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Episode 12 of 'Saxo Options Talk': Navigating risk: defined vs undefined strategies
Koen Hoorelbeke
Options Strategist
Summary: Episode 12 of 'Saxo Options Talk' brings to the forefront the pivotal concepts of defined and undefined risk strategies in options trading. Koen Hoorelbeke and Peter Siks dissect these crucial strategies, laying out their potential impacts on a trader’s portfolio.
Options are complex, high-risk products and require knowledge, investment experience and, in many applications, high risk acceptance. We recommend that before you invest in options, you inform yourself well about the operation and risks.
Introducing Episode 12 - Navigating Risk: Defined vs Undefined Strategies
In "Navigating Risk: Defined vs Undefined Strategies," Koen and Peter demystify the distinctions between defined and undefined risk strategies. This episode is a deep dive into understanding these fundamental options strategies and how they align with different trader profiles, particularly those new to the options market.
Understanding Risk Strategies
- Risk Strategies Explained: Learn the difference between defined and undefined risk strategies with real examples, and explore which might be suitable for novice users.
- Straddles and Strangles: Examine strategies like straddles, which can be both defined and undefined based on their long or short positions, and strangles, typically associated with undefined risk.
Transforming Risk
- From Undefined to Defined: Delve into how an undefined risk strategy like a strangle can be converted into a defined one such as an iron condor.
- Weighing the Odds: Consider the advantages and disadvantages of both approaches, including how market conditions like high VIX levels can influence the viability of undefined risk strategies.
The Art of Position Sizing
- Size Matters: The hosts bring an interesting analogy with gaming to emphasize the importance of sizing in risk management, illustrating how this can be the difference between success and failure in trading strategies.
Preparing for the Next Step
- Looking Ahead: Get a preview of the upcoming episode focusing on the short strangle, both uncovered and covered versions, providing listeners with a teaser of more advanced strategies to come.
Why Listen to Episode 12?
- Whether you are testing the waters of options trading or looking to hone your risk management techniques, Episode 12 is an invaluable guide to mastering the balance between potential profits and risks.
Subscribe and stay ahead
Ensure you don't miss this insightful episode by subscribing to 'Saxo Options Talk' on Podbean, or on Spotify. Keep yourself updated with the latest strategies and discussions in options trading.
Join the discussion
After tuning in, join me on my Threads profile to share your thoughts and insights on the episode. It's an excellent platform for engaging with fellow traders and enhancing our collective understanding of options strategies.
Your questions, our answers
We're eager to hear from you! Send your options-related questions to optionquestions@saxobank.com. Selected questions will be addressed in future episodes, providing customized advice and insights.
Conclusion:
Episode 12 of 'Saxo Options Talk' is a crucial listen for traders seeking clarity on defined and undefined risk strategies. Koen and Peter’s expert insights offer a comprehensive understanding of how to navigate these strategies, making informed decisions to align with your trading objectives. Tune in to elevate your options trading knowledge and prepare for the evolving market conditions.
For continuous insights and updates on market/options strategies, interact with me/follow my social media account on Threads.
Previous episodes of the "Saxo Options Talk" podcast
- 13 Mar 2024: Options Talk - Episode 11 - Stretched Synthetic Stock using Options
- 6 Mar 2024: Options Talk - Episode 10 - Synthetic Stock
- 28 Feb 2024: Options Talk - Episode 09 - Volatility
- 21 Feb 2024: Options Talk - Episode 08 - Rolling
- 14 Feb 2024: Options Talk - Episode 07 - Put Spreads
- 7 Feb 2024: Options Talk - Episode 06 - Delta
- 31 Jan 2024: Options Talk - Episode 05 - Short Call Spreads
- 24 Jan 2024: Options Talk - Episode 04 - Long Call Spreads
- 17 Jan 2024: Options Talk - Episode 03 - Long Calls
- 10 Jan 2024: Options Talk - Introducing -Options Talk by Koen and Peter- -Your Weekly Podcast on Options Trading
Previous "Volatility reports":
- Volatility report - week 12 - 18 mar 24 -- 22 mar 24
- Volatility report - week 11 - 11 mar 24 -- 15 mar 24
- Volatility report - week 10 - 4 mar 24 -- 8 mar 24
- Volatility report - week 9 - 26 feb 24 -- 1 mar 24
- Volatility report - week 8 - 19 feb 24 -- 23 feb 24
- Volatility report - week 7 - 12 feb 24 -- 16 feb 24
- Volatility report - week 6 - 5 feb 24 -- 9 feb 24
- Volatility report - week 5 - 29 jan 24 -- 2 feb 24
- Volatility report - week 4 - 22 jan 24 -- 26 jan 24
- Volatility report - week 3 - 15 jan 24 -- 19 jan 24
Previous "Investing with options" articles:
- 8 Mar 2024: Investing with options - Gold optionality
- 19 Feb 2024: Investing with options - Securing your tech stock gains with simple hedging strategies - 2of2
- 19 Feb 2024: Investing with options - Securing your tech stock gains with simple hedging strategies - 1of2
- 2 Feb 2024: Investing with options - Microsoft - buying stock or options - a comparison
- 25 Jan 2024: Investing with FX options - Hedging USDJPY currency risk
- 8 Jan 2024: Investing with FX options - Hedging currency risk
- 30 Nov 2023: Investing with options - striking gold (GLD)
- 23 Nov 2023: Investing with options - hedging the Nasdaq 100
- 17 Nov 2023: Investing with options - Nvidia - pre-earnings
- 10 Nov 2023: Investing with options - AdYen - post investor day
- 31 Oct 2023: Investing with options - Novo Nordisk earnings
- 31 Oct 2023: Investing with options - Apple earnings
- 24 Oct 2023: Investing with options - Amazon earnings
- 24 Oct 2023: Investing with options - Meta Platforms earnings
- 23 Oct 2023: Investing with options - Alphabet earnings
- 20 Oct 2023: Investing with options - Microsoft earnings
- 18 Oct 2023: Investing with options - Tesla earnings
- 17 Oct 2023: Investing with options - long bonds - TLT
Previous "What are your options" articles:
- 23 Feb 2024: What are your FX options - NZDUSD and NZDJPY
- 12 Feb 2024: What are your FX options - USDJPY - after 148 breakout
- 24 Jan 2024: What are your options - Tesla Q4 Earnings
- 18 Jan 2024: What are your FX options - EURUSD elevated volatility
- 12 Jan 2024: What are your options - Coinbase after BTC ETF approval
- 21 Nov 2023: What are your options - Nvidia earnings
- 08 Nov 2023: What are your options - Disney earnings
- 26 Oct 2023: What are your options - Nasdaq Selling Premium
- 29 Aug 2023: What are your options - Salesforce earnings
- 25 Aug 2023: What are your options - the Qs - Nasdaq etf
- 23 Aug 2023: What are your options - Nvidia - earnings - market reactions
- 21 Aug 2023: What are your options - swing trading semi-conductors - stocks vs options
- 18 Aug 2023: What are your options - using TLT as an inverse proxy for the 10 year yield
Related articles:
- From zero to hero - buying options
- From zero to hero - selling options
- From zero to hero - option strategies
- From zero to hero - options lexicon
- Why options strategies belong in every traders toolbox
- Understanding and calculating the expected move of a stock etf index
- Understanding Delta - a key guide for Investors and Traders - part 1
- Understanding Delta - a key guide for Investors and Traders - part 2
- Trading 0DTEs - get your feet wet - without drowning - part 1
- Trading 0DTEs - get your feet wet - without drowning - part 2
Options are complex, high-risk products and require knowledge, investment experience and, in many applications, high risk acceptance. We recommend that before you invest in options, you inform yourself well about the operation and risks. In Saxo Bank's Terms of Use you will find more information on this in the Important Information Options, Futures, Margin and Deficit Procedure. You can also consult the Essential Information Document of the option you want to invest in on Saxo Bank's website.
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