In this edition of 5 in 5 we sit down with Jean-Christophe Gilbert and dive into his favorite strategies and how he trades them.
Jean-Christophe Gilbert is the founder of a large Facebook Group named Options 101. He also has a YouTube channel where he documents exactly what he is doing trading-wise. Sharing his trades, how he chooses his stocks, and any and all things Options related. You can find his channel here: https://www.youtube.com/c/JCGilbert1/featured
- How did you first get into trading?
I got into it when I was in high school because I found that fun. I would buy stocks and sell them, no strategy or anything, I just found it fun. I got into options only years later.
- What are some things you wish you knew when you first started?
I wish I knew about options first, and second that it’s all about probabilities. As crazy as it sounds if you understand that you will win. You can literally trade options just looking at probabilities.
- What strategies are your favorite to play and why? And how do you manage risk on those plays?
I love credit spreads, especially what we call “wide” credit spreads, meaning you sell the 30 delta (relatively close to the ATM strike) and buy the 5 delta (very far OTM). The reason I’m doing this is that I think selling naked options in this low-volatility market is really dangerous so I protect myself by buying that 5 delta options that acts as an insurance in case of a crash. On top of being protected in case of a crash, I maximize the premium I’m getting on the option that I’m selling, and I’m also able to roll my trade in case it goes against me. What’s to take away here is that as I don’t know when a crash will happen, I constantly protect myself with that long leg acting like an insurance. As a result, I’m earning less money on the short term, but I’m for sure winning more on the long term as I wouldn’t get that hurt if a crash would happen tomorrow.
- What are you looking for in a set up, be it technical , fundamental , or just analyzing the stocks IV?
As I’m selling credit spreads, I’m always looking for stocks that have high IV percentiles, I basically bet that the implied volatility on the stock is too high, and that options prices will come down. Something very important that I do is that I keep a portfolio that is “”delta-neutral”, meaning I have long delta and short delta positions so as to make sure I’m not too heavy on one side of the market. So basically I’m really only looking at the IV Percentile of the stock, but from a more technical perspective, I like selling put credit spreads when the stock is a the low-end of its trading range and call credit spreads when the stock is the at high end of its trading range. If I can find extremes + high IV percentile, that’s gold for me.
- What book or resource has helped you the most in business or in your personal life?
There is a great book written by Sheldon Natenberg on options (https://amzn.to/3h6QEkO), otherwise more business/life related I’d say Principles by Ray Dalio (https://amzn.to/2UeW0BG), quite a heavy reading but really worth it.