Tom begins the segment with a conversation about the importance of young traders getting theireven if they have a smaller account. Moving on to the research, the guys show how small-account traders can gain short premium exposure in equities without sacrificing multiple thousands of dollars in buying power requirement (BPR), which is usually the case in the liquid underlyings like SPY and IWM that we like to trade.
Sector ETFs like XLK and XRT, technology and retail stocks, allow for traders with smaller accounts to get in the game without putting up a considerable portion of their account in BPR. This is because most of these ETFs have smaller prices, and thus have smaller margin requirements. The sector ETFs that Tom presents here combine both great liquidity andso that traders can pick and choose where they think short premium opportunity might lie, dependent on which has the highest .
Finally, historical results are shown forin the sector ETFs that the team has used as examples for this segment. History dictates that also overstates in these sector ETFs as well as the market indices like SPY and IWM.