Dr. Schultz (an academic and trader) explains theoretical trading concepts and practical application to take your trading to the next level.
When the stock moves significantly outside of our short strikes on an Inverted Strangle, do we ever consider widening out the inversion at tastytrade?
Usually with Inverted Strangles we roll to the stock price to maximize extrinsic value, but you could intentionally sandbag the stock price to lessen the width of inversion..
With no Long Put Vertical Spread added to your strategy, the Short Put yields more credit and more delta than the Put Ratio Spread at tastytrade.
Using Delta, Theta, and Vega at tastytrade, we can forecast where option prices are likely to go - should a stock move to a certain level in the coming days.
Defined-Risk position sizing tends to scale inversely with account size - the smaller your account, the larger your defined-risk positions, and vice versa.
Volatility skew shows us that Puts normally sell for more than Calls, but it also shows us that Call Spreads sell for more than Put Spreads.
The extrinsic value within out-of-the-money options starts to decrease more quickly right around 45 DTE in the cycle - making it the perfect time for new trades.
With an Inverted Strangle, the width of the inversion effectively sets the minimum price for the Inverted Strangle - here’s why.
Stocks with higher IVRs and higher IVs allow us to establish our positions with higher overall credits - something that ultimately gives us more flexibility at tastytrade.
The Short Put strategy is without question one of the most effective strategies you can use, but it will still get tested at times. Here’s how to navigate those situations.
The volatility of the Iron Fly strategy at tastytrade can be reduced by either widening out our strikes or managing our positions early.
When you have a position on with a mixture of one lots and two lots, convert each adjustment into its aggregate impact on total credits to arrive at your true basis.
While we don’t like rolling for debits at tastytrade, there are times when your strike isn’t available in the future cycle, and you don’t have a choice.
As high probability traders at tastytrade, we lean heavily on POP and P50, but it’s important to understand the differences between these two metrics.
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