tastytrade: From Theory to Practice: Recent Episodes
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Dr. Schultz (an academic and trader) explains theoretical trading concepts and practical application to take your trading to the next level.
Even when we sell premium and generate positive theta on order entry, our positions can flip over and become negative theta. This essentially means that short premium positions will slowly approach maximum value (a bad outcome), and long premium positions will slowly approach minimum value (a bad outcome). Therefore, in these situations, time is working against you no differently than it would be with a naked long call or naked long put.
Even when we sell premium and generate positive theta on order entry, our positions can flip over and become negative theta. This essentially means that short premium positions will slowly approach maximum value (a bad outcome), and long premium positions will slowly approach minimum value (a bad outcome). Therefore, in these situations, time is working against you no differently than it would be with a naked long call or naked long put.
As premium sellers, we much prefer higher implied volatility for new option strategies. But much of the time in the market, volatility is on the lower end, so we need to have alternative strategies available to us for these environments, too. This is where a strategy like a Diagonal Spread is such a good strategy to have in your repertoire.
As premium sellers, we much prefer higher implied volatility for new option strategies. But much of the time in the market, volatility is on the lower end, so we need to have alternative strategies available to us for these environments, too. This is where a strategy like a Diagonal Spread is such a good strategy to have in your repertoire.
Today, we’re live on YouTube for the final time of 2023, so we offer up our outlook for the overall market for next year. This includes a prediction in SPY, TLT, and GLD. Then we answer as many of your questions as we can!
Today, we’re live on YouTube for the final time of 2023, so we offer up our outlook for the overall market for next year. This includes a prediction in SPY, TLT, and GLD. Then we answer as many of your questions as we can!
Today, we’re live on YouTube talking about the possibility of a year-end rally in the market. With the big rally today in the major indexes, it seems more likely that the Santa Rally is back on. Will it stick so the bulls can end the year on a high note? Or will it simply be another opportunity for the bears to short at higher prices? Let’s discuss!
Today, we’re live on YouTube talking about the possibility of a year-end rally in the market. With the big rally today in the major indexes, it seems more likely that the Santa Rally is back on. Will it stick so the bulls can end the year on a high note? Or will it simply be another opportunity for the bears to short at higher prices? Let’s discuss!
Today, we’re live on YouTube taking as many of your questions as we can! And some great ones came in:
If I have a $4500 account and don't want to exceed a 1:1 ratio w/the SPY, I need to keep my delta below 11 or 12, right?
What is an ideal Vertical Put Spread on SPY for you?
I’m often wrong on direction, my positions slowly die as the underlying moves unfavorably, punching through the strategy’s directional buffer. How do I get on track?
How would you buy crash lotto tickets? A bucket of $1-$5 priced 30dte vxx call debit spreads?
What is the best way to hedge a potential 10-15% drop in Nasdaq?
Today, we’re live on YouTube taking as many of your questions as we can! And some great ones came in:
If I have a $4500 account and don't want to exceed a 1:1 ratio w/the SPY, I need to keep my delta below 11 or 12, right?
What is an ideal Vertical Put Spread on SPY for you?
I’m often wrong on direction, my positions slowly die as the underlying moves unfavorably, punching through the strategy’s directional buffer. How do I get on track?
How would you buy crash lotto tickets? A bucket of $1-$5 priced 30dte vxx call debit spreads?
What is the best way to hedge a potential 10-15% drop in Nasdaq?
When you have a long OTM strategy that isn’t working, there is no reason to close out the position when it’s marking at/near zero. The position may never come back, but you literally cannot lose anymore, so there is no reason not to hold it. This idea applies to any long premium strategy, such as a long call, long put, or long vertical spread.
When you have a long OTM strategy that isn’t working, there is no reason to close out the position when it’s marking at/near zero. The position may never come back, but you literally cannot lose anymore, so there is no reason not to hold it. This idea applies to any long premium strategy, such as a long call, long put, or long vertical spread.
Today we are live on YouTube taking your questions! Some great ones that came in: What do you think about the use of straddles on index futures (i.e. /NQ, /ES, /MNQ, etc.) for profits around triple witching?
Can you say anything about when and how to "recenter" strangles? Is the 50% management rule on options selling due to risk/reward skewing against you as you start actualizing credit received?
Today we are live on YouTube taking your questions! Some great ones that came in: What do you think about the use of straddles on index futures (i.e. /NQ, /ES, /MNQ, etc.) for profits around triple witching?
Can you say anything about when and how to "recenter" strangles? Is the 50% management rule on options selling due to risk/reward skewing against you as you start actualizing credit received?
With CPI having come in well under consensus estimates for the second consecutive month, how should you consider positioning your portfolio? The market rallied hard after the miss, so what's coming next with the Fed Announcement tomorrow and triple witching on Friday?
On today's YouTube Live we discuss all of those things and take as many of your questions as we can!
With CPI having come in well under consensus estimates for the second consecutive month, how should you consider positioning your portfolio? The market rallied hard after the miss, so what's coming next with the Fed Announcement tomorrow and triple witching on Friday?
On today's YouTube Live we discuss all of those things and take as many of your questions as we can!
With both CPI and a Fed Announcement this week, the market is primed for extreme volatility. As a result, we decide to take some undefined-risk units off the table, just to lighten up our capital allocation and buying power usage. Specifically, our $DOCU earnings trade from just last week is right around a scratch, so we close it out early today.
With both CPI and a Fed Announcement this week, the market is primed for extreme volatility. As a result, we decide to take some undefined-risk units off the table, just to lighten up our capital allocation and buying power usage. Specifically, our $DOCU earnings trade from just last week is right around a scratch, so we close it out early today.
Earlier this morning, the producer price index was released, and it came in above the consensus estimate. This suggests that inflation may be peaking up again, as prices on the producer side could be increasing. Interestingly, however, the market shrugged off the news and rallied higher. So what’s going on here? We offer our take, and then, we take as many of your questions as we can!
Earlier this morning, the producer price index was released, and it came in above the consensus estimate. This suggests that inflation may be peaking up again, as prices on the producer side could be increasing. Interestingly, however, the market shrugged off the news and rallied higher. So what’s going on here? We offer our take, and then, we take as many of your questions as we can!
Next week is setting up to be a highly volatile week, with both the CPI release on Tuesday and the Fed Announcement on Wednesday. On today’s YouTube Live, we talk about what to consider going into these data points, and how to possibly position your portfolio. Then, we take as many of your questions as we can!
Next week is setting up to be a highly volatile week, with both the CPI release on Tuesday and the Fed Announcement on Wednesday. On today’s YouTube Live, we talk about what to consider going into these data points, and how to possibly position your portfolio. Then, we take as many of your questions as we can!
One of the biggest reasons we like trading stocks like AAPL, AMZN, or NFLX is because the premiums are often quite juicy in these names - yielding several important benefits. First, more credit allows us to widen our break-even points. Second, more credit makes for easier adjustments when we are defending a position. And third, more credit makes even more room for implied volatility overstatement.
One of the biggest reasons we like trading stocks like AAPL, AMZN, or NFLX is because the premiums are often quite juicy in these names - yielding several important benefits. First, more credit allows us to widen our break-even points. Second, more credit makes for easier adjustments when we are defending a position. And third, more credit makes even more room for implied volatility overstatement.
As premium sellers, we like the positioning of collecting credits on entry and playing for high probability outcomes. However, we still want to be aware of just how efficient our positions might be, in terms of the premium they are collecting. To do this, we like to compare the credit collected on the trade relative to the buying power requirement to hold the position. Generally speaking, we always try to collect at least a Premium Efficiency of about 10% or more.
As premium sellers, we like the positioning of collecting credits on entry and playing for high probability outcomes. However, we still want to be aware of just how efficient our positions might be, in terms of the premium they are collecting. To do this, we like to compare the credit collected on the trade relative to the buying power requirement to hold the position. Generally speaking, we always try to collect at least a Premium Efficiency of about 10% or more.
Today, we’re live on YouTube to answer all of your questions! Some great ones that came in were:How does an Iron Fly stack up against an Iron Condor?When you’re tested on an Iron Condor, should you roll up the untested side?What about aggressively neutralizing delta on a Short Strangle before you get tested?
Today, we’re live on YouTube to answer all of your questions! Some great ones that came in were:How does an Iron Fly stack up against an Iron Condor?When you’re tested on an Iron Condor, should you roll up the untested side?What about aggressively neutralizing delta on a Short Strangle before you get tested?
Historically speaking, December is a very strong month for the market, as the “Santa Claus Rally” normally takes place to close out the calendar year. But given the significant move up in the market already over the last few weeks, should we expect the Santa Claus Rally again this year? Today, we’re live on YouTube to share some thoughts on that very question, and then take all of your questions!
Historically speaking, December is a very strong month for the market, as the “Santa Claus Rally” normally takes place to close out the calendar year. But given the significant move up in the market already over the last few weeks, should we expect the Santa Claus Rally again this year? Today, we’re live on YouTube to share some thoughts on that very question, and then take all of your questions!
Sometimes it can be challenging to generate negative delta in your portfolio, but both short call spreads and skewed short strangles do just that. With a short call spread, you have defined-risk with a stronger directional bias to the downside, whereas with a skewed short strangle, you have undefined-risk with a weaker directional bias to the downside.
Sometimes it can be challenging to generate negative delta in your portfolio, but both short call spreads and skewed short strangles do just that. With a short call spread, you have defined-risk with a stronger directional bias to the downside, whereas with a skewed short strangle, you have undefined-risk with a weaker directional bias to the downside.
Rolling is a big part of our adjustment process, but some rolls are credit rolls and some are debit rolls. While all Undefined-Risk Strategies can be rolled for a credit, only some Defined-Risk Strategies can be rolled for a credit. Effectively how ITM the strategy might be largely determines whether or not the strategy can be rolled for a credit.
Rolling is a big part of our adjustment process, but some rolls are credit rolls and some are debit rolls. While all Undefined-Risk Strategies can be rolled for a credit, only some Defined-Risk Strategies can be rolled for a credit. Effectively how ITM the strategy might be largely determines whether or not the strategy can be rolled for a credit.
Today, we’re live on YouTube taking all your questions, while we work through the reasons for managing our positions at 21 DTE. By rolling or closing our positions early, we’re able to more favorably alter our overall Greek exposure. Furthermore, the additional extrinsic value we’re able to collect from the roll serves to improve our trade basis and widen our break-even points.
Today, we’re live on YouTube taking all your questions, while we work through the reasons for managing our positions at 21 DTE. By rolling or closing our positions early, we’re able to more favorably alter our overall Greek exposure. Furthermore, the additional extrinsic value we’re able to collect from the roll serves to improve our trade basis and widen our break-even points.
With ES at 4,000 and NQ near 12,000, the recent bear market rally has seen a surge in prices. So naturally that begs the question, how much higher can it go? Is there still significant upside heading into the end-of-the-year? Today on YouTube Live, we offer up our thoughts on all of that, as well as answering as many questions from you all as we can!
With ES at 4,000 and NQ near 12,000, the recent bear market rally has seen a surge in prices. So naturally that begs the question, how much higher can it go? Is there still significant upside heading into the end-of-the-year? Today on YouTube Live, we offer up our thoughts on all of that, as well as answering as many questions from you all as we can!
While Vega might not be as flashy as a Delta or Theta, its impact when we are Short Vega can be clearly felt in the classic strategy - The Short Strangle. Being Short Vega means we are positioned for volatility contraction, and in a Short Strangle, a significant move in either direction can hurt your profit/loss. But moves to the upside are offset by the volatility contraction we’re wanting, while moves to the downside are exacerbated by volatility expansion.
While Vega might not be as flashy as a Delta or Theta, its impact when we are Short Vega can be clearly felt in the classic strategy - The Short Strangle. Being Short Vega means we are positioned for volatility contraction, and in a Short Strangle, a significant move in either direction can hurt your profit/loss. But moves to the upside are offset by the volatility contraction we’re wanting, while moves to the downside are exacerbated by volatility expansion.
While we always aim to stay small with our position sizing, what is actually “small” is always a relative term in relation to account size. Generally speaking, we like to keep defined-risk strategies to 1-5% of our accounts, and undefined-risk strategies to 3-10% of our accounts. However, it’s worth nothing that smaller accounts ($20k or less) have to accept larger position sizes, while larger accounts ($100k or more) can more easily shrink all position sizes.
While we always aim to stay small with our position sizing, what is actually “small” is always a relative term in relation to account size. Generally speaking, we like to keep defined-risk strategies to 1-5% of our accounts, and undefined-risk strategies to 3-10% of our accounts. However, it’s worth nothing that smaller accounts ($20k or less) have to accept larger position sizes, while larger accounts ($100k or more) can more easily shrink all position sizes.
Election Day has arrived, with the 2022 midterm elections being held today! One thing we know for sure is that the markets are sure to be choppy and volatile, as results come in and we get closer to the winners being declared.But on today’s YouTube Live, we offer up a few thoughts around how the market might react to a Blue Wave vs. a Red Wave.
Election Day has arrived, with the 2022 midterm elections being held today! One thing we know for sure is that the markets are sure to be choppy and volatile, as results come in and we get closer to the winners being declared.But on today’s YouTube Live, we offer up a few thoughts around how the market might react to a Blue Wave vs. a Red Wave.
There are times when closing a position earlier than anticipated can make a lot of sense. For example, you might have gained a profit on the position much earlier than expected, so you could consider closing the trade early. Or there could be some event-driven risks on the horizon that you want to avoid, so you could consider taking the position off here, too.
There are times when closing a position earlier than anticipated can make a lot of sense. For example, you might have gained a profit on the position much earlier than expected, so you could consider closing the trade early. Or there could be some event-driven risks on the horizon that you want to avoid, so you could consider taking the position off here, too.
The Non-Farm Payrolls number was released this morning, and it showed even more strength in the labor market. Surprisingly, the market rallied hard on the news, so it seems that good news might be good news again, even though many people think an even stronger labor market is only going to keep interest rates higher for longer.
The Non-Farm Payrolls number was released this morning, and it showed even more strength in the labor market. Surprisingly, the market rallied hard on the news, so it seems that good news might be good news again, even though many people think an even stronger labor market is only going to keep interest rates higher for longer.
The Fed just met yesterday to increase interest rates by the expected 75 bps. Is this bullish or bearish for stocks? On today’s YouTube Livestream, we discuss that, while answering as many questions as we can!
The Fed just met yesterday to increase interest rates by the expected 75 bps. Is this bullish or bearish for stocks? On today’s YouTube Livestream, we discuss that, while answering as many questions as we can!
A big part of what we do at tastytrade is making adjustments to our portfolios. Whether it be rolling the untested side of a strangle, or rolling a vertical spread out for a credit, we’re always looking for ways to reduce risk and improve break-even points.
Here is a simple 3-step process to begin the adjustment process for any position in your portfolio.
Check out this segment about the Proximity Effect.
A big part of what we do at tastytrade is making adjustments to our portfolios. Whether it be rolling the untested side of a strangle, or rolling a vertical spread out for a credit, we’re always looking for ways to reduce risk and improve break-even points.
Here is a simple 3-step process to begin the adjustment process for any position in your portfolio.
Check out this segment about the Proximity Effect.
Once we go inverted on a Short Strangle, we always have the option to un-invert back to a regular Short Strangle, but we have to be aware of our credits/debits. Since moving back to a regular Short Strangle will always cost a debit, it’s imperative that we figure out our net credit/debit on the whole position before we consider this move.Did you see our show on the Proximity Effect?
Once we go inverted on a Short Strangle, we always have the option to un-invert back to a regular Short Strangle, but we have to be aware of our credits/debits. Since moving back to a regular Short Strangle will always cost a debit, it’s imperative that we figure out our net credit/debit on the whole position before we consider this move.Did you see our show on the Proximity Effect?
Today, we’re live on YouTube, and we’re answering as many of your questions as we can! Some of the more notable ones that came in were:
What deltas do we like to choose on Ratio Spreads?
How do dividend payments affect option strategies?
Why are max profit and max loss missing from Calendar Spreads?
Today, we’re live on YouTube, and we’re answering as many of your questions as we can! Some of the more notable ones that came in were:
What deltas do we like to choose on Ratio Spreads?
How do dividend payments affect option strategies?
Why are max profit and max loss missing from Calendar Spreads?
Today, we’re live on YouTube, and we have both AAPL and AMZN earnings after the bell today. For AAPL, we’re bearish, so we look at a Skewed Strangle - skewed a bit to the downside to bring in some negative delta. For AMZN, we’re bullish, so we consider a simple Short Put to play the upside.
Today, we’re live on YouTube, and we have both AAPL and AMZN earnings after the bell today. For AAPL, we’re bearish, so we look at a Skewed Strangle - skewed a bit to the downside to bring in some negative delta. For AMZN, we’re bullish, so we consider a simple Short Put to play the upside.
Possibly the most classic adjustment across all of tastytrade is to roll the untested side - so what are we getting and what are we giving up when we do this? Generally speaking, rolling the untested side reduces your overall risk in the position, but it does expose you to a potential whipsaw, if the stock reverses back quickly. However, because our main priority with undefined-risk strategies is to reduce risk first, rolling the untested side when the time calls for it is our go-to move.
Possibly the most classic adjustment across all of tastytrade is to roll the untested side - so what are we getting and what are we giving up when we do this? Generally speaking, rolling the untested side reduces your overall risk in the position, but it does expose you to a potential whipsaw, if the stock reverses back quickly. However, because our main priority with undefined-risk strategies is to reduce risk first, rolling the untested side when the time calls for it is our go-to move.
Today, we’re live on YouTube answering as many questions as we can, but first, we analyze our NFLX, PG, and TSLA Earnings Trades. A few of the more notable questions that came in:What is Gamma Scalping and Reverse Gamma Scalping?Should bonds have a negative drift?How to trade a $1,000 account?
Today, we’re live on YouTube answering as many questions as we can, but first, we analyze our NFLX, PG, and TSLA Earnings Trades. A few of the more notable questions that came in:What is Gamma Scalping and Reverse Gamma Scalping?Should bonds have a negative drift?How to trade a $1,000 account?
Today, we’re live on YouTube answering as many questions as we can, and we also put on earnings trades in NFLX, TSLA, and PG.
For NFLX, we added a bearish Short Call Spread.
For TSLA, we played it neutral with a $10 Wide Iron Condor.
For PG, we played a bullish bias with a simple Short Put.
Today, we’re live on YouTube answering as many questions as we can, and we also put on earnings trades in NFLX, TSLA, and PG.
For NFLX, we added a bearish Short Call Spread.
For TSLA, we played it neutral with a $10 Wide Iron Condor.
For PG, we played a bullish bias with a simple Short Put.
You will often hear us say that with Short Strangles and Inverted Strangles we want the same thing (stock inside the strikes), but the reason why is different. With a Short Strangle the best-case scenario is both options out-of-the-money, while with an Inverted Strangle the best-case scenario is always both options in-the-money. Thus, while we want the stock between the strikes to minimize intrinsic value for both strategies, the end result is very different.
You will often hear us say that with Short Strangles and Inverted Strangles we want the same thing (stock inside the strikes), but the reason why is different. With a Short Strangle the best-case scenario is both options out-of-the-money, while with an Inverted Strangle the best-case scenario is always both options in-the-money. Thus, while we want the stock between the strikes to minimize intrinsic value for both strategies, the end result is very different.
Going inverted to defend a position is a typical adjustment that we like to make, but you need to be aware of the inherent tradeoff with strike selection. Generally speaking, the wider you go with your inversion, the more you will neutralize your delta, but the less profit potential you will have on the position. Therefore, just make sure you fully understand what you’ve signed up for when you go inverted with a specific strike on your strangle.
Going inverted to defend a position is a typical adjustment that we like to make, but you need to be aware of the inherent tradeoff with strike selection. Generally speaking, the wider you go with your inversion, the more you will neutralize your delta, but the less profit potential you will have on the position. Therefore, just make sure you fully understand what you’ve signed up for when you go inverted with a specific strike on your strangle.
With CPI being released this morning, the economy showed slightly more inflationary pressure than was expected. After a pre-market nosedive once the CPI number was released, surprisingly, the markets rallied hard on the open and into the afternoon.
So what does all of that mean for your portfolio? That's the topic today, as we stream live on YouTube!
With CPI being released this morning, the economy showed slightly more inflationary pressure than was expected. After a pre-market nosedive once the CPI number was released, surprisingly, the markets rallied hard on the open and into the afternoon.
So what does all of that mean for your portfolio? That's the topic today, as we stream live on YouTube!
Today, we’re live on YouTube taking all your questions, and one of the more notable ones that came in was in regards to adjusting positions aggressively. The more traditional approach to managing positions is to simply wait until your strikes are tested before you make any adjustments. But an alternative way to approach your positions is to aggressively roll each side i.e. Reverse Gamma Scalping, in an effort to maximize your extrinsic value and minimize your directional exposure.
Today, we’re live on YouTube taking all your questions, and one of the more notable ones that came in was in regards to adjusting positions aggressively. The more traditional approach to managing positions is to simply wait until your strikes are tested before you make any adjustments. But an alternative way to approach your positions is to aggressively roll each side i.e. Reverse Gamma Scalping, in an effort to maximize your extrinsic value and minimize your directional exposure.
One thing that can be very helpful to remember is that each calendar day effectively has its own, unique implied volatility. Therefore, when we examine the IVs for different binary events, we will see them commanding much higher volatilities on the option chain. Recognizing this can help us better manage the overall exposure and outlier risk of our positions.
One thing that can be very helpful to remember is that each calendar day effectively has its own, unique implied volatility. Therefore, when we examine the IVs for different binary events, we will see them commanding much higher volatilities on the option chain. Recognizing this can help us better manage the overall exposure and outlier risk of our positions.
Streaming live on YouTube, we answer as many of your questions as we can! These include:
- With this current Bear Market, have we reached a bottom, or is there more pain on the way?
- Should you adjust Calendar Spreads on a daily basis?
- Is there any benefit to going for more than 50% of max profit on your strategies?
Streaming live on YouTube, we answer as many of your questions as we can! These include:
- With this current Bear Market, have we reached a bottom, or is there more pain on the way?
- Should you adjust Calendar Spreads on a daily basis?
- Is there any benefit to going for more than 50% of max profit on your strategies?
On today’s YouTube livestream, we talk about the Bear Market Rally that we’re currently in and offer some thoughts around when it might end and further upside potential. With all the macro headwinds that the economy faces, from inflation to The Fed, a VIX at 30 still means that we are likely to see more violent moves on both sides of the market - not on the lower end.
On today’s YouTube livestream, we talk about the Bear Market Rally that we’re currently in and offer some thoughts around when it might end and further upside potential. With all the macro headwinds that the economy faces, from inflation to The Fed, a VIX at 30 still means that we are likely to see more violent moves on both sides of the market - not on the lower end.
A big part of what we do at tastytrade is generally referred to as strategic diversification, where the simple fact that different strategies move differently is extremely beneficial. Where at any single moment in time, you likely have a combination of very different positions on - a well-timed environment for managing winners.
A big part of what we do at tastytrade is generally referred to as strategic diversification, where the simple fact that different strategies move differently is extremely beneficial. Where at any single moment in time, you likely have a combination of very different positions on - a well-timed environment for managing winners.
Every trader runs into a loser eventually and oftentimes it’s sooner rather than later. When that happens, they are forced to decide whether to hold and hope for a rebound or close and redistribute capital somewhere else. While indexes are naturally better suited for holding, especially when that position aligns with your overall bias in the market, individual stocks are harder to hold indefinitely due to regular earnings announcements.
Every trader runs into a loser eventually and oftentimes it’s sooner rather than later. When that happens, they are forced to decide whether to hold and hope for a rebound or close and redistribute capital somewhere else. While indexes are naturally better suited for holding, especially when that position aligns with your overall bias in the market, individual stocks are harder to hold indefinitely due to regular earnings announcements.
A good case can be made for either a long delta portfolio or short delta portfolio. While long delta allows you to harness the power of positive drift, short delta can serve as an effective hedge against a short premium portfolio, while also capitalizing on any high velocity down moves that materialize. Keep in mind, however, that static portfolio delta and dynamic portfolio delta will work very differently in the event of a large directional move.
A good case can be made for either a long delta portfolio or short delta portfolio. While long delta allows you to harness the power of positive drift, short delta can serve as an effective hedge against a short premium portfolio, while also capitalizing on any high velocity down moves that materialize. Keep in mind, however, that static portfolio delta and dynamic portfolio delta will work very differently in the event of a large directional move.
On today's YouTube Livestream, we answer as many of your questions as we can! These include:Should you go inverted or recenter a Short Strangle?How does delta measure option price change and probability?As premium sellers, do our winners have to be smaller than our losers?
On today's YouTube Livestream, we answer as many of your questions as we can! These include:Should you go inverted or recenter a Short Strangle?How does delta measure option price change and probability?As premium sellers, do our winners have to be smaller than our losers?
Now that the CPI number has been released showing hotter than expected inflation, how should you trade that new information? What adjustments should you consider for your portfolio? How will this number impact the outlook for the rest of the year? Join us for another YT Livestream, as we answer all of those questions, and as many of YOUR questions as we can!
Now that the CPI number has been released showing hotter than expected inflation, how should you trade that new information? What adjustments should you consider for your portfolio? How will this number impact the outlook for the rest of the year? Join us for another YT Livestream, as we answer all of those questions, and as many of YOUR questions as we can!
Oftentimes, market awareness is used as a catch-all term to mean some vague understanding of the markets that is difficult to precisely define, but here are three clear examples of market awareness: undefined-risk return potential, defined-risk adjustment limitations, and binary event unit risk. Notice that the common denominator across these three examples is they all require some level of experience to understand and appreciate.
Oftentimes, market awareness is used as a catch-all term to mean some vague understanding of the markets that is difficult to precisely define, but here are three clear examples of market awareness: undefined-risk return potential, defined-risk adjustment limitations, and binary event unit risk. Notice that the common denominator across these three examples is they all require some level of experience to understand and appreciate.
Today, we manage our KR earnings winner, and then spend the rest of the show answering YOUR questions. Some great ones that came in focused on why we manage early, my favorite statistical metric in the marketplace, and also whether or not this is a new bull market, or just a bear market rally.
Today, we manage our KR earnings winner, and then spend the rest of the show answering YOUR questions. Some great ones that came in focused on why we manage early, my favorite statistical metric in the marketplace, and also whether or not this is a new bull market, or just a bear market rally.
As active traders in the world of options, we are always monitoring how much capital we have available to allocate to our positions.
At times, our buying power will be stretched, and we will have very little capital leftover to adjust or defend our trades. When this happens, what can we do? Here is the most efficient way to restore the buying power in your account.
And today is Thursday, so we are live streaming on YouTube - where we answer as many of YOUR questions as we can!
As active traders in the world of options, we are always monitoring how much capital we have available to allocate to our positions.
At times, our buying power will be stretched, and we will have very little capital leftover to adjust or defend our trades. When this happens, what can we do? Here is the most efficient way to restore the buying power in your account.
And today is Thursday, so we are live streaming on YouTube - where we answer as many of YOUR questions as we can!
A Butterfly Spread is essentially the combination of two Vertical Spreads, so when one side gets close to max value, should you leg out and close it? You certainly can consider it, just remember that by closing the Long Call Spread early at less than max value, or paying an additional debit to buy back the Short Call Spread early, you are adding risk to the trade.
A Butterfly Spread is essentially the combination of two Vertical Spreads, so when one side gets close to max value, should you leg out and close it? You certainly can consider it, just remember that by closing the Long Call Spread early at less than max value, or paying an additional debit to buy back the Short Call Spread early, you are adding risk to the trade.
Bear markets move quickly. As tastytraders, however, we’re prepared with different strategies and adjustment mechanics for any market environment. So on today’s YouTube Livestream, we talk through some things to consider when managing your portfolio through this bear market.
And of course, we answer as many of your questions as we can!
Bear markets move quickly. As tastytraders, however, we’re prepared with different strategies and adjustment mechanics for any market environment. So on today’s YouTube Livestream, we talk through some things to consider when managing your portfolio through this bear market.
And of course, we answer as many of your questions as we can!
The heart of strategic diversification is the idea that you have a mixture of different strategies, all with varying degrees of directional bias, in your portfolio at any given point in time. Having more positions on at any given point in time yields more opportunities to manage winners, without sacrificing overall portfolio bias.
The heart of strategic diversification is the idea that you have a mixture of different strategies, all with varying degrees of directional bias, in your portfolio at any given point in time. Having more positions on at any given point in time yields more opportunities to manage winners, without sacrificing overall portfolio bias.
Rolling and adjusting are big parts of what we do as tastytraders, and you will often hear that rolling “smooths out” your deltas or “waters down” your directional bias. As we look at our AAPL and SPY positions and consider a roll on each of them, we show exactly how our deltas would indeed change from an adjustment.
Rolling and adjusting are big parts of what we do as tastytraders, and you will often hear that rolling “smooths out” your deltas or “waters down” your directional bias. As we look at our AAPL and SPY positions and consider a roll on each of them, we show exactly how our deltas would indeed change from an adjustment.
One of the more recent developments in the tastytrade research is the clear benefit of managing our positions early. Specifically, this means closing or adjusting positions at 21 DTE in the current expiration cycle. Doing this allows us to avoid the added gamma risk of our positions - especially the undefined-risk positions.And today we are live on YouTube where we answer as many questions from YOU as we can!
One of the more recent developments in the tastytrade research is the clear benefit of managing our positions early. Specifically, this means closing or adjusting positions at 21 DTE in the current expiration cycle. Doing this allows us to avoid the added gamma risk of our positions - especially the undefined-risk positions.And today we are live on YouTube where we answer as many questions from YOU as we can!
As out-of-the-money premium sellers, extrinsic value is of utmost importance to our analysis and decision making. Understanding this metric more and more is only going to improve your trading, and make your ability to adjust positions even that much more effective. Specifically with our positions, we see how extrinsic value is helping us make more money with our IWM Short Put and lose less money with our UBER Short Straddle.And today we are live on YouTube where we answer as many questions from YOU as we can!
As out-of-the-money premium sellers, extrinsic value is of utmost importance to our analysis and decision making. Understanding this metric more and more is only going to improve your trading, and make your ability to adjust positions even that much more effective. Specifically with our positions, we see how extrinsic value is helping us make more money with our IWM Short Put and lose less money with our UBER Short Straddle.And today we are live on YouTube where we answer as many questions from YOU as we can!
Directionally, 16 delta on one side and 16 delta on the other side will indeed cancel out, but a closer inspection of the characteristics of these deltas shows that they can also differ greatly in their impacts on strategy selection. Which essentially explains the basis for volatility skew in the marketplace, as significantly different IVs will lead to significantly different extrinsic values at that strike.Did you catch our recently on how to determine Delta/Theta levels for your portfolio?
Directionally, 16 delta on one side and 16 delta on the other side will indeed cancel out, but a closer inspection of the characteristics of these deltas shows that they can also differ greatly in their impacts on strategy selection. Which essentially explains the basis for volatility skew in the marketplace, as significantly different IVs will lead to significantly different extrinsic values at that strike.Did you catch our recently on how to determine Delta/Theta levels for your portfolio?
As a second derivative of the Black-Scholes Model, Gamma is an important Greek that we use in our trading all the time, but the Negative Gamma that we experience as premium sellers can be difficult to understand. Here’s how to interpret Negative Gamma, and what it means for your positions.Did you catch our recently on how to determine Delta/Theta levels for your portfolio?
As a second derivative of the Black-Scholes Model, Gamma is an important Greek that we use in our trading all the time, but the Negative Gamma that we experience as premium sellers can be difficult to understand. Here’s how to interpret Negative Gamma, and what it means for your positions.Did you catch our recently on how to determine Delta/Theta levels for your portfolio?
For today’s YouTube Live, we’re talking all things live option strategies! Whether it be a vertical spread where you want to define your risk, or a short strangle where you’re comfortable holding undefined-risk in exchange for higher probabilities, no question is off limits. Today is all about YOUR QUESTIONS.
For today’s YouTube Live, we’re talking all things live option strategies! Whether it be a vertical spread where you want to define your risk, or a short strangle where you’re comfortable holding undefined-risk in exchange for higher probabilities, no question is off limits. Today is all about YOUR QUESTIONS.
With both HD and WMT reporting earnings in the morning, we wanted to get some strategies on to position ourselves for a bullish move in either of those stocks. Specifically, we looked to use an Expected Move Butterfly in both, which could give us a great payoff if the market moves in our favor.And today, we’re streaming live on YouTube, so spend most of the show answering your questions!
With both HD and WMT reporting earnings in the morning, we wanted to get some strategies on to position ourselves for a bullish move in either of those stocks. Specifically, we looked to use an Expected Move Butterfly in both, which could give us a great payoff if the market moves in our favor.And today, we’re streaming live on YouTube, so spend most of the show answering your questions!
The main goal of an Inverted Strangle is actually no different from the main goal of a Regular Strangle - you want the stock to stay between your short strikes. What this does is essentially minimizes the intrinsic value of the strategy, while allowing the extrinsic value to fall over time. With an Inverted Strangle, however, you need to be aware of the minimum value of the strategy, as well as a reasonable expectation for management.
The main goal of an Inverted Strangle is actually no different from the main goal of a Regular Strangle - you want the stock to stay between your short strikes. What this does is essentially minimizes the intrinsic value of the strategy, while allowing the extrinsic value to fall over time. With an Inverted Strangle, however, you need to be aware of the minimum value of the strategy, as well as a reasonable expectation for management.
In recent days, the CPI and PPI have shown that inflation has stabilized and prices might be cooling off a bit. There’s still a ton of work to do to bring inflation down to meet the Fed’s ultimate goal, but it’s a good start. Either way, as a trader, how should you trade these economic numbers?That’s the topic for today’s YouTube Livestream, and of course, we answer as many of your questions as we can!
In recent days, the CPI and PPI have shown that inflation has stabilized and prices might be cooling off a bit. There’s still a ton of work to do to bring inflation down to meet the Fed’s ultimate goal, but it’s a good start. Either way, as a trader, how should you trade these economic numbers?That’s the topic for today’s YouTube Livestream, and of course, we answer as many of your questions as we can!
While we mostly focus on the relationship between Probability of Profit (POP) and credit collected as premium sellers, there also exists an important relationship between POP and debit paid. Essentially, as the POP on a long premium position increases, the debit paid also increases, which reinforces the universal principle that higher probabilities always come with a cost.
While we mostly focus on the relationship between Probability of Profit (POP) and credit collected as premium sellers, there also exists an important relationship between POP and debit paid. Essentially, as the POP on a long premium position increases, the debit paid also increases, which reinforces the universal principle that higher probabilities always come with a cost.
Regardless of our own directional bias in the market, we’re all looking to strategically diversify our portfolios. As a result, this means that even when market direction goes our way, we will have some losing positions that must be defended.With a net bullish portfolio, however, any bearish strategies that haven’t worked can actually serve as a hedge against our core portfolio as expiration approaches.
Regardless of our own directional bias in the market, we’re all looking to strategically diversify our portfolios. As a result, this means that even when market direction goes our way, we will have some losing positions that must be defended.With a net bullish portfolio, however, any bearish strategies that haven’t worked can actually serve as a hedge against our core portfolio as expiration approaches.
As you begin to trade different positions and build your portfolio, you will naturally wonder just how many positions you should carry in your portfolio. As is the case with most things in the market, the answer is multi-faceted, and there is no one-size-fits-all solution. But thinking in terms of different account sizes and experience levels, we offer a loose reference to help you find your personal sweet spot.
As you begin to trade different positions and build your portfolio, you will naturally wonder just how many positions you should carry in your portfolio. As is the case with most things in the market, the answer is multi-faceted, and there is no one-size-fits-all solution. But thinking in terms of different account sizes and experience levels, we offer a loose reference to help you find your personal sweet spot.
As premium sellers who take the short side of the option contract, assignments are a cost of doing business and will happen from time to time. But when there’s an upcoming dividend on the horizon, assignments can be a more regular occurrence. Here’s what to look for to keep your assignment risk as low as possible in the face of an upcoming dividend.And since it’s a Thursday, we are LIVE on YouTube - so we take as many of your questions as we can!
As premium sellers who take the short side of the option contract, assignments are a cost of doing business and will happen from time to time. But when there’s an upcoming dividend on the horizon, assignments can be a more regular occurrence. Here’s what to look for to keep your assignment risk as low as possible in the face of an upcoming dividend.And since it’s a Thursday, we are LIVE on YouTube - so we take as many of your questions as we can!
Oftentimes, we’ll put on earnings trades in the longer expiration cycles - right around our typical entry point of 45 DTE. This gives us the benefit of the inevitable volatility crush from earnings, while also maintaining some muted exposure to the Greeks over the life of the trade. Furthermore, if we get the move we’re looking for from the earnings number, we always have the option to close a winner early, too.
Oftentimes, we’ll put on earnings trades in the longer expiration cycles - right around our typical entry point of 45 DTE. This gives us the benefit of the inevitable volatility crush from earnings, while also maintaining some muted exposure to the Greeks over the life of the trade. Furthermore, if we get the move we’re looking for from the earnings number, we always have the option to close a winner early, too.
Traditional break-even point analysis shows you where you would break even on a trade at expiration. But prior to expiration, option prices include both intrinsic value and extrinsic value, so the break-even analysis needs to be approached differently. In fact, as premium sellers wanting option prices to be low, the added extrinsic value before expiration day always means early break-evens will be worse than expiration break-evens.
Traditional break-even point analysis shows you where you would break even on a trade at expiration. But prior to expiration, option prices include both intrinsic value and extrinsic value, so the break-even analysis needs to be approached differently. In fact, as premium sellers wanting option prices to be low, the added extrinsic value before expiration day always means early break-evens will be worse than expiration break-evens.
With exactly 21 DTE to go in the August cycle today, we look to manage all the positions in our portfolio that need to be managed. The reason why managing at 21 DTE is so important is that it allows us to avoid any of the gamma risk that comes with holding positions very close to expiration. Furthermore, this is more relevant for our undefined-risk strategies, as gamma risk is a much bigger issue for undefined-risk positions, as opposed to defined-risk positions.
With exactly 21 DTE to go in the August cycle today, we look to manage all the positions in our portfolio that need to be managed. The reason why managing at 21 DTE is so important is that it allows us to avoid any of the gamma risk that comes with holding positions very close to expiration. Furthermore, this is more relevant for our undefined-risk strategies, as gamma risk is a much bigger issue for undefined-risk positions, as opposed to defined-risk positions.
Big earnings day today with both AAPL and AMZN reporting after the bell tonight. On the show, we work through some strategies to consider for each, while also analyzing how our previous earnings trades in MSFT, GOOGL, SHOP, and META are faring thus far. And with it being a Thursday, we are live on YouTube, and we'll take as many of your questions as we can!
Big earnings day today with both AAPL and AMZN reporting after the bell tonight. On the show, we work through some strategies to consider for each, while also analyzing how our previous earnings trades in MSFT, GOOGL, SHOP, and META are faring thus far. And with it being a Thursday, we are live on YouTube, and we'll take as many of your questions as we can!
Defined-Risk strategies are an important part of any well-balanced portfolio. But an often overlooked aspect of defining your risk on these strategies is the simple fact that the presence of a long leg slows down the time decay on the position, and thus it will take you longer to reach whatever profit target you might have for that trade.
Every earnings trade comes with an implicit decision you have to make - use the weekly expiration cycles or the monthly expiration cycles? With the weekly cycles, you position yourself for a quicker payoff, but you run the risk of rolling at worse prices should the trade go against you. With the monthly cycles, the payoffs are inevitably slower, but the overall trade can be viewed very much like a regular 45 DTE trade.
Every earnings trade comes with an implicit decision you have to make - use the weekly expiration cycles or the monthly expiration cycles? With the weekly cycles, you position yourself for a quicker payoff, but you run the risk of rolling at worse prices should the trade go against you. With the monthly cycles, the payoffs are inevitably slower, but the overall trade can be viewed very much like a regular 45 DTE trade.
From time to time, we all have to accept losing positions. When the inevitable loser hits your portfolio, how do you decide whether to defend the position or close the trade completely? As we look at our SNAP earnings trade from last night, we analyze an important part of making this decision - the extrinsic value differential between the current cycle and the next cycle.
From time to time, we all have to accept losing positions. When the inevitable loser hits your portfolio, how do you decide whether to defend the position or close the trade completely? As we look at our SNAP earnings trade from last night, we analyze an important part of making this decision - the extrinsic value differential between the current cycle and the next cycle.
As premium sellers, our game is usually smaller winners in exchange for higher probabilities. But even still, there are times when we’re able to nail a specific strategy, and we have a large winner on our hands. When this happens, how should you handle it?Since this very thing has happened with our Expected Move Butterfly in TSLA, we talk through the different options at our disposal.And we are LIVE on YouTube, so we spend most of the show answering YOUR questions.
As premium sellers, our game is usually smaller winners in exchange for higher probabilities. But even still, there are times when we’re able to nail a specific strategy, and we have a large winner on our hands. When this happens, how should you handle it?Since this very thing has happened with our Expected Move Butterfly in TSLA, we talk through the different options at our disposal.And we are LIVE on YouTube, so we spend most of the show answering YOUR questions.
As OTM premium sellers, the buffer between the strike price and the stock price might be our biggest ally in working positions to profitability. The stock can essentially move anywhere inside of this buffer, and we’re still on track to be profitable, which explains why OTM short premium positions are always higher probability plays—don’t need to be right directionally (and can even be a bit wrong) and still win.
As OTM premium sellers, the buffer between the strike price and the stock price might be our biggest ally in working positions to profitability. The stock can essentially move anywhere inside of this buffer, and we’re still on track to be profitable, which explains why OTM short premium positions are always higher probability plays—don’t need to be right directionally (and can even be a bit wrong) and still win.
Another earnings season has come upon us, with all the heavy hitters reporting in the next couple of weeks. When it comes to a sound earnings strategy, the most important elements are position size, trade timing, and management goals. Today, we walk through how to analyze each of these components.
Another earnings season has come upon us, with all the heavy hitters reporting in the next couple of weeks. When it comes to a sound earnings strategy, the most important elements are position size, trade timing, and management goals. Today, we walk through how to analyze each of these components.
As OTM premium sellers, there is always a tradeoff between probability of profit and credit collected, and the expected move can help balance these two opposing forces. With the expected move tracking very closely to the one standard deviation on the Normal Distribution, our probabilities are usually in the 60-70% range, when our strikes are placed on the edges of the expected move—at least for undefined-risk strategies.
As OTM premium sellers, there is always a tradeoff between probability of profit and credit collected, and the expected move can help balance these two opposing forces. With the expected move tracking very closely to the one standard deviation on the Normal Distribution, our probabilities are usually in the 60-70% range, when our strikes are placed on the edges of the expected move—at least for undefined-risk strategies.
In bull markets, making money seems easy because whatever you buy just goes up a few days later, and you have an immediate profit. But what about a bear market? Well, the advantageous thing about being an active option trader is that you aren’t married to the long side like a traditional, passive investor is, so you have the flexibility to be more nimble and proactive with defending your position and switching your directional bias.And since we’re live on YouTube today, most of the show is dedicated to YOUR QUESTIONS.
In bull markets, making money seems easy because whatever you buy just goes up a few days later, and you have an immediate profit. But what about a bear market? Well, the advantageous thing about being an active option trader is that you aren’t married to the long side like a traditional, passive investor is, so you have the flexibility to be more nimble and proactive with defending your position and switching your directional bias.And since we’re live on YouTube today, most of the show is dedicated to YOUR QUESTIONS.
Option profit/loss is always determined by time (theta), volatility (vega), and direction (delta), but another way to think about delta is by way of the proximity effect. While the relationship between the stock price and strike price clearly impacts the intrinsic value of the strategy, it also impacts the extrinsic value of the strategy, as we see today.Have you seen our BRAND NEW CRASH COURSE on Rolling?
Option profit/loss is always determined by time (theta), volatility (vega), and direction (delta), but another way to think about delta is by way of the proximity effect. While the relationship between the stock price and strike price clearly impacts the intrinsic value of the strategy, it also impacts the extrinsic value of the strategy, as we see today.Have you seen our BRAND NEW CRASH COURSE on Rolling?
A big part of our strategy at tastytrade is to take profits early and manage our winners. But different strategies can have their own unique profit taking characteristics. Here’s a quick guide to the different profit targets we like to use on some of our most used strategies.Have you seen our BRAND NEW CRASH COURSE on rolling?
A big part of our strategy at tastytrade is to take profits early and manage our winners. But different strategies can have their own unique profit taking characteristics. Here’s a quick guide to the different profit targets we like to use on some of our most used strategies.Have you seen our BRAND NEW CRASH COURSE on rolling?
Adjustments are a big part of what we do to defend our positions at tastytrade. But once you’ve made an adjustment, how do you interpret your new position? How have your profit/loss dynamics changed, and how has your directional bias potentially changed? Obviously, the answers to these questions depend heavily on the specific strategy in question, so we take a look at potential adjustments in our AMZN Short Strangle and GLD Calendar Spread.Have you seen our BRAND NEW CRASH COURSE on Rolling?
Adjustments are a big part of what we do to defend our positions at tastytrade. But once you’ve made an adjustment, how do you interpret your new position? How have your profit/loss dynamics changed, and how has your directional bias potentially changed? Obviously, the answers to these questions depend heavily on the specific strategy in question, so we take a look at potential adjustments in our AMZN Short Strangle and GLD Calendar Spread.Have you seen our BRAND NEW CRASH COURSE on Rolling?
One of the most important points in time for a trade is trade entry. Here, you are able to analyze all the different metrics associated with a potential trade to make sure that you are comfortable with the risk-return tradeoff, the probability of profit, and the directional bias. As we study our Calendar Spread in WMT, we learn of some potential improvements we could make to our trade entry analysis for future Calendar Spreads.And since we are live on YouTube, we spend most of our time answering YOUR QUESTIONS.[Have you seen our BRAND NEW CRASH COURSE on Rolling?
One of the most important points in time for a trade is trade entry. Here, you are able to analyze all the different metrics associated with a potential trade to make sure that you are comfortable with the risk-return tradeoff, the probability of profit, and the directional bias. As we study our Calendar Spread in WMT, we learn of some potential improvements we could make to our trade entry analysis for future Calendar Spreads.And since we are live on YouTube, we spend most of our time answering YOUR QUESTIONS.[Have you seen our BRAND NEW CRASH COURSE on Rolling?
As active option traders, losses are simply part of the game. So when we do have the inevitable loss in our portfolios, how should we manage them? At tastytrade, there are effectively two schools of thought when it comes to managing your losers, and today, we explore both of them.Have you seen our BRAND NEW CRASH COURSE on Rolling?
As active option traders, losses are simply part of the game. So when we do have the inevitable loss in our portfolios, how should we manage them? At tastytrade, there are effectively two schools of thought when it comes to managing your losers, and today, we explore both of them.Have you seen our BRAND NEW CRASH COURSE on Rolling?
Defined-Risk Strategies are an important piece to the puzzle for every portfolio—especially the portfolios of newer traders just starting out. But the very nature of defining your risk on a trade reduces the effectiveness of these strategies. Here’s how to mitigate that reduction, and recapture some of the potency of these strategies. Have you seen our BRAND NEW CRASH COURSE on Rolling?
Defined-Risk Strategies are an important piece to the puzzle for every portfolio—especially the portfolios of newer traders just starting out. But the very nature of defining your risk on a trade reduces the effectiveness of these strategies. Here’s how to mitigate that reduction, and recapture some of the potency of these strategies. Have you seen our BRAND NEW CRASH COURSE on Rolling?
Today for the YouTube Livestream, we’re talking all things option strategies. Specifically, we look to adjust our Broken-Wing Butterfly in QQQ, and then we check in on our two Calendar Spreads in GLD and WMT.Then we focus solely on YOUR questions.Have you seen our BRAND NEW CRASH COURSE on Rolling?
Today for the YouTube Livestream, we’re talking all things option strategies. Specifically, we look to adjust our Broken-Wing Butterfly in QQQ, and then we check in on our two Calendar Spreads in GLD and WMT.Then we focus solely on YOUR questions.Have you seen our BRAND NEW CRASH COURSE on Rolling?
There are a number of benefits to selling options, but the biggest one might be the buffer that you’re able to build between the current stock price and the strike price of the option. This region offers protection against stock moves against you, which also indirectly makes any adjustments you consider easier to implement because the position will be absorbing the initial moves of the stock well.[Have you seen our BRAND NEW CRASH COURSE on Rolling?
There are a number of benefits to selling options, but the biggest one might be the buffer that you’re able to build between the current stock price and the strike price of the option. This region offers protection against stock moves against you, which also indirectly makes any adjustments you consider easier to implement because the position will be absorbing the initial moves of the stock well.[Have you seen our BRAND NEW CRASH COURSE on Rolling?
Calendar Spreads can be great strategies to utilize in low volatility environments. Low IV Options Strategies while slower moving in nature, they can take a while to reach a given profit target. But as long as you pay special attention to the extrinsic value in the front month relative to the total debit paid, you can effectively position yourself to be profitable. Have you seen our BRAND NEW CRASH COURSE on Rolling?
Calendar Spreads can be great strategies to utilize in low volatility environments. Low IV Options Strategies while slower moving in nature, they can take a while to reach a given profit target. But as long as you pay special attention to the extrinsic value in the front month relative to the total debit paid, you can effectively position yourself to be profitable. Have you seen our BRAND NEW CRASH COURSE on Rolling?
At tastytrade, one of the core components of our management strategy is to manage our positions, especially the undefined-risk positions at 21 DTE in the expiration cycle. While doing this does mean that we forgo the increased theta decay that occurs closer to the expiration, it also means that we avoid the increased gamma risk that occurs closer to expiration. And given our core philosophy of focusing on duration over direction, we like that trade.Have you seen our BRAND NEW CRASH COURSE on Rolling?
At tastytrade, one of the core components of our management strategy is to manage our positions, especially the undefined-risk positions at 21 DTE in the expiration cycle. While doing this does mean that we forgo the increased theta decay that occurs closer to the expiration, it also means that we avoid the increased gamma risk that occurs closer to expiration. And given our core philosophy of focusing on duration over direction, we like that trade.Have you seen our BRAND NEW CRASH COURSE on Rolling?
When volatility is high in the markets, we feel as tastytraders there is more opportunity for success. Still, however, higher volatility does mean that prices will move more rapidly and conditions will change more quickly. As a result, here are two keys to improve your trading in highly volatile markets, and keep your portfolio on track to reach its goals. Have you seen our BRAND NEW CRASH COURSE on Rolling?
When volatility is high in the markets, we feel as tastytraders there is more opportunity for success. Still, however, higher volatility does mean that prices will move more rapidly and conditions will change more quickly. As a result, here are two keys to improve your trading in highly volatile markets, and keep your portfolio on track to reach its goals. Have you seen our BRAND NEW CRASH COURSE on Rolling?
Arguably the most important concept a new option trader has to understand early on is the idea of moneyness. Essentially the moneyness of an option controls the potential of both the intrinsic value and the extrinsic value in the option’s price. And while the short side of the option contract wants both intrinsic and extrinsic to be as low as possible, the long side of the contract wants both intrinsic and extrinsic to be as high as possible.Have you seen our BRAND NEW CRASH COURSE on Rolling?
Arguably the most important concept a new option trader has to understand early on is the idea of moneyness. Essentially the moneyness of an option controls the potential of both the intrinsic value and the extrinsic value in the option’s price. And while the short side of the option contract wants both intrinsic and extrinsic to be as low as possible, the long side of the contract wants both intrinsic and extrinsic to be as high as possible.Have you seen our BRAND NEW CRASH COURSE on Rolling?
Whenever you consider an undefined-risk strategy, it might be useful to get in the habit of taking a look at the premium efficiency on the trade. Doing so will allow you to see how efficiently your capital is being used, and thus it might lead to making better overall decisions in terms of the trades that you take the trades that you don’t take.Have you seen our BRAND NEW CRASH COURSE on Rolling?
Whenever you consider an undefined-risk strategy, it might be useful to get in the habit of taking a look at the premium efficiency on the trade. Doing so will allow you to see how efficiently your capital is being used, and thus it might lead to making better overall decisions in terms of the trades that you take the trades that you don’t take.Have you seen our BRAND NEW CRASH COURSE on Rolling?
An Inverted Strangle is an adjustment strategy that we use often to defend positions gone wrong. In going inverted, however, it’s always a challenge to choose the right strike on the inversion. Going right to the new at-the-money strike does maximize extrinsic value, but it might also lock in a sizable loss for that cycle. So today, we weigh the gimmes and the gotchas of inverted strike selection. And we’re live on YouTube, so we spend the bulk of our time answering YOUR QUESTIONS.Have you seen our BRAND NEW CRASH COURSE on Rolling?
An Inverted Strangle is an adjustment strategy that we use often to defend positions gone wrong. In going inverted, however, it’s always a challenge to choose the right strike on the inversion. Going right to the new at-the-money strike does maximize extrinsic value, but it might also lock in a sizable loss for that cycle. So today, we weigh the gimmes and the gotchas of inverted strike selection. And we’re live on YouTube, so we spend the bulk of our time answering YOUR QUESTIONS.Have you seen our BRAND NEW CRASH COURSE on Rolling?
When making adjustments and defending a position, it’s important to understand exactly what it is that you’re wanting out of that position. With a Strangle, you’re prioritizing the room between strikes over directional bias minimization, whereas with an Inverted Strangle, you’re prioritizing directional bias minimization over profit potential. Understanding these differences is important to making the right decision in the given moment.Have you seen our BRAND NEW CRASH COURSE on Rolling?
When making adjustments and defending a position, it’s important to understand exactly what it is that you’re wanting out of that position. With a Strangle, you’re prioritizing the room between strikes over directional bias minimization, whereas with an Inverted Strangle, you’re prioritizing directional bias minimization over profit potential. Understanding these differences is important to making the right decision in the given moment.Have you seen our BRAND NEW CRASH COURSE on Rolling?
Short Puts are one of our favorite strategies to use in the market to establish positive delta and capture positive theta. But of course, there will still be times when these strategies are tested, and we have to defend and adjust our positions. So when this happens, what do we do, and how do we make our decisions?On today’s YouTube Live, those are the questions that we will answer.Have you seen our BRAND NEW CRASH COURSE on Rolling?
Short Puts are one of our favorite strategies to use in the market to establish positive delta and capture positive theta. But of course, there will still be times when these strategies are tested, and we have to defend and adjust our positions. So when this happens, what do we do, and how do we make our decisions?On today’s YouTube Live, those are the questions that we will answer.Have you seen our BRAND NEW CRASH COURSE on Rolling?
So how do you find a new options trade? At tastytrade, we have a process that we like to follow that starts with one of the pre-screened watchlists on tastyworks, sorts the stocks by their implied volatility rank, and then ends with executing a strategy that fits our desired risk-return preferences for that position.
Have you seen our BRAND NEW CRASH COURSE on Rolling?
So how do you find a new options trade? At tastytrade, we have a process that we like to follow that starts with one of the pre-screened watchlists on tastyworks, sorts the stocks by their implied volatility rank, and then ends with executing a strategy that fits our desired risk-return preferences for that position.
Have you seen our BRAND NEW CRASH COURSE on Rolling?
One of the things you will never see us do at tastytrade is buy naked long options. The reason why you won’t see this is naked long options present us with two problems, simultaneously. First, time is working against you on a naked long option, as the extrinsic value decrease over time hurts your position’s profit/loss. Second, direction is also working against you in a way, as you need the stock to move in your favor, in order to hit any of your profit targets.Have you seen our BRAND NEW CRASH COURSE on Rolling?
One of the things you will never see us do at tastytrade is buy naked long options. The reason why you won’t see this is naked long options present us with two problems, simultaneously. First, time is working against you on a naked long option, as the extrinsic value decrease over time hurts your position’s profit/loss. Second, direction is also working against you in a way, as you need the stock to move in your favor, in order to hit any of your profit targets.Have you seen our BRAND NEW CRASH COURSE on Rolling?
One of the biggest differences between stock positions and option positions is the capital allocation required for each type of trade. While stock positions require 50% margin in margin accounts, a similar option position can be put on for 20% margin, or even less. By efficiently using your capital like this, you have flexibility to address the other areas of your portfolio more easily.Have you seen our BRAND NEW CRASH COURSE on Rolling?
One of the biggest differences between stock positions and option positions is the capital allocation required for each type of trade. While stock positions require 50% margin in margin accounts, a similar option position can be put on for 20% margin, or even less. By efficiently using your capital like this, you have flexibility to address the other areas of your portfolio more easily.Have you seen our BRAND NEW CRASH COURSE on Rolling?
Defined-Risk strategies are great strategies because they allow us to actively engage in the markets and trade with high probabilities, all while limiting our risk. Still, it's important to recognize that by covering any short options with a corresponding long option, and defining our risk, there is a certain amount of friction that is introduced into the strategy. This means that beneficial metrics like positive Theta or negative Vega are reduced as a result of those long legs.
Defined-Risk strategies are great strategies because they allow us to actively engage in the markets and trade with high probabilities, all while limiting our risk. Still, it's important to recognize that by covering any short options with a corresponding long option, and defining our risk, there is a certain amount of friction that is introduced into the strategy. This means that beneficial metrics like positive Theta or negative Vega are reduced as a result of those long legs.
Defending a losing position, and making the appropriate adjustments, is a big part of the tastytrade process. And once you’ve managed a position, you have to decide if/how you should alter your profit targets. Should you stick with 50% of the original credit received? Should you adjust it higher? Should you adjust it lower?For the YouTube Live today, we answer those questions, as we take a look at our ARKK position.Did you catch our show on how to determine Delta/Theta levels for your portfolio?
Defending a losing position, and making the appropriate adjustments, is a big part of the tastytrade process. And once you’ve managed a position, you have to decide if/how you should alter your profit targets. Should you stick with 50% of the original credit received? Should you adjust it higher? Should you adjust it lower?For the YouTube Live today, we answer those questions, as we take a look at our ARKK position.Did you catch our show on how to determine Delta/Theta levels for your portfolio?
Market volatility, as measured by the VIX (spot volatility) and /VX (futures volatility) displays some very interesting patterns. First, volatility is almost always in a state of contraction, so when volatility does expand rapidly, it’s fighting against market pressure to contract back to lower levels quickly. But second, while future volatility as measured by /VX is normally higher than current volatility as measured by the VIX, also known as contango, there are times when this relationship is flipped, and the market is said to be in backwardation.Did you catch our show on how to determine Delta/Theta levels for your portfolio?
Market volatility, as measured by the VIX (spot volatility) and /VX (futures volatility) displays some very interesting patterns. First, volatility is almost always in a state of contraction, so when volatility does expand rapidly, it’s fighting against market pressure to contract back to lower levels quickly. But second, while future volatility as measured by /VX is normally higher than current volatility as measured by the VIX, also known as contango, there are times when this relationship is flipped, and the market is said to be in backwardation.Did you catch our show on how to determine Delta/Theta levels for your portfolio?
Let's talk about naked options strategies in smaller accounts! What are good undefined-risk strategies for traders with limited capital? What kind of buying power reduction should you look for? And as usual - any and all questions are welcomed and encouraged.Did you catch our show on how to determine Delta/Theta levels for your portfolio?
Let's talk about naked options strategies in smaller accounts! What are good undefined-risk strategies for traders with limited capital? What kind of buying power reduction should you look for? And as usual - any and all questions are welcomed and encouraged.Did you catch our show on how to determine Delta/Theta levels for your portfolio?
Whenever we roll a position, our primary objective is to reduce overall risk on the position. This risk reduction might come in the form of wider break-even points, less directional risk, or even less exposure to the Greeks. But whether we roll a position up, down, or out, without question, risk mitigation is the top priority.Did you catch our show on how to determine Delta/Theta levels for your portfolio?
Whenever we roll a position, our primary objective is to reduce overall risk on the position. This risk reduction might come in the form of wider break-even points, less directional risk, or even less exposure to the Greeks. But whether we roll a position up, down, or out, without question, risk mitigation is the top priority.Did you catch our show on how to determine Delta/Theta levels for your portfolio?
You’ve likely heard before that an in-the-money (ITM) Short Put is basically just like long stock, at some point. As we look at our deep ITM Short Put position in WMT, we explain how that happens, by looking at the deltas of the position relative to the deltas on a stock position. In doing so, we see that our WMT position is indeed not much different from a purely long stock position.Did you catch our show on how to determine Delta/Theta levels for your portfolio?
You’ve likely heard before that an in-the-money (ITM) Short Put is basically just like long stock, at some point. As we look at our deep ITM Short Put position in WMT, we explain how that happens, by looking at the deltas of the position relative to the deltas on a stock position. In doing so, we see that our WMT position is indeed not much different from a purely long stock position.Did you catch our show on how to determine Delta/Theta levels for your portfolio?
Sometimes rolling an in-the-money (ITM) strategy forward can be challenging when the same strikes are not available in the next cycle. In this situation, you will often have to analyze whether or not it’s worth it to adjust the strike and alter the intrinsic value of the position. As we examine a potential roll on our KR position, we work through how to interpret the roll price, especially when it’s a net debit.Did you catch our show on how to determine Delta/Theta levels for your portfolio?
Sometimes rolling an in-the-money (ITM) strategy forward can be challenging when the same strikes are not available in the next cycle. In this situation, you will often have to analyze whether or not it’s worth it to adjust the strike and alter the intrinsic value of the position. As we examine a potential roll on our KR position, we work through how to interpret the roll price, especially when it’s a net debit.Did you catch our show on how to determine Delta/Theta levels for your portfolio?
An Option Strategy Live Q&A, where any and all questions are welcomed, and nothing is off limits. Today, we answer questions about the disastrous WMT earnings from the other day, choosing between Short Puts and Put Ratio Spreads, and whether or not we’ve reached a near-term bottom in the market.
An Option Strategy Live Q&A, where any and all questions are welcomed, and nothing is off limits. Today, we answer questions about the disastrous WMT earnings from the other day, choosing between Short Puts and Put Ratio Spreads, and whether or not we’ve reached a near-term bottom in the market.
As we sell OTM strategies at trade entry, it’s common for us to have positive theta on our positions at the start. But over the life of a trade, that positive theta can flip to negative theta, particularly with defined-risk strategies. So as premium sellers that depend on decay, it’s important that we recognize this possibility.Did you catch our show last week on how to determine Delta/Theta levels for your portfolio?
As we sell OTM strategies at trade entry, it’s common for us to have positive theta on our positions at the start. But over the life of a trade, that positive theta can flip to negative theta, particularly with defined-risk strategies. So as premium sellers that depend on decay, it’s important that we recognize this possibility.Did you catch our show last week on how to determine Delta/Theta levels for your portfolio?
Arguably the biggest benefit of short options is the ability to make money on your positions without having to pick direction correctly. By having non-directional elements like positive theta and negative vega working for you, even when a stock moves against you, you can still turn a profit on your positions. As we look at where our Short Put in IWM has gone since we first put the trade on, we see this exact scenario playing out.
Did you catch our show on how to determine Delta/Theta levels for your portfolio?
Arguably the biggest benefit of short options is the ability to make money on your positions without having to pick direction correctly. By having non-directional elements like positive theta and negative vega working for you, even when a stock moves against you, you can still turn a profit on your positions. As we look at where our Short Put in IWM has gone since we first put the trade on, we see this exact scenario playing out.
Did you catch our show on how to determine Delta/Theta levels for your portfolio?
With the market continuing to drop, we take a look at the VIX to see if we can glean any useful information about market direction. While market randomness and unpredictability will always win the day, the recent clustering of volatility on the higher end does suggest that we are due for a volatility contraction.Did you catch our show on how to determine Delta/Theta levels for your portfolio?
With the market continuing to drop, we take a look at the VIX to see if we can glean any useful information about market direction. While market randomness and unpredictability will always win the day, the recent clustering of volatility on the higher end does suggest that we are due for a volatility contraction.Did you catch our show on how to determine Delta/Theta levels for your portfolio?
Strategic Diversification is at the foundation of our approach to portfolio management. By having different strategies with their own unique exposures and biases in the market, we’re able to benefit from all different market environments. Furthermore, by combining a strategically diversified portfolio with a philosophy centered on managing winners, we have a powerful combination of tools that pave the way for success. Did you catch our show on how to determine Delta/Theta levels for your portfolio?
Strategic Diversification is at the foundation of our approach to portfolio management. By having different strategies with their own unique exposures and biases in the market, we’re able to benefit from all different market environments. Furthermore, by combining a strategically diversified portfolio with a philosophy centered on managing winners, we have a powerful combination of tools that pave the way for success. Did you catch our show on how to determine Delta/Theta levels for your portfolio?
Hedging your long stock portfolio with Long Puts is certainly a strategy you can use, as we discussed on this morning’s Skinny. But it’s important to note that the cost of these Puts is steep, even the OTM strikes are never “cheap”, and the negative theta over time actually worsens with each passing day that your hedge doesn’t work.Did you catch our show last week on how to determine Delta/Theta levels for your portfolio?
Hedging your long stock portfolio with Long Puts is certainly a strategy you can use, as we discussed on this morning’s Skinny. But it’s important to note that the cost of these Puts is steep, even the OTM strikes are never “cheap”, and the negative theta over time actually worsens with each passing day that your hedge doesn’t work.Did you catch our show last week on how to determine Delta/Theta levels for your portfolio?
With any new short premium position, the best case scenario is a stock with strong liquidity, high implied volatility rank, and around 45 DTE in the cycle. Right now, if we stick to the Watchlists in the tastyworks platform, with volatility elevated across the board and 42 DTE in the June cycle, we actually have all three right now. So for a premium selling tastytrader, this is the ideal scenario.Did you catch my naked strategies for a $5,000 account segment? Check out my YouTube Series on Trade Management!
With any new short premium position, the best case scenario is a stock with strong liquidity, high implied volatility rank, and around 45 DTE in the cycle. Right now, if we stick to the Watchlists in the tastyworks platform, with volatility elevated across the board and 42 DTE in the June cycle, we actually have all three right now. So for a premium selling tastytrader, this is the ideal scenario.Did you catch my naked strategies for a $5,000 account segment? Check out my YouTube Series on Trade Management!
Similar to an Iron Condor roll, a Butterfly roll is best done by breaking the strategy down into its component parts. The Long Strangle on the outside will be a debit to roll, and the Short Straddle on the inside will be a credit to roll. And much like an Iron Condor, the objective is for the net roll between the two to be a credit, so that overall risk is reduced on the position.Did you catch my naked strategies for a $5,000 account segment?Check out my YouTube Series on Trade Management!
Similar to an Iron Condor roll, a Butterfly roll is best done by breaking the strategy down into its component parts. The Long Strangle on the outside will be a debit to roll, and the Short Straddle on the inside will be a credit to roll. And much like an Iron Condor, the objective is for the net roll between the two to be a credit, so that overall risk is reduced on the position.Did you catch my naked strategies for a $5,000 account segment?Check out my YouTube Series on Trade Management!
Oftentimes, we find ourselves in the gray area of making adjustments - where it could go either way. In these situations, it can be helpful to layer in some objectivity into the decision-making process, and this is where looking at the Delta and Probability-of-a-Touch (POT) can be extremely helpful. A quick glance at these metrics alone can often nudge you in one direction or the other.Did you catch my naked strategies for a $5,000 account segment?Check out my YouTube Series on Trade Management!
Oftentimes, we find ourselves in the gray area of making adjustments - where it could go either way. In these situations, it can be helpful to layer in some objectivity into the decision-making process, and this is where looking at the Delta and Probability-of-a-Touch (POT) can be extremely helpful. A quick glance at these metrics alone can often nudge you in one direction or the other.Did you catch my naked strategies for a $5,000 account segment?Check out my YouTube Series on Trade Management!
With our undefined-risk positions, we always want to aim to manage them at 21 DTE to avoid the gamma risk that is associated with carrying trades closer and closer to expiration. But when we look at the actual graph of gamma over time, we see that there isn’t much difference between 21 DTE and, say, 18 DTE. So if life ever gets in the way, and you can’t roll on time, an extra day or two isn’t going to matter much in the grand scheme of things.Did you catch my naked strategies for a $5,000 account segment?Check out my YouTube Series on Trade Management!
With our undefined-risk positions, we always want to aim to manage them at 21 DTE to avoid the gamma risk that is associated with carrying trades closer and closer to expiration. But when we look at the actual graph of gamma over time, we see that there isn’t much difference between 21 DTE and, say, 18 DTE. So if life ever gets in the way, and you can’t roll on time, an extra day or two isn’t going to matter much in the grand scheme of things.Did you catch my naked strategies for a $5,000 account segment?Check out my YouTube Series on Trade Management!
At tastytrade, we always like to roll our defined-risk strategies for a credit. But with a Vertical Spread, if you widen your strikes on a roll to collect that credit, you have to recognize that you’re actually adding risk to the trade. As we work through our TLT position, we see exactly how this works.Did you catch my naked strategies for a $5,000 account segment?Check out my YouTube Series on Trade Management!
At tastytrade, we always like to roll our defined-risk strategies for a credit. But with a Vertical Spread, if you widen your strikes on a roll to collect that credit, you have to recognize that you’re actually adding risk to the trade. As we work through our TLT position, we see exactly how this works.Did you catch my naked strategies for a $5,000 account segment?Check out my YouTube Series on Trade Management!
Big day in the portfolio today! After taking off our winning earnings trades from the other day in MSFT, FB, and V, we analyze some new strategies for AAPL and AMZN tonight. Specifically, we look at a Skewed Strangle in AAPL (skewed to the downside), and a bearish Broken-Wing Butterfly in AMZN. Both strategies allow us to benefit from short premium, while taking a directional bias.Did you catch my naked strategies for a $5,000 account segment? Check out my YouTube Series on Trade Management!
Big day in the portfolio today! After taking off our winning earnings trades from the other day in MSFT, FB, and V, we analyze some new strategies for AAPL and AMZN tonight. Specifically, we look at a Skewed Strangle in AAPL (skewed to the downside), and a bearish Broken-Wing Butterfly in AMZN. Both strategies allow us to benefit from short premium, while taking a directional bias.Did you catch my naked strategies for a $5,000 account segment? Check out my YouTube Series on Trade Management!
Today is one of the heaviest earnings days of the year. So we put on Call Broken-Wing Butterfly in GOOGL, an Expected Move Butterfly in MSFT, a Short Call Spread in CMG, a Short Put in FB, and a Super Bull in V. Our Super Bull from UPS yesterday worked so well, that we decided to try it again for tonight’s call in Visa.Did you catch my naked strategies for a $5,000 account segment?Check out my YouTube Series on Trade Management!
Today is one of the heaviest earnings days of the year. So we put on Call Broken-Wing Butterfly in GOOGL, an Expected Move Butterfly in MSFT, a Short Call Spread in CMG, a Short Put in FB, and a Super Bull in V. Our Super Bull from UPS yesterday worked so well, that we decided to try it again for tonight’s call in Visa.Did you catch my naked strategies for a $5,000 account segment?Check out my YouTube Series on Trade Management!
Sooner or later, the untested side that you originally rolled will itself become the tested side. When this happens, what should you do? Should you roll the other side in, or sit and do nothing? Today, Dr. Jim looks at the KR position and weighs the different options available.Did you catch Dr. Jim's naked strategies for a $5,000 account segment?Check out his YouTube Series on Trade Management!
Sooner or later, the untested side that you originally rolled will itself become the tested side. When this happens, what should you do? Should you roll the other side in, or sit and do nothing? Today, Dr. Jim looks at the KR position and weighs the different options available.Did you catch Dr. Jim's naked strategies for a $5,000 account segment?Check out his YouTube Series on Trade Management!
Following the tastytrade mechanics for strategy adjustment, we’re able to routinely reduce our overall risk with the adjustments we make to a position. By simply rolling out in time for a credit, risk is reduced as break-even points are widened. Of course, this doesn’t mean that the position is guaranteed to be profitable, but it does mean that overall losses can be mitigated with this strategy.Segment on embedded Short Verticals.Did you catch my naked strategies for a $5,000 account segment?Check out my YouTube Series on Trade Management!
Following the tastytrade mechanics for strategy adjustment, we’re able to routinely reduce our overall risk with the adjustments we make to a position. By simply rolling out in time for a credit, risk is reduced as break-even points are widened. Of course, this doesn’t mean that the position is guaranteed to be profitable, but it does mean that overall losses can be mitigated with this strategy.Segment on embedded Short Verticals.Did you catch my naked strategies for a $5,000 account segment?Check out my YouTube Series on Trade Management!
When you have a neutral strategy on, and one side has become a clear winner, it can be challenging to know what to do with the untested side. With undefined-risk strategies, we typically opt to [roll that untested side in closer to the stock price, but what about with a defined-risk strategy, such as an Iron Condor? Today on the YouTube Livestream, we discuss the main benefits of legging out versus not legging out. Did you catch my naked strategies for a $5,000 account segment? Check out my YouTube Series on Trade Management!
When you have a neutral strategy on, and one side has become a clear winner, it can be challenging to know what to do with the untested side. With undefined-risk strategies, we typically opt to [roll that untested side in closer to the stock price, but what about with a defined-risk strategy, such as an Iron Condor? Today on the YouTube Livestream, we discuss the main benefits of legging out versus not legging out. Did you catch my naked strategies for a $5,000 account segment? Check out my YouTube Series on Trade Management!
Broken-Wing Butterflies with their embedded Verticals are complex strategies, so tracking their profit/loss isn’t as straightforward as some of the simpler strategies, such as Vertical Spreads or Short Puts. But to best understand how the position will respond when the stock price moves, it’s helpful to break prices down into three possible regions: all options OTM, all options ITM, and everything in between. While the OTM and ITM outcomes are fairly simple to analyze, as we see today with our SPY position, it is the in-between area where it can be a lot more challenging to clearly track P/L changes.Did you catch my naked strategies for a $5,000 account segment?
Broken-Wing Butterflies with their embedded Verticals are complex strategies, so tracking their profit/loss isn’t as straightforward as some of the simpler strategies, such as Vertical Spreads or Short Puts. But to best understand how the position will respond when the stock price moves, it’s helpful to break prices down into three possible regions: all options OTM, all options ITM, and everything in between. While the OTM and ITM outcomes are fairly simple to analyze, as we see today with our SPY position, it is the in-between area where it can be a lot more challenging to clearly track P/L changes.Did you catch my naked strategies for a $5,000 account segment?
Normally with our trades, we enter for a credit and exit for a debit, or we enter for a debit and exit for a credit. But sometimes on the rare occasion, we can actually enter for a credit, and then exit the same position for another credit. How does this work? As we look at our current position in C, we break down exactly why this happens.Did you catch my naked strategies for a $5,000 account segment?Check out my YouTube Series on Trade Management!
Normally with our trades, we enter for a credit and exit for a debit, or we enter for a debit and exit for a credit. But sometimes on the rare occasion, we can actually enter for a credit, and then exit the same position for another credit. How does this work? As we look at our current position in C, we break down exactly why this happens.Did you catch my naked strategies for a $5,000 account segment?Check out my YouTube Series on Trade Management!
As premium sellers, we usually take advantage of the positive theta that exists in the market. But there are still times within our strategies that we will include long premium components that carry negative theta. Here are a couple ways that we’re able to mitigate the effects of negative theta, and at times, even overpower it with positive theta.Did you catch my naked strategies for a $5,000 account segment? Check out my YouTube Series on Trade Management!
As you trade more and gain experience, your market awareness will naturally improve. This will allow you to better take advantage of the different metrics we analyze at trade entry. Specifically, looking for higher implied volatility opportunities to sell premium and making sure you collect a big enough credit on your trades to justify the risk-return dynamics are two examples of how a deeper level of market awareness can benefit you.Did you catch my naked strategies for a $5,000 account segment?Check out my YouTube Series on Trade Management!
As you trade more and gain experience, your market awareness will naturally improve. This will allow you to better take advantage of the different metrics we analyze at trade entry. Specifically, looking for higher implied volatility opportunities to sell premium and making sure you collect a big enough credit on your trades to justify the risk-return dynamics are two examples of how a deeper level of market awareness can benefit you.Did you catch my naked strategies for a $5,000 account segment?Check out my YouTube Series on Trade Management!
When you have a Broken-Wing Butterfly (or even Ratio Spread) that has moved in your favor a good bit, it quickly makes the most sense to cash in the profits and close the position. This is simply because the risk:return dynamics of the trade no longer favor holding it much longer, given the move that has been made. With our Call BWB in SPY, we see this exact thing today.Did you catch my naked strategies for a $5,000 account segment?Check out my YouTube Series on Trade Management!
When you have a Broken-Wing Butterfly (or even Ratio Spread) that has moved in your favor a good bit, it quickly makes the most sense to cash in the profits and close the position. This is simply because the risk:return dynamics of the trade no longer favor holding it much longer, given the move that has been made. With our Call BWB in SPY, we see this exact thing today.Did you catch my naked strategies for a $5,000 account segment?Check out my YouTube Series on Trade Management!
Today, as our Core Strategies Series moves on, we continue our discussion on Ratio Spreads. Specifically, we discuss the relationship between Put Ratio Spreads and Naked Puts, whether or not we consider Call Ratio Spreads, and how the strategy changes with different imbalances inside of the strategy.
Today, as our Core Strategies Series moves on, we continue our discussion on Ratio Spreads. Specifically, we discuss the relationship between Put Ratio Spreads and Naked Puts, whether or not we consider Call Ratio Spreads, and how the strategy changes with different imbalances inside of the strategy.
As out-of-the-money premium sellers, we usually analyze extrinsic value on trade entry, but it’s much less common for us to pay close attention to extrinsic value (or the changes to extrinsic value) over the life of the trade. Doing this, however, can yield extremely valuable insights into what controls option pricing, which in turn, directly impacts your position’s profit/loss.
Did you catch my naked strategies for a $5,000 account segment?
Check out my YouTube Series on Trade Management!
As out-of-the-money premium sellers, we usually analyze extrinsic value on trade entry, but it’s much less common for us to pay close attention to extrinsic value (or the changes to extrinsic value) over the life of the trade. Doing this, however, can yield extremely valuable insights into what controls option pricing, which in turn, directly impacts your position’s profit/loss.
Did you catch my naked strategies for a $5,000 account segment?
Check out my YouTube Series on Trade Management!
In all of trading, especially at trade entry, there is one metric that is the most important: liquidity. With its ability to impact the bid-ask spread differential and overall competitiveness of the market, liquidity has such a wide-ranging effect that it cannot be ignored. Not to mention, with so many highly liquid alternatives available in the market, there isn’t really a great reason to ever intentionally choose an illiquid one.Did you catch my naked strategies for a $5,000 account segment?
In all of trading, especially at trade entry, there is one metric that is the most important: liquidity. With its ability to impact the bid-ask spread differential and overall competitiveness of the market, liquidity has such a wide-ranging effect that it cannot be ignored. Not to mention, with so many highly liquid alternatives available in the market, there isn’t really a great reason to ever intentionally choose an illiquid one.Did you catch my naked strategies for a $5,000 account segment?
Expected Move Iron Condors can be great strategies to play a neutral bias with defined-risk. But there will be times when you’ll want to add more of a directional bias to this basic structure, and make it bullish or bearish. Here’s how to take an Expected Move Iron Condor and make it more directional to one side.Did you catch my naked strategies for a $5,000 account segment?
When earnings are a few weeks away, it can be more challenging to find new trades. While earnings trades continue to give us opportunities, we typically don’t like to trade them until the day of the announcement. So in these situations, you can always choose shorter durations that don’t include the earnings date, or you can simply stick with indexes to avoid earnings altogether.
On the YouTube Livestream, we always answer as many questions as we can!
When earnings are a few weeks away, it can be more challenging to find new trades. While earnings trades continue to give us opportunities, we typically don’t like to trade them until the day of the announcement. So in these situations, you can always choose shorter durations that don’t include the earnings date, or you can simply stick with indexes to avoid earnings altogether.
On the YouTube Livestream, we always answer as many questions as we can!
It’s usually best to stick with your mechanics and consistently maintain your profit targets. This can help you achieve smoother results, and reduce the number of emotionally-charged decisions you make. However, there are certainly times when it’s warranted to consider deviating from your original plan - such as at 21 DTE in the cycle, just before a binary event, Binary Events and the Odds of a 2020 Market Correction - luckbox magazine or in the event that your portfolio risk has changed significantly.Check out my latest blog article! Volatility Trading: How to Trade During Volatile Markets
It’s usually best to stick with your mechanics and consistently maintain your profit targets. This can help you achieve smoother results, and reduce the number of emotionally-charged decisions you make. However, there are certainly times when it’s warranted to consider deviating from your original plan - such as at 21 DTE in the cycle, just before a binary event, Binary Events and the Odds of a 2020 Market Correction - luckbox magazine or in the event that your portfolio risk has changed significantly.Check out my latest blog article! Volatility Trading: How to Trade During Volatile Markets
As tastytraders, we’re always on the hunt for a theoretical edge with our trades. Finding these situations gives us an advantage and tilts the odds in our favor. But just as we saw this morning with Tom and Tony, there might be times where what is theoretically optimal isn’t practically possible. Still as active traders, we have to find a way to balance what is practically feasible with what is theoretically best.Check out my latest blog article! Volatility Trading: How to Trade During Volatile Markets
As tastytraders, we’re always on the hunt for a theoretical edge with our trades. Finding these situations gives us an advantage and tilts the odds in our favor. But just as we saw this morning with Tom and Tony, there might be times where what is theoretically optimal isn’t practically possible. Still as active traders, we have to find a way to balance what is practically feasible with what is theoretically best.Check out my latest blog article! Volatility Trading: How to Trade During Volatile Markets
As premium sellers in the options market, we obviously want our positions to remain out-of-the-money. By staying OTM, the positive theta on these positions leads into premium decay, and eventually, profitability. But one thing that is interesting to note is that all OTM positions are not created equally - the moneyness of the position plays a big role in determining just how long it will take to reach a given profit target.Check out my latest blog article, Volatility Trading: How Traders Can Take Advantage of Volatile Markets.
As premium sellers in the options market, we obviously want our positions to remain out-of-the-money. By staying OTM, the positive theta on these positions leads into premium decay, and eventually, profitability. But one thing that is interesting to note is that all OTM positions are not created equally - the moneyness of the position plays a big role in determining just how long it will take to reach a given profit target.Check out my latest blog article, Volatility Trading: How Traders Can Take Advantage of Volatile Markets.
A neat little trick that you can use with implied volatility in the markets is known as the “rule of 16”. Essentially, you can take the IV of any stock, divide it by 16, and the result will give you a rough approximation of the anticipated daily range in the stock. With this calculation, you can quickly gauge just how big of a range a specific stock, or the market as a whole, is expecting for the upcoming trading day.
A neat little trick that you can use with implied volatility in the markets is known as the “rule of 16”. Essentially, you can take the IV of any stock, divide it by 16, and the result will give you a rough approximation of the anticipated daily range in the stock. With this calculation, you can quickly gauge just how big of a range a specific stock, or the market as a whole, is expecting for the upcoming trading day.
Every balanced portfolio is going to have both defined-risk positions and undefined-risk positions. Defined-risk positions give the undeniable peace of mind of knowing the worst-case scenario on trade entry, while undefined-risk positions obviously leave the worst-case outcome as an unknown over its life. Interestingly though, it is actually undefined-risk strategies that provide smoother results over time, whereas defined-risk strategies can experience a good bit of volatility with their performance.Check out my latest blog article!
Every balanced portfolio is going to have both defined-risk positions and undefined-risk positions. Defined-risk positions give the undeniable peace of mind of knowing the worst-case scenario on trade entry, while undefined-risk positions obviously leave the worst-case outcome as an unknown over its life. Interestingly though, it is actually undefined-risk strategies that provide smoother results over time, whereas defined-risk strategies can experience a good bit of volatility with their performance.Check out my latest blog article!
Implied Volatility Rank, or IVR, is a key metric that we like to use at tastytrade. As IVR looks at the previous year’s range of implied volatility, it gives us a sense for where IV currently sits, relative to itself over the last year. Most times, IVR is inside a range from 0-100, but there are times when IVR can actually exceed 100. Today, we learn exactly what it means when that happens.
Implied Volatility Rank, or IVR, is a key metric that we like to use at tastytrade. As IVR looks at the previous year’s range of implied volatility, it gives us a sense for where IV currently sits, relative to itself over the last year. Most times, IVR is inside a range from 0-100, but there are times when IVR can actually exceed 100. Today, we learn exactly what it means when that happens.
Intrinsic Value and Extrinsic are fundamental to the options market, and they are equally as foundational to every active trader. Understanding when options have only extrinsic value or both intrinsic value and extrinsic value is something that routinely shows up in all corners of the market. Additionally, rolling positions can certainly alter the extrinsic value of the position, or both the intrinsic and extrinsic value of the position. To illustrate all of these relationships, we look at a few different options in TWTR.
Intrinsic Value and Extrinsic are fundamental to the options market, and they are equally as foundational to every active trader. Understanding when options have only extrinsic value or both intrinsic value and extrinsic value is something that routinely shows up in all corners of the market. Additionally, rolling positions can certainly alter the extrinsic value of the position, or both the intrinsic and extrinsic value of the position. To illustrate all of these relationships, we look at a few different options in TWTR.
For today’s show, we’re having our first ever Live Q&A session with the YouTube audience! As we’re streaming the Thursday program out on our YouTube channel, where we’re able to interact with the viewers like never before. And while there are always some incredible questions that come in, today we wanted to dedicate the entire show to answering as many as we can.
For today’s show, we’re having our first ever Live Q&A session with the YouTube audience! As we’re streaming the Thursday program out on our YouTube channel, where we’re able to interact with the viewers like never before. And while there are always some incredible questions that come in, today we wanted to dedicate the entire show to answering as many as we can.
One of the most important things we look for in a stock to trade is strong liquidity, and in an option chain, we always have to choose between monthly cycles and weekly cycles. With our focus normally on the more liquid monthly cycles, we naturally give ourselves the best chance to be filled at fair prices. But there are still times when a trade inside of a weekly cycle can make sense, as we see today with our Short Put Spread in DIA.
One of the most important things we look for in a stock to trade is strong liquidity, and in an option chain, we always have to choose between monthly cycles and weekly cycles. With our focus normally on the more liquid monthly cycles, we naturally give ourselves the best chance to be filled at fair prices. But there are still times when a trade inside of a weekly cycle can make sense, as we see today with our Short Put Spread in DIA.
During times of extreme uncertainty in the markets, we as tastytraders feel there is an abundance of opportunities available to us. Still, we want to make sure that we allocate additional capital in a way that is prudent and strategic. As a result, it is very important that we are cognizant of individual position size and strategic diversification during times like these.
During times of extreme uncertainty in the markets, we as tastytraders feel there is an abundance of opportunities available to us. Still, we want to make sure that we allocate additional capital in a way that is prudent and strategic. As a result, it is very important that we are cognizant of individual position size and strategic diversification during times like these.
As we talked about just yesterday, the best defense against an outlier move is to control your position size on entry. Doing this will allow you to withstand some significant moves against you, without feeling pressured to abandon the tastytrade mechanics.
Today in the portfolio, we see two real-time examples of how to do this: one with our iron condor in DIA, and one with our short strangle in WMT.
As we talked about just yesterday, the best defense against an outlier move is to control your position size on entry. Doing this will allow you to withstand some significant moves against you, without feeling pressured to abandon the tastytrade mechanics.
Today in the portfolio, we see two real-time examples of how to do this: one with our iron condor in DIA, and one with our short strangle in WMT.
Without question, the best defense against an outlier move is staying small with your position sizing. By keeping your size in check on order entry, you position yourself to be able to withstand most really big moves against you. This allows you to adjust your positions rationally, and stick to the tastytrade mechanics when your positions are tested.
Without question, the best defense against an outlier move is staying small with your position sizing. By keeping your size in check on order entry, you position yourself to be able to withstand most really big moves against you. This allows you to adjust your positions rationally, and stick to the tastytrade mechanics when your positions are tested.
Our standard approach for selling vertical spreads is to choose out-of-the-money strikes. This makes sense because it allows us to take advantage of short premium, while also increasing our probability of profit. But is there ever a time when a short vertical spread with in-the-money strikes should be considered? Yes, and as we see $LOW earnings coming up tomorrow morning, an upcoming earnings announcement can be a great time to use this strategy
Our standard approach for selling vertical spreads is to choose out-of-the-money strikes. This makes sense because it allows us to take advantage of short premium, while also increasing our probability of profit. But is there ever a time when a short vertical spread with in-the-money strikes should be considered? Yes, and as we see $LOW earnings coming up tomorrow morning, an upcoming earnings announcement can be a great time to use this strategy
As tastytraders, we’re always looking to take advantage of opportunities and sell high implied volatility rank (IVR). But when it comes to choosing between index products or individual stocks to sell high IVR, we almost always choose indexes. By and large, indexes aren’t exposed to the same level of outlier risk that individual stocks are, so when volatility is high across the board (like it is now), we usually opt for the indexes. Leaning on this idea, we look to add a new trade in SPY to the portfolio.
As tastytraders, we’re always looking to take advantage of opportunities and sell high implied volatility rank (IVR). But when it comes to choosing between index products or individual stocks to sell high IVR, we almost always choose indexes. By and large, indexes aren’t exposed to the same level of outlier risk that individual stocks are, so when volatility is high across the board (like it is now), we usually opt for the indexes. Leaning on this idea, we look to add a new trade in SPY to the portfolio.
Defined-Risk strategies are great additions to your portfolio because they give you the peace of mind of knowing your worst-case scenario on order entry. But over time, undefined-risk strategies are more consistent and reliable in their performance. So how can you tap into the power of undefined-risk, while still capping your max loss? One way is to widen the strikes of your strategy - something that will immediately make your position feel more naked.
Defined-Risk strategies are great additions to your portfolio because they give you the peace of mind of knowing your worst-case scenario on order entry. But over time, undefined-risk strategies are more consistent and reliable in their performance. So how can you tap into the power of undefined-risk, while still capping your max loss? One way is to widen the strikes of your strategy - something that will immediately make your position feel more naked.
With a classic Short Strangle, our typical first adjustment is to roll the untested into a tighter version of that same Short Strangle. But after this adjustment has been made, if you need to adjust again, what is the next move? Today, we explore the gimmes and the gotchas between rolling into an even tighter Short Strangle versus rolling right into a Short Straddle.
With a classic Short Strangle, our typical first adjustment is to roll the untested into a tighter version of that same Short Strangle. But after this adjustment has been made, if you need to adjust again, what is the next move? Today, we explore the gimmes and the gotchas between rolling into an even tighter Short Strangle versus rolling right into a Short Straddle.
One of the more unique things about delta is that it can be used in a variety of ways, with one of those uses being an approximate gauge of probability. While delta itself measures the probability of the option expiring ITM, double the delta actually shows you the probability of that specific price level being touched at any point before expiration. When determining the likelihood that a position can be rolled or not, this can be extremely useful, as we see with our IWM position.
One of the more unique things about delta is that it can be used in a variety of ways, with one of those uses being an approximate gauge of probability. While delta itself measures the probability of the option expiring ITM, double the delta actually shows you the probability of that specific price level being touched at any point before expiration. When determining the likelihood that a position can be rolled or not, this can be extremely useful, as we see with our IWM position.
Positive Theta is obviously at the core of what we do at tastytrade. By selling out-of-the-money premium, we’re able to put time on our side and benefit from the natural decay of option prices. When you look to add positive theta to your portfolio, however, there are effectively two different ways you could do this.
With undefined-risk strategies, you’ll be able to quickly add positive theta, whereas with defined-risk strategies, you’ll have to add positive theta more slowly. As we look to add some new trades to our portfolio, we work through the gimmes and the gotchas inside of this relationship.
Be sure to connect with Dr. Jim on Twitter!
Positive Theta is obviously at the core of what we do at tastytrade. By selling out-of-the-money premium, we’re able to put time on our side and benefit from the natural decay of option prices. When you look to add positive theta to your portfolio, however, there are effectively two different ways you could do this.
With undefined-risk strategies, you’ll be able to quickly add positive theta, whereas with defined-risk strategies, you’ll have to add positive theta more slowly. As we look to add some new trades to our portfolio, we work through the gimmes and the gotchas inside of this relationship.
Be sure to connect with Dr. Jim on Twitter!
Rolling is an important part of our defense strategy, as it allows us to extend the duration of a losing position. When we roll, however, we’re not always able to collect a credit, as we see with some of our defined-risk positions. So how do we determine if a roll is going to be a credit or debit? As we see with our IWM position today, the key is to recognize which leg of the spread is the driver of the strategy.
Be sure to connect with Dr. Jim on Twitter!
Rolling is an important part of our defense strategy, as it allows us to extend the duration of a losing position. When we roll, however, we’re not always able to collect a credit, as we see with some of our defined-risk positions. So how do we determine if a roll is going to be a credit or debit? As we see with our IWM position today, the key is to recognize which leg of the spread is the driver of the strategy.
Be sure to connect with Dr. Jim on Twitter!
Two strategies we love to use to take directional shots for earnings are the Long ATM Vertical Spread and the Expected Move Butterfly. Both of these strategies can certainly benefit from a directional move in your favor, but a nice hybrid between the two could be the Long OTM Vertical Spread. By moving our strikes just slightly OTM, we’re able to reduce the cost from what an ATM Spread would cost, while still avoiding the precision that would be required with an Expected Move Butterfly.Be sure to connect with Dr. Jim on Twitter!
A big part of what we do as tastytraders is make strategic adjustments to our portfolios. Doing this allows us to continually position our trades in probabilistically favorable situations, while reducing risk and improving break-even points. Still, it’s important to recognize when it’s appropriate to make an adjustment, and when it’s appropriate to simply sit tight. Today, we offer up a guideline to making portfolio adjustments.
Check out the full Day-to-Day Portfolio Management video on Youtube!
Be sure to connect with Dr. Jim on Twitter!
A big part of what we do as tastytraders is make strategic adjustments to our portfolios. Doing this allows us to continually position our trades in probabilistically favorable situations, while reducing risk and improving break-even points. Still, it’s important to recognize when it’s appropriate to make an adjustment, and when it’s appropriate to simply sit tight. Today, we offer up a guideline to making portfolio adjustments.
Check out the full Day-to-Day Portfolio Management video on Youtube!
Be sure to connect with Dr. Jim on Twitter!
Our entire process can be boiled down to one, singular advantage: taking advantage of the overreaction that is priced into volatility. As our research has shown over and over again, implied volatility is routinely greater than realized volatility, which ends up leaving premium sellers with an advantage over premium buyers. Interestingly, however, can this same idea be applied to stock prices themselves? In other words, can we position ourselves to take advantage of overreaction in stock price movements? Today, we look at both FB and AMZN to discuss.
Be sure to connect with Dr. Jim on Twitter!
Our entire process can be boiled down to one, singular advantage: taking advantage of the overreaction that is priced into volatility. As our research has shown over and over again, implied volatility is routinely greater than realized volatility, which ends up leaving premium sellers with an advantage over premium buyers. Interestingly, however, can this same idea be applied to stock prices themselves? In other words, can we position ourselves to take advantage of overreaction in stock price movements? Today, we look at both FB and AMZN to discuss.
Be sure to connect with Dr. Jim on Twitter!
Naked Short Calls are not normally part of our goto strategy set because they can be tough trades to hold onto in a market that naturally wants to grind higher. Furthermore, even when you are right directionally, and the stock drops, the implied volatility expansion that will likely accompany that lower stock price will work against your profitability. Interestingly, however, the IV crush that so reliably happens from earnings might be able to overcome this drag, as we see with our Naked Short Call from SBUX earnings the other day.
Be sure to connect with Dr. Jim on Twitter!
Naked Short Calls are not normally part of our goto strategy set because they can be tough trades to hold onto in a market that naturally wants to grind higher. Furthermore, even when you are right directionally, and the stock drops, the implied volatility expansion that will likely accompany that lower stock price will work against your profitability. Interestingly, however, the IV crush that so reliably happens from earnings might be able to overcome this drag, as we see with our Naked Short Call from SBUX earnings the other day.
Be sure to connect with Dr. Jim on Twitter!
Adjusting our positions over time is a key piece to the puzzle, when it comes to tastytrade management mechanics. Normally when we roll or adjust a position for a credit, it not only adds duration to the trade, but it also reduces our max loss, too. Interestingly, with a strategy like a Broken-Wing Butterfly, however, this is not necessarily the case. With our QQQ BWB, we actually increased our max risk when we closed out the Long Put Vertical Spread portion of the strategy, and today we explain how that happened.
Be sure to connect with Dr. Jim on Twitter!
Adjusting our positions over time is a key piece to the puzzle, when it comes to tastytrade management mechanics. Normally when we roll or adjust a position for a credit, it not only adds duration to the trade, but it also reduces our max loss, too. Interestingly, with a strategy like a Broken-Wing Butterfly, however, this is not necessarily the case. With our QQQ BWB, we actually increased our max risk when we closed out the Long Put Vertical Spread portion of the strategy, and today we explain how that happened.
Be sure to connect with Dr. Jim on Twitter!
Earnings continue to give us great opportunities to boost our occurrences and take advantage of high implied volatility, especially given the reliable volatility crush that occurs once the earnings announcement has been made. Interestingly, however, even after earnings are out and volatility has dropped a bit, the implied volatility rank (IVR) of the stock might still be elevated. So not only can we sell volatility here (and take advantage of all its advantages), but we don’t have to worry about the binary nature of the earnings announcement itself.
Be sure to connect with Dr. Jim on Twitter!
Earnings continue to give us great opportunities to boost our occurrences and take advantage of high implied volatility, especially given the reliable volatility crush that occurs once the earnings announcement has been made. Interestingly, however, even after earnings are out and volatility has dropped a bit, the implied volatility rank (IVR) of the stock might still be elevated. So not only can we sell volatility here (and take advantage of all its advantages), but we don’t have to worry about the binary nature of the earnings announcement itself.
Be sure to connect with Dr. Jim on Twitter!
With 21 DTE in the February cycle today, we look to roll as many positions as we can, and one of these positions is our Broken-Wing Butterfly in QQQ. As this strategy sets up very much like a Ratio Spread, we will look to adjust it in a similar fashion. Specifically, we’ll consider both rolling the entire spread out to the next cycle or taking the Long Put Vertical Spread portion off for near max value. In working through this analysis, we are reminded that defined-risk strategies are great because they put a limit on your max loss, but that “gimme” is not without a corresponding “gotcha”.
Be sure to connect with Dr. Jim on Twitter!
With 21 DTE in the February cycle today, we look to roll as many positions as we can, and one of these positions is our Broken-Wing Butterfly in QQQ. As this strategy sets up very much like a Ratio Spread, we will look to adjust it in a similar fashion. Specifically, we’ll consider both rolling the entire spread out to the next cycle or taking the Long Put Vertical Spread portion off for near max value. In working through this analysis, we are reminded that defined-risk strategies are great because they put a limit on your max loss, but that “gimme” is not without a corresponding “gotcha”.
Be sure to connect with Dr. Jim on Twitter!
From just the last few days, we have several earnings trades on in our portfolio. Specifically, we have MSFT, TSLA, and MCD, and interestingly, our approach to each of them is slightly different. Both TSLA and MCD expire this Friday, so they’ll be closed one way or another by then, but while TSLA is a lost cause, MCD is still very much alive with a chance at profitability. As for MSFT, this was more of a JEM-style trade that hasn’t worked yet but still has plenty of time until March expiration.Be sure to connect with Dr. Jim on Twitter!
From just the last few days, we have several earnings trades on in our portfolio. Specifically, we have MSFT, TSLA, and MCD, and interestingly, our approach to each of them is slightly different. Both TSLA and MCD expire this Friday, so they’ll be closed one way or another by then, but while TSLA is a lost cause, MCD is still very much alive with a chance at profitability. As for MSFT, this was more of a JEM-style trade that hasn’t worked yet but still has plenty of time until March expiration.Be sure to connect with Dr. Jim on Twitter!