On today’s From Theory to Practice, Dr. Jim focuses on the market reaction to the large downward revision in jobs gains in the overall economy. Then, he points everyone to his Short Call Spread in GLD, a trade that after only a day is already underwater - which means that had you done the opposite, you’d be in a great spot. Lastly, Dr. Jim works through the differences in Butterfly Spreads with various expirations, showcasing how the cost of the strategy actually decreases as you give it more time.
In today's From Theory to Practice, Dr. Jim Schultz noted Best Buy's recovery to $77 and HIMSS rebounding from recent lows around $42 to nearly $50. With CMG and SBUX, Dr. Jim is remaining patient with his long shares position, rather than selling calls against them on weakness. "I don't want to sell calls when the stock is falling. I want to sell calls on strength," he explained, highlighting his short-term contrarian approach to portfolio management.
In today's From Theory to Practice, Dr. Jim Schultz continues his educational series on extrinsic value, focusing on volatility as the second key driver. He explains how higher implied volatility increases option prices through greater extrinsic value, creating selling opportunities for premium sellers. For tomorrow's Non-Farm Payrolls report, Dr. Jim positions for potential market volatility with expected move butterflies in both SPX (one-day cycle) and gold futures (four-day cycle), both targeting downside moves. He adds a Lululemon (LULU) earnings butterfly to the upside as a potential hedge.
Despite the market turmoil, in today's From Theory to Practice, Dr. Jim successfully managed several positions for profit. The NVIDIA (NVDA) earnings trade produced positive results, with the butterfly closing at $3.05 (from $2 entry) and a call spread closed for $0.81 after being sold for $2, delivering approximately $2.25 in total profit. Best Buy (BBY) bucked the downtrend, allowing for the exit of a vertical spread position at a minimal loss of about 30 cents. Additional trades included closing a Rocket Lab (RKLB) short put at 50% profit and exiting a Wolfspeed (WOLF) short straddle for approximately 30% of maximum profit. Through all of this, Dr. Jim emphasized maintaining position size discipline while demonstrating how defined-risk strategies can be managed effectively even during significant market declines.
In today's From Theory to Practice, Dr. Jim starts with his NVIDIA (NVDA) position, where the stock initially plummeted post-earnings despite beats, but recovered most losses by market open. CrowdStrike (CRWD) emerged as a standout performer, generating approximately $8 profit on the Dr Jim's butterfly spread position. He then closed his Williams-Sonoma (WSM) put spread for a $0.70 profit while maintaining his NVIDIA call spread position. Dr. Jim then also addressed the Chipotle (CMG) trade, where assignment finally occurred at the $50 strike price after weeks of holding a deep in-the-money put. Lastly, with VIX at extremely low levels, Dr. Jim discussed strategy adjustments for the current low-volatility environment, suggesting long vertical spreads and diagonal spreads as more appropriate tactics.
In today's From Theory to Practice portfolio updates, Dr. Jim's Chipotle (CMG) 50-strike short put remains with no extrinsic value but hasn't yet been assigned. For IWM, he demonstrated a strangle adjustment by rolling the position to October, moving the untested put strike up from 203 to 219, and collecting $4.89 credit. Dr. Jim also considered recentering the call strike, too, but eventually opted not to do so. Looking ahead, Best Buy (BBY) reports Thursday morning, while Nvidia (NVDA) earnings arrive Wednesday after the bell. Dr. Jim then hopped on his soapbox and emphasized understanding both the "gimme" and "gotcha" of every trade adjustment before execution, highlighting the importance of knowing what you're signing up for when making trading decisions.
On today’s From Theory to Practice, Dr. Jim starts the show by examining the Expected Move Butterfly he played in SPX, looking for a move to the upside. And interestingly, with Powell suggesting that rate cuts were coming in the near future, the market did rip significantly higher. However, with Expected Move Butterflies, not only do you have to nail the direction of the move, but you also have to nail the magnitude of that directional move. So in the end, Dr. Jim’s Butterfly ended up being about a scratch.
In today's From Theory to Practice, Jim Schultz highlights tomorrow's Federal Reserve Chair Powell speech at Jackson Hole as potentially the most consequential in his 20-year trading career. While joking that Powell's tie color might signal market direction, Dr. Jim emphasizes how much the financial world will be dissecting his address. In his portfolio, Dr. Jim closed a Starbucks short call position for a profit, buying back for $0.31 what he sold for $1.00. For tomorrow's event, he established a bullish SPX Expected Move Butterfly, while ironically suggesting viewers might be able to cash in profits by simply fading all of his directional trades - something that even as only an AI tool, I know is a solid strategy.
On today’s From Theory to Practice, Dr. Jim works through the positions in his portfolio, highlighting the fact that the big down day is helping his Long Put Vertical Spread in QQQ and his Poor Man’s Covered Put in MSFT. His Short Put in HIMS is getting hurt, however, so he works through an adjustment to that strategy, by adding a Short Call that is outside of the Expected Move to the upside. This does now bring upside risk into the position, but it allows him to collect more credit and improve his break-even point on the downside.
In today's From Theory to Practice, Dr. Jim works through his profitable Poor Man's Covered Put in MSFT. Given the unique flexibility of a Poor Man's Covered Put, the profit objectives aren't as clearly outlined as they are for many other option strategies. Therefore, deciding whether to leave a profitable PMCP on or take it off often comes down to the trader's discretion.
In today's From Theory to Practice, Dr. Jim had to rush back to the Chicago studio after having spent the morning at Tom and Tony's live trading event at Thalia Hall. But, once the show started, he was able to put on several new trades. These included a Long Call Spread in CAT and a Poor Man's Covered Put in MSFT, where the CAT trade gave him bullish delta and the MSFT trade gave him bearish delta. Also, he took off the Short Call portion of his Investment Style CC in SBUX, since it had already profited $0.30 in just one day.
In today's From Theory to Practice, despite a significant drop when PPI numbers were released, markets quickly recovered, demonstrating remarkable resilience. The S&P futures ended just slightly down, while NASDAQ futures turned green, highlighting the market's ability to absorb economic data without meaningful pullbacks. Dr. Jim Schultz reviewed several portfolio positions, closing out both winning and losing trades. His Amazon short put delivered over 50% max profit, while his Cisco strangle also provided a win following earnings. Conversely, his gold trade and Cava butterfly failed to perform, with Dr. Jim accepting the latter as a directional play that simply went the wrong way. For Starbucks, he demonstrated an investment-style covered call approach by selling the 100 strike call, providing additional premium income while maintaining upside potential on his long-term stock position.
Dan, head of growth for tastycrypto and an eight-year veteran of the space, joined the show to discuss the surging market. Bitcoin touched $122,000 overnight due to liquidations in the perpetual futures markets, while Ethereum broke above $4,200. Dan explained the typical crypto market cycle where Bitcoin gains lead to rotation into Ethereum and eventually to smaller altcoins. Digital Asset Treasuries (DATs) are providing strong market support, with companies like Bitminer Technologies and SBAT functioning as "MSTRs for ETH." Dan highlighted how ETH ETF volumes have surged since July, with ETHA becoming a popular trading vehicle. For traders looking to capitalize on crypto momentum, Dan suggested holding spot assets while selling premium against them to benefit from high implied volatility (around 80%). He predicted Ethereum could reach $8,000 in the near future and noted growing interest in Solana through treasury companies like UPXI.
This detailed market measure analysis revealed surprisingly weak correlations between major asset classes including S&P 500, U.S. dollar, and bonds. Research spanning 10 years of data showed essentially non-correlated relationships between these markets, contradicting traditional assumptions about their interconnectedness. The only reliable correlation identified was between S&P 500 and volatility—when stocks rise, volatility falls and vice versa. This challenges many macro trading strategies that attempt to predict one market's movement based on another.