now I love units when I'm trading to keep in a back pocket in case the market crashes but they're not great as an actual hedge against the short position all right when I like units is I have a butterfly then I'll buy some put units outside of the butterfly in case the market tanks alright that's how a butterfly I was in in the flash crash ended up making a ton of money alright alright so now what we will do is give the wings of kick in to recapture gamma all right meanwhile the trade is maintaining the majority of its decay alright that's a real it's a really cool thing okay alright example alright so now I'm gonna use action view six they've been so kind as to help me out there with let me come on I wasn't pressing escape so we go to Jan 4th there's probably faster ways than to click this through alright and I already preset up a trade and yes I did look ahead to see that we were in something smooth because I didn't feel like you know I wanted you to see that this trade as it's supposed to be traded ok now a lot of guys will come in and show you kind of after the facts hey this is what you should have done this is what you should have done this is what you should have done yeah I'm always wearing this stuff but I do like kind of show examples of things that that you know an adjustment working so that you can see how it can apply because this was a trade that I actually was in in spiders that that did make money ok obviously it was not in SP AK it was something we did on our amp it report so you know you throw on the trade alright we're selling the 1270 call and put and you can see we've got the 1305 as a long and the 12:35 is as along alright with about 17 days to expiration this is the Jan butterfly so we push forward to Friday Jan 7th and hey we're doing pretty good rip a couple thousand bucks okay if you look at the risk on this chart you know a couple thousand bucks is almost twenty percent that's really nice alright now what am I worried about well take a look as time goes by you know yes I make more money but I also get more sensitive to price changes and I also worry about this thing really booming outside of the tent make sure I didn't add these in already nope I didn't alright so now how would I reverse Harvey real simple I sell that option that's 185 and then I just kick them any up to ten points and then if you're going to do it on the calls you have to do it on the puts alright and this is what your trade does so if we superimpose the two trades and I'm going to reduce those lines so you can see the differences all right take a look at the two trades notice the smoothness that I've gained in my adjusted trade relative to my initial trade do you see how how it's gotten smoother and what else have I done take a look well you know we'll get into this more but this is kind of your standard adjustment it really smooth things out all right so now I will close and I'm going to convert now if I'm really aggressive I can reverse Harvey as much as I want okay if I wanted to really get aggressive if I said you know what I'm I'm really nervous about this thing taking off you know I could reverse Harvey all the way to where I almost have no risk all right now we're not gonna do that we'll just leave as is all right so you can see what we did we a good way one thing I'd like to note a good way to reverse Harvey all right to know if a strike should be reversed Harvey it is one you're up money typically at least 5% that's the one I like to go for on a butterfly at least 5% now it's more than that on the ETF because you have to take into account commissions all right it's especially on something like an ETF where you know I know that the place is like the broker houses like to show tell you that you should do etf's well ETFs are really Commission intensive I'm not saying they're saying they're do they're telling you that because they want the Commission's I'm just pointing out that ETFs are very Commission intense okay you draw your own conclusion so a good way to tell if a winning trade should be reversed Harvey is if a wing drops below $2 in the SPX note that that number depends on the size of the underline you know 2 bucks in the SPX is 20 cents in the Spyders about all right it's the equivalent of like 3 dollars in ndx o or a dollar eighty dollar 50 in the S in the rut and maybe a dollar 25 or a dollar a dollar in the OEX all right that's a great way to know whether something should be reverse perfect okay all right so and at that time you saw the adjustments we do all right now notice here's what I love about that reverse Harvey okay is look how little premium we gave up on our top end we cut our maximum profit from about 22,000 down to about 19,000 but we cut our wrists down from 12,000 over 12,000 to about 6,000 that is really really key so when you're doing this let's reverse Harvey you're not just reducing your risk you're actually reducing or much your necessary margin in the trade which is a really really nice thing all right so what happened we cut our risk in half we flatten the curve while keeping a huge portion of our profit potential the trade now the downside there is some temporary fader reduction okay I'll show you I mean prior to the reverse Harvey all right prior the worse Harvey if you look if you look at the different theta numbers the non Harvey at twelve seventy is collecting three hundred dollars a day the Harvey's one is collecting $200 a day so you give something up but in relative terms the amount of risk that you lose all right amount of risk you take off totally worth it absolutely worth it almost every time all right so step four we manage the trade if it stays within the tenth the trader may reverse harvey again so let's kind of walk through this thing I don't remember what's gonna happen I think we this trade does really well going forward yeah see we're making even more money now we're keeping an eye on those 1295 all right now you're all up if you look you're really doing well you know there's no rule that says you can't reverse Harvey again earlier all right you're now up twenty seven hundred bucks you don't have to though all right so what we can we can look at it and talk about it and figure out I don't think I did I may have I don't at the double check all right but you can see we lost a thousand dollars now how would have been if we hadn't done anything if we in Reverse Harvey let's take a look you could just do like a little mini reverse Harvey you can see you're really pulling that thing in tight you could go crazy and turn it into something like this if you're one of those people that never wants to lose money well guess what you're never going to lose money trading this way well let's just do a standard one let's see how much better we would have done if we'd reversed Harvard and you know we were pretty close here 265 is certainly close especially with ten days to expiration can we go for that half an hour and you know and that's been about the same by now you never know pain you never know what the option view because it can move around down yet why you know if we reverse Harvard again we got nothing to fear I think this thing really runs up on us take a look at this we're now up 2500 bucks we're sitting right on our wing alright and look what he knows here you have to reverse Harvey now never it when I'm trading I never buy an option where the where the value is under three dollars in the SPX I won't do it that's just me now I can try and see if I could reverse Harvey one more time the problem is is now I've got something that looks like this alright I'm outside of my tank that basically is your hint to take it off okay if you say if you notice all right trade escapes 2/10 is generally prudent to exit all right step six one smacks target profit has been reached exit or full trade super-tight all right now I like to teach my students about two different types of profit they've got their tart their target profit which is 10% or 15% or 20% and then they've got their max target profit that is a number beyond that you know you guys ever have that feeling where you know you've got a winning trade and you get up so much but you're not sure what the whether you should exit or not you feel bad about exiting well the way I stopped myself from that problem is I will set up this max target profit when I reach that I will tighten up a trade so much that it basically has to just sit there for this thing to make for or I'm out okay you know just for fun let's let's let's let's keep with this reverse RV and see how this thing does cuz we got a week like Friday we kind of really peak out don't we so you can see we reverse Harvey this thing we're now ten bucks out and we're still up fifteen hundred bucks now we're gonna look at these and let's just see where we close out today I'll bet you this thing I think it falls right back in doesn't it huh that's not bad right 2,900 bucks I'll take it now you could even be sitting here reverse Harvey n some more and by that I mean turn this into a vertical at certain points so there are all sorts of different the point is is that I think you guys are starting to see kind of the power of this adjustment it really helps us kind of deal with a problem all right other uses it can prevent a whipsaw okay so imagine this you have I don't know anybody thrown out a butterfly in the last couple months and had it threatened to the upside it gets threatened threatened threatened or in onine they're trading something where it gets threatened to the downside then it swings up and gets threatened to the upside well if you use reverse Harvey's you can actually I love that I use them you use reverse Harvey's if you use reverse Harvey's you can actually reduce some of that risk I will show you how so let's go down to November 15 all right and you have that trade on already no there we go so the trade I've thrown on is an SPX butterfly we throw on D 1200 and I just pick some strikes the 1200 1140 1260 fly okay you can see what it looks like right there what I must have something in there that shouldn't be let me deal with this I will reap it it on all right so now I'll buy the yeah huh same difference I never understood that expression people say the same difference what does that mean you know it seems like kind of a silly expression if you think about it I'm a am I the only one that feels that way see why is this King giving that weird curve on the top end that doesn't seem right now ah all right so the next day we push forward and I picked this day on purpose because I think we take out all right so you see we're definitely being threatened what is in there oh there's something else in there let's see sell sell bye-bye that's these Jan's okay that's what's throwing us off there's our chart so now we're definitely being threatened here all right so we go to make an adjustment Justin and I like to make let's see we got a pretty long delts I'm gonna try and cut that thing down by about you know half so you guys will get to see some sort of adjustment then I'll sell it at the money mmm I probably do three all right so you can see with the adjustment we've made here now the problem is is that this options now gotten really cheap too as we've moved down let's you know I might reverse Harvey this thing and we'll do something like that and you know give you this weird Delta it may actually make you long you're not as long as many as you think but just for simplicity let's do even this okay and then I will sell seven and what is sixty five bucks away from eleven seven I'll buy the eleven ten so actually we might do ten of these because we want to sell at the money why do you sell at the money do you think cuz you want that premium alright and you know if you're one of those people that says I don't like that risk you can do something like this as well you know there's all sorts of different ways to do it it's not really we're not really dealing with the adjustment itself see but you can see you've really gotten that kind of long faded out alright so now we put forward a couple of days and the market whips back okay to twelve hundred and look at what happened here our options picked up a bunch of value our 1260s are worth the exact same amount okay let me show you the difference 23 60 versus I'm going to remove that reverse Harvey you know you saved you you made an extra thousand bucks on that whipsaw okay and that's a really again that's a nice powerful tool to have by your side is hey this trade you know they're kicking it in now they're giving some screwy Delta's up here that's what the issue is but this trade is you know paying me to take this thing on that's pretty nice okay and they're protected I'm getting protection from that whip back you know and it's great because I think we had a huge rally here and if you want until Monday November 22nd you're sitting pretty never mind so and there you have it but you can see how this this can be used as a nice adjustment there's a nice whip saw prevention all right so summary traders should use at the money theta decay to their advantage all right there's a lot of ways to manage a winning trade the reverse Harvey is one of them and it can be used as a profit keeper or to prevent whipsaw all right now I want to tell you before we get the questions I want to tell you about something I've got starting Monday all right you knew I was going to come here with the sales pitch sorry you know it's for this we'll take two minutes I'm doing this future pros prep course and it's gonna be intensive and it's gonna be six to eight weeks depending on how busy we get in how much we get into it and the idea is that you know there's a lot of people have read a lot of books and done a lot of things okay but it but they've never gotten mentoring but one they don't even know whether or who to go to because they don't have the knowledge to understand what they need and they're kind of afraid to jump in with both feet cuz most mentoring courses are thousands and thousands and thousands of dollars this course was actually designed to kind of bridge that gap to let you know to let you figure out whether a you're ready for mentoring war and be to help you kind of figure out what you need all right some people need a seven thousand eight thousand nine thousand dollar course some people need a thousand dollar course alright some people need you know a no course and shouldn't trade there are a lot of people that shouldn't trade alright so the course is gonna go through price action of options volatility the Greeks income spreads speculative spreads and basics of position management alright it begins Monday and here's gonna be the deal alright and this is the best deal I have out there alright this is better than what I've got on the commercial on my podcast this is better than everything I've got out there 25% off the price alright use the coupon code OC prep discount low C is for option Club prep obviously it's prep and then discount all right now do we have questions for me specifically now involving the reverse Harvey Chris I'm combing through these real quick so basically I'm just going to kind of rattle through these and a couple of them are just asking for confirmation so what Dan was doing was converting his Iron Butterfly into an iron Condor by rolling the short off universe or spraying him a little bit wider yeah yeah that was that's the face he was doing it in a much more complex way than I described it but yes that is what he was doing see if there was a couple good ones in here Dan's a great guy I love him I really do how why did make the butterfly to start with some iced tea a party standard deviation is what I use I what I'm putting together a butterfly I assume I'm gonna be in it for 20 days I and I used the at the money volatility to set a 20 day standard deviation based on the price so that would be in the case of if I was really trying to seriously set up a butterfly for that January gate we were looking at which was inside 20 days okay for a standard butterfly I think it was January 4th okay when I'm inside of 20 days I calculate to the Wednesday of expiration all right so whatever number of days that is so on we're expiring today 17 days so it's 14 days so I would say all right we're trading 1270 that is a volatility of of course the balls don't match why would they let's see 13 and 15 will call 14% okay so that'd be 14 over 365 square root multiply that times the price times our strike price which is 12 70 and then I'd multiply that times the volatility which is 14% remember guys volatilities our percent so I really would have set this thing 35 points wide which actually I think is what I set it at midnight all right that makes sense okay we'll get a question here that says once you roll one side would you roll it again since the market is already at your short strike what I once I roll one side when I roll it again I don't know exactly meant by that I'm not again what what I kick in my wings again absolutely absolutely if the if it stays at my short strike I will reverse Harvey up to you know two or three times and the idea is that I've set up trades Chris you'll love this I set up reverse Harvey's where my P&L graph the entire P&L graph was above my zero line it was really great really great so a lot of fun there is a question here some are something about the the idea of what if the market moves shortly after you put your butterfly on and I don't know exactly how it was phrased but that that was the gist of it that is a whole nother conversation but yeah that's something that that before you trade a butterfly you should know what you're doing in that situation I would say the one thing I always tell people is you know you're talking to a trader or you're talking to guys starting a trading business are you starting a hedge fund and he says to you hey Chris Smith give me $100,000 all right now if that guy knew as much about options as you do all right would you give him the hundred thousand dollars and if the answer is no then you shouldn't be trading all right at least certainly not a hundred thousand bucks what's Mark what a spread is narrow enough that you'd stop reverse Harvey because it's now too narrow oh you know that really depends you know ten bucks at a certain point I mean at a certain point you're gonna end up buying back your meat I will I mean I'll sit there in reverse Harvey for you know I I had one on that was I had a trade on that was literally in diamonds that was literally a point wide it was the 16 17 18 fly because I reversed Harvey didn't so tight what percentage of the time do you hold your butterflies to expiration versus taking them off a certain number of days prior I don't I don't ever really hold them to expiration okay I mean how but I'll hold them as long as I think that they're viable all right that's the neat thing about reverse Harvey you can pull this thing in and just let write it through expiration week okay because like I said you can theoretically get one of these where you where even if it goes completely outside your tent you're making ten fifteen percent I'll ride those as long as I can is that a question that says do you ever do a Harvey versus a reverse Harvey and then so how do you choose between the two me typically not I I imagine there'd be situations where that makes sense if you had the time you would do a Harvey versus a reverse Harvey is if you had what we call a smile skew okay and that is a we all I mean I'm sure you guys have heard me talk about volatility skew the times where a Harvey can make sense is when you get a curve well that for me get a curve that kind of looks like that so you're selling here or so you're buying back here and selling actually a higher implied volatility alright if I can sell a nice high implied volatility then I may go for it all right another time I might do it is if I think that the wings are overpriced okay if everything's fair value or if all things are kind of fairly priced I'm always going to get a reverse Harvey if there's a major miss pricing on part of the out-of-the-money curve then your standard Harvey makes a lot of sense I've got a couple questions here people are asking about the the special deal you're talking about whether there's a length of any to use or oh yeah yeah you know if you go to option pit com let me and you go to the events tab you may recognize there it's right here okay it's under events so it's on my right on my home page and you just click sign up and obviously you would delete this and then you would type in obviously OC prep discount fly to order all right so you go coupon discount of 150 bucks will be take the doctor from your order that check out kind of neat right very good alright so that is that is an I mean you know I was giving out a deal on the podcast take a hundred bucks off this is gonna be a little better than that so you know what is my FY fYI if you're one of my my active students this is free for you so don't go and pay me I don't want to have to pay you back yet okay we've got one one dinner seller says what if we already signed up for the course how do we get the new discount why don't they just email you then you can figure that one out yeah email me and we'll figure it out I can I'll you know I'll apply it to I'll happily apply it toward some services or something like that so all right so here's what the last question for tonight okay aren't you concerned about continuing to throw money into the tree every time you reverse Harvey know you're actually taking money out of the trade when you reverse Harvey okay now you are buying premium you're buying strikes that are closer but if you look as you reverse Harvey okay you know let's go to that seventh know hey you know learn paint on I've got it on here if you look when I look at this chart I say you're taking money out not putting money in okay okay I mean you've taken over six thousand dollars off the table now yeah you cut your faded down a little bit but you've taken money off the table and smooth yourself you've actually kept what you're actually keeping more money in okay in my opinion all right so you got a debit or so even though you got a debit you've actually locked in yeah you're black profits there thousand bucks aw yeah you've locked in some profit you've taken six thousand dollars off the table okay so the question is will you if you've got 25 if you've got twenty five thousand dollars in premium okay and you're risking that you died on the table alright and you're risking twelve thousand for that $25,000 of premium all right you collect 25 hundred of that premium so you've got twenty-five hundred dollars in your pocket okay now would you rather at try and collect twenty two thousand five hundred dollars for 12,000 and risk or excuse me would you rather collect you know risk that twenty-five hundred for two and still leave $12,000 for the opportunity to maybe make an extra five hundred bucks over a week or would you like to basically pocket a thousand of that dollars okay give up you know five hundred dollars in a que for a week but also free up six thousand in capital that's six thousand bucks you can use for something else if you want to go and buy X you know buy lottery tickets with you with that extra six thousand bucks you're now free to do so I wouldn't suggest it alright but you're free to do so all right if you want to fly to Chicago and take me out to dinner with that extra six thousand bucks you are welcome to no II mean you seriously are welcome to and I would suggest that one so you could bring my wife and we'll bring my wife so she'd like that well mark we've done pretty good we we hit our scheduled stop time pretty much right on the mark I have to say I think this was the fastest I've ever been at give it and then I would argue that this is my Lisa's or cerebral wouldn't you I've been pretty tight I tried to not be so theory so full of theory and a little a little more application but this is the type of stuff you know people think of this big theory head I'm all about application when I teach okay that my whole thought process is is that you need to know what you're doing before you do it okay so that's why I'm hard but I think people appreciate that so alright but what we'll do is it takes a little while for me to convert the video but it'll it'll be up right by the weekend and I had people asking already whether we're gonna have a video replay of it and the answer is yes I will have it along the video archive and so you can better watch it over and over and over again yep so but mark thank you very much for joining us and sharing the rest part II if that awesome and then awesome name it's really fun to say you know what why don't you reverse Harvey that so it sounds like it belongs it really does all right well I you know I can't thank you enough for having me and you know you've got such a great audience and I always I always ask great questions and they're smart and you know it's a great group so all right well thank you very much all right good night everybody