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Sep 24, 2015

Truth Or Skepticism: Blowouts & Passive Investing

By:Mike Butler

Tom & Dylan are back with another segment of Truth or Skepticism. This time, the duo talks about a recent blowout in VW, what Tom is looking for in commodities, and how passive investors eventually take the leap to active investing. Check out the preview below!

BLOWOUTS (With the case of VW)

It’s easy for people to get seduced into blowouts as fields of opportunity. How do you distinguish?
— Dylan Ratigan

Dylan wonders how Tom thinks through blowouts, and what Tom’s ideal type of blowout is. Tom explains that he does not like opportunities that are fueled by bad business, but rather downside opportunities that are from natural causes.

A blow out is a PRICE EXTREME. We will not do something JUST based on price extreme.
— Tom Sosnoff


Everything depends on account size - we give up some upside to reduce basis immediately.
— Tom Sosnoff

Tom & Dylan discuss trading techniques in different products such as commodities vs. equities. Tom explains the difference and how down moves in each can result in different option activity.

Probability of payout - is it the overarching metric?
— Dylan Ratigan


Largest number of commodity purchases ever in my trading career right now.
— Tom Sosnoff

Tom explains why he is long so many commodities, and breaks down his strategy for getting long.


A passive investor is left with three choices: Hold, close, or ramp up. Now that the premise is challenged, what to do?
— Dylan Ratigan

Tom states that doubling down is never a thought in his mind this day and age. He believes no one is left with just those three choices - they can learn to become an active investor and feel confident in any market.

You have to WANT to learn.
— Tom Sosnoff

Interested in watching more episodes of Truth or Skepticism? Watch them here in the archives on!

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

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