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Man, so we're going to do the 12 days of trading today. Let's talk about Dr. Jim's biggest 2025 learnings. >> Guys, we are forever students. We never stop learning. I've got my three biggest learnings from the year. Are you guys ready for this? >> Sure. >> Yeah. >> All right. So, let's kick us off here. John, get us rolling. So, I've now spent over 20 years studying the financial markets as a student, professor, academic, and practitioner. But without question, I still found myself learning new things that I hadn't before considered each and every year. So, in celebration of today's theme within the 12 days of trading, here are my three biggest discoveries from 2025. All right, we're all getting ready for 2026. I mean, we've got a short week this week, short week next week. So, let's go ahead and get going. Number one, size exposes. So, sooner or later, your true risk in the market is revealed by your trade size. It doesn't matter what you think. It doesn't matter what you say. It all gets exposed. It all gets laid bare in the end when you are are faced with a pretty big market move. And so if you have a small trade size, you have kind of this organic hedge that's built in. You can make up for a lot of different things that might come your way. When you have a really large trade size, you now have a lot less room for error and you could be too late. And what I mean by too late is if you are really really sized up and you are really really large, if a move comes your way and you're not ready for it or maybe you're not at your terminal or whatever and it starts to get away from you, it may not be so easy to cut size. I mean, you can always cut size, but the the damage may have already been done. It could be too late before you can do anything. So, what do you guys think? Size exposes. I've I've known this for a long time, but man, this year I feel like every year I I appreciate this in a brand new way. What do you guys think? >> It's number one. I mean, >> and that's why Dr. Jim put it at number one. I mean, come on. >> It's the most important thing. And I think, you know, you get you kind of get lulled into bigger size. And I think this happens to everybody. And, you know, you you're doing zero day stuff or, you know, you're you're taking big directional bets and they work for a period of time and you think you're a genius. and everybody gets, you know, oh, I'm going to go from 2 to four and now I'm 4 to 8 and 8 to 16 and soon enough you're trading, you know, these huge size positions and one goes wrong and it wipes everything out. And I I I think size is the number one. It's the hardest thing to keep under control because the stuff that works and the amount of times it works, you're like, "Okay, well, you know, I don't want to wait 20 days to do this over and over again. I'm just going to do this in two days. And then, you know, you kind of uh you you get caught. Everybody gets caught with size at some point in their trading career. And then you say, "Okay, I got it. I got it now." And then it'll catch you again in a in a handful of years. >> I'm never going to do I'm never going to do that again for the next time. >> It's impossible. It's impossible to to really not get caught every uh every so often. But you It's a learning experience. No doubt. The silver silver position that got too big. >> Silver position got too big. >> And that was my one this year. And you know you >> And it hurt. >> Oh, you Yeah, it hurts. It hurts. That's how you remember it. >> Yeah. Yeah. And you got too big. >> And you got too big in a very big product. Like you It was a double cardinal sin. Like you put on the one trade as small as you could put it on. You put it on as a Paris trade. and you took off one of the legs on the pairs trade and then you added to it. I mean, you know, putting on one contract in Nvidia all the time and now making a two contract trade, you know, that's getting big. What you did, you were 10 times as big as you should be and then you got like 30 times as big as you should be and that's, you know, be the whole portfolio becomes that trade. That's the problem with getting too big. Your whole portfolio becomes that trade. >> Yes. >> Everything else gets struggled. >> That's a great point. No, that's a great point. Yeah, that that's there's a lot of wisdom right there. A lot of wisdom right there. You know, another thing, too. >> Another thing, too, man. I got you, man. Don't worry about it. Like, it's you and me tonight, man. It's you, and me, and Philip Rivers. I mean, >> that's right. That's right. >> You know, we're just like, we're just like The Perfect Storm, which was what? George Clooney, Mark Wahlberg, and that other guy. Like, it's a perfect It's a perfect trio. Who was the other guy in the Perfect Storm? >> Was it um was it John? Was it John C. Riley? >> Yes. >> I WANT TO WOW. >> IS THAT RIGHT? >> HOW DID YOU pull that one out of your earth? the the Step Brothers guy. Yeah. >> Is that right? >> Yes, you're correct. >> Yeah, John corrected it. >> That's crazy. I don't know how I pulled that. I don't know how I pulled that out. That was a pretty nice pull. I have to >> He's done some good ones in those in that dram drama realm in uh Gangs in New York. He's in there, too. He's one of the um >> uh are they Irish? What are they? Irish, >> I think. So, yeah, I think so. Yeah. >> Yeah. >> So, you guys want to hear a funny story about gangs in New York? >> I I've only I've only seen >> Daniel Good movie. Amazing. Absolutely. >> Great. Great movie. Great movie. Daniel D. Lewis. I would have no clue, but I've seen the movie. >> So, I saw the movie, right? So, I saw the movie. It's what, 3 hours long? Three and a half hours long. >> No, John. Look that up. It's 3 hours long. >> No, >> John. I need a time stamp. It It's definitely >> If you're watching it on like TBS, >> hours with commercial. >> No, no, no. I'm talking straight through wire to wire. It's 2:45 minimum. >> No. Give me a time stamp. >> No, it's like 145. It's like a normal. >> Yeah, >> this isn't a rom, dude. This thing's 245. >> He's He's right. I think it's I think it's got some time to it. >> Let's see. >> 2 hours and 47 minutes. Look at that. >> That's a fast 2 hours and that is a movie that goes by like an hour and a half. >> Right. >> Right. Sure. Okay. Of course it should be. But I saw the movie in 2003 when I was studying abroad in France. I went with my French friends. We watched it in French. Man, it was brutal, dude. It was the longest three hours of my life. I HAD NO IDEA WHAT ANYBODY was saying. >> I was going to say, you don't see uncultured. That's >> I did a little bit at the time, but they that is too fast. Too much slang. You can't watch Gangs of New York in French. That should be a >> That's a hate That's a hate crime. >> That is a hate crime. >> Come on. >> THAT GOES AGAINST EVERYTHING cultured in France or New York. >> Yeah, >> that's a good point. That's a good point. My French friends were excited about it. >> Like we listened to we we listened to Jenny from the block on the way there. Like we watched Gangs from New York. It was awesome, dude. It was amazing for them. It was at least. But man, that was brutal. >> It was absolutely brutal. But anyway, >> watch that over the Christmas holiday. You'll like it. >> Okay. Actually, you know what I'm watching? So, I want to get back to the piece, of course, but you guys aren't going to believe this. >> So, Autumn and I just got done watching Die Hard, right? Christmas movie. Obviously, it's not even up for debate. >> It's a good one. >> But Autumn Autumn had never seen Die Hard before. We've been married 16 and 1/2 years. Had never seen Die Hard. I couldn't believe it. >> Oh, >> I don't I I could I could see that. I always a woman. I see that. I mean, I could >> It's iconic, man. It's absolutely iconic. >> Uh and by the way, if anybody ever does dispute Die Hard being a Christmas movie, all you have to do is look at the soundtrack from the movie. They've got all Christmas songs. Like that's all you need to know. Like that's your that's your bread and butter. That's your haymaker right there. So anyway, >> good point. >> All right, John, bring us back into the content. Okay, so size exposes Gangs of New York is not a movie to see in French. Num French. Uh number two. >> So number two, my second discovery. Now I'm going to be curious to hear what you guys think about this because these are my own thoughts. Okay, so these are my own thoughts. John, let's go to the second the second discovery. trading in a zero or one DTE cycle can certainly bring opportunities but it it still cannot replicate what the traditional 45 to 21 cycles can produce. So that's my first main discovery. But then secondly, how I trade the 01 DTE cycles because for me I do most of my trading on from theory to practice. So I don't do a zero DTE. It doesn't make any sense. There's only an hour left in the day. So, I do a lot of trades for the next day, which is technically a one DTE, but I kind of treat it like a zero DTE. >> But when I look at these trades, I don't like to sell premium at all. I don't like to sell premium undefined risk for kind of obvious reasons. I don't feel like, you know, you don't have any time to adjust in case you're wrong. I don't even like to sell premium defined risk. And I know the Tasty Research has a lot of promising results when it comes to this, but for me still, the results 45 to 21 are so reliable, like they're so uh consistent, man. That just makes so much more sense to me when it comes to a 01 DTE world. But if I'm looking at making some trades in this time frame, I'm typically buying premium. >> So, so give me an example how you would do it. So, you buy direction, you buy a call spread. >> Well, I'm going to give you a great there's a great example on the next slide. So, I don't want to ruin that just yet. >> But basically, I'm looking at debit spread strategies. I'm looking for directional plays. Let's just put it like that. >> I would have no problem with that. >> Could be a butterfly. Hey, there's a little preview into what's coming on the next slide, but yeah, what do you guys think about this? I may run counter to how you guys feel about this, but I'm just curious where you guys are at. >> I I don't have a problem with it. It's not the way that I would do it. You're being, you know, you're having a directional bias. You're doing it a day out. I have no I have no problem with that. I mean, you're you're probably turning a a 50/50 directional play. Um, probably I'm assuming I'm I don't know what you do. Probably buying a little bit of an out of the money spread. So, you're you're going all the direction. You're trying to get, you know, a multiple two, three times what you're paying for uh the spread. If I know you, you're probably going bullish every day because that's the way the market's been going and it's worked out well for you. So that would be my >> What? Hold on, hold on, hold on. You guys are the momentum traders now. You guys are the Momo crew. I'm trying I'm trying to be the last Moheakin to protect the short-term contrarian. >> Another great movie. Another great movie. >> Another Daniel D. Lewis. Another Daniel D. Lewis. Great movie. Last of the Moheakans. Have you ever seen that? >> No. He was in that movie. Wow. >> He's a star. >> You in that one, too? No, >> he's Hawkeye. >> Hawkeye. >> He's the final Moheakin. No, I've never seen that one. I actually >> You've never seen Wait a minute. You've never seen >> I take that back. I take that back. So when I when I studied abroad in SPAIN IN 2006. >> OH, NO. YOU WATCHING SPANISH? >> YOU CAN'T WATCHING A NATIVE AMERICAN movie in Spanish. This be You're all over the place, Jim. >> I had no idea what was going on, man. But all my Spanish friends had a great time. I'm like, I don't know what's going on, but there you go. >> That's your That's your It is a You're going to You're going to love it. First of all, you're going to love it, and you're going to instill the wisdom in your children and your lovely wife. So, you guys should watch it together this week. >> Okay. All right. >> Last weekend, I'm being dead serious. Great movie. >> A great one. It is a great one. Great movie. >> I'll give it a look. I'll give it a look. >> Great movie. >> Okay. Okay. So, Okay. So, so Tony, so you so you don't mind getting back to the second discovery. don't mind selling some premium in a zero DT world. I >> we do it intraday. We take our profits quickly. We really do from the research we do both sides typically. I don't think we've really ever done one side maybe one dime >> uh directional biasing. >> But I I think the key concept applies to both of us, Jim. Um we're managing these really quickly. Like we are trying to take risk off as quickly as possible. I think your slide kind of highlights the idea that, you know, there's a lot of risk and it's very quick in both directions on these sort of trades. And so, you know, you approaching it with the debit trade. Risk defined. You know exactly what your max loss is going in. It's defined. It's a shot trade is kind of the same thing that we are applying to our trades where, you know, we are on the short premium side. we have a lot more time left because you're towards the end of the day, but we have a we are managing them very very quickly for small amounts of profit to take that risk off. So, I think we're highlighting kind of the same idea here that these short-term trades, it's very quick risk and so you should be taking the reward very quickly, too. >> Mhm. Yeah. And I think there's a lot there's a lot of wisdom in that, too. And and that just shows kind of how, you know, you need to know what you're signing up for. Like when you go into a 45 21 day cycle, like you've got time, you can be patient. You can go for higher profit targets, 50% of max profit, whatever. But when you're in a zero DT world, it's a different ballgame. Like you've got to understand like, you know, this is Lambo in the cold. This isn't Miami in, you know, September. Like, we've got to play a different game here. You know what I'm saying? >> Mhm. For sure. >> All right. Okay. Third discovery. John, let's go to the final discovery. This is probably this has probably been the most impactful one for me because I use this strategy so much. So, the more you use a given strategy, the more subtleties and nuances you pick up about how that specific strategy reacts to varying market metrics. And I I I think we could we could apply this that statement to every strategy, but I'm just going to use one because I do this all the time. And the from theory to practice fam, they know that we do this all the time. The expected move butterfly. This is my go-to directional play for earnings, for binary events, for whatever because you're right, Tony, you can set it up for multiples of the debit paid, you know, and it could be a cheap way to take a shot. Well, what I kind of discovered was for the longest time, I really liked like Wednesday into Friday butterflies or Thursday into Friday butterflies because the way this the strategy is structured, you don't want there to be any exttrinsic value left. And the only way that's going to happen with a butterfly specifically is at the very end of the cycle. Like it's got to be like expiration day or maybe the day before. Even if you hit the move or whatever, if it's too early, those short options cling on to all that extrinsic value. And you can't get anywhere near max profit. I mean, you really can't get anywhere near max profit until the final hours. Anyway, >> I was going to I was going to say that. I was going to say that even in the butterfly that you're using. >> Let's go. Let's go. I don't What do you do then? $10 wide. It depends on the product, but I mean 10, 20, 35 if it's like SPX or something, >> you're you're going to get, you know, if it goes to or near the body of your butterfly, which is exactly what you want when you long a butterfly. You long one, short two, long one on the on the back end. So, it's a defined risk trade. Even with a day to go or that day is expiration and it goes to your short strike, what do you you know, you're up what onethird the width of the strikes, maybe a little bit more, uh maybe a little bit less depending on on where it is, but you don't go anywhere near max profit until the last hourish of the day. And even then, then then you have that gamma risk. Now, again, it's gamma risk because you have a profit in the trade. Profit goes away or you make less money if it starts going the wrong way. You don't have the gamma risk of losing more money if it goes the wrong way, but taking money off the table that you didn't ring the register for feels just as bad as watching the P&L go in the opposite direction, right? >> That's exactly right. Oh, that's so true. That's so true. But yeah, so the 01 DTE, you know, that that's your best chance to get a big home run winner, but even still then you're not going to get near the max profit. Okay, that's how I felt and I still feel that way in a lot of ways. But man, this this last year specifically, it's really opened my eyes to doing butterflies earlier in the week, like a Monday or a Tuesday going into Friday, because you just have to understand the dynamics have changed. So now I'm not going to get anywhere near max profit. I'm I'm not going to get anywhere near like a double or a triple or whatever. But now I do have multiple opportunities for the stock to kind of land in that butterfly net. Like if I do a zero or a one TT, I got one chance. I got two chances, whatever. But if I do it Monday now, it could be Tuesday, it could be Wednesday, it could be Thursday, it could be Friday. And my risk is defined. So I can let it ride the whole time if I need to. And so that is really that man, it really opened my eyes to like, all right, I can use this the same strategy I've been using for so long, but in a completely different way with different goals and different objectives. And those are the types of things that only happen when you've been doing the strategy. You can't learn it in a textbook. You can't learn it on a podcast. You have to be in it. You have to be seeing how the market reacts or how the strategy reacts to the market moving and then you begin to make adjustments. And I think that's been one of the biggest discoveries for me this past year. >> One one chance, one shot, 8 Mile. Did you Did you watch that in Germany? >> Did you watch 8 Mile in German? So, I was visiting Hong Kong in 2011 and I and I I actually grew up Did you So, did you No, all all kidding aside, did you guys did you I grew up on 10 Mile. Like my mom and dad still live on 10 Mile. >> Wow. >> Like like two miles away from where that movie was shot. >> You're like the Eminem of option trading. >> I I I'm something, man. I don't know if I would say that, but >> Oh, man. >> So good. So, >> all right. Well, let's get them a few takeaways. Sean M&M takeway trading, man. I don't know. You might be dating yourself, too. I don't know if a lot of people know who Eminem is. >> Oh, come on. Everybody knows who Eminem is. >> Any trader who takes his or her crap seriously is a perpetual student of the markets where certain things might dawn on you after many, many years and when you least expect it. Much like what I continue to experience each and every year, even after two decades in the markets. And merry Christmas and happy holidays to everybody out there. Merry Christmas and happy holidays to you. That's Dr. Jim, the Eminem of option trading here at >> And by Eminem, I think they mean like the little candies that like >> the goat. You're the goat. >> You're the goat. You're the goat. Good job out of you. Go Philip Rivers. We're going to take a quick 90 second break and come back. We got more Tasty Live after this with a market measure next. Even the S&Ps up 29 and change. Volatility in by 50s. I'm a little surprised by that. 1690 almost a 3% move on volatility. Scary low. We'll take a quick 90 second break and come back. We got a market measure next. Good job, Dr. Jim. Yep.