Alert

Looking to access our full catalog of shows? Log in to see what's recent and get old favorites!

The Skinny on Options: Abstract Applications hero image

Mondays | 8:40 - 9:00A CT

The Skinny on Options: Abstract Applications

The vast, limitless world of derivatives is quite complicated and very complex. So join Dr. Jim and dig beneath the surface – uncover some of the more intricate ideas that this space has to offer, and then apply these abstract concepts into your trading.

Jan 11, 2021

Not only can Put-Call Parity help us build synthetic stock positions at tastytrade, but it can also help explain extrinsic value differences between Calls and Puts.

Jan 4, 2021
The higher-order Greeks, such as Charm, Vomma, and Color can give tastytraders unique insight into their new trades
Dec 21, 2020
Utility Theory, Risk-Neutral Pricing, ARCH Modeling, and Leptokurtic Distributions - the Skinny at tastytrade had a jam-packed 2020!
Dec 14, 2020
The bedrock to many of the mathematical models that we use at tastytrade is none other than the Wiener Process.
Dec 7, 2020
As tastytraders, we are all impacted by the Endowment Effect - both at the position level and the portfolio level.
Nov 30, 2020
The aggregate levels of directional bias and overall time decay will produce "constraints" that will be relevant for various account sizes.
Nov 23, 2020
Risk is not symmetric between rising prices and falling prices in equity index products, which has been shown to test our strikes more to the upside.
Nov 16, 2020
tastytrade explores what Modern Portfolio Theory might look like if it included derivatives, thus creating an "Option Frontier".
Nov 9, 2020
We use the Normal Distribution a lot at tastytrade, as the results of any series of samples taken from any distribution will themselves be "normal".
Nov 2, 2020
Every tastytrader will eventually experience hot streaks and cold streaks, but both hot streaks and cold streaks will eventually normalize to the mean
Oct 26, 2020
To understand how many occurrences we need with the tastytrade approach to options, we use population means and sample means in the Law of Large Numbers
Oct 19, 2020
Not only is time a component of Gamma Risk significant, but both moneyness and delta can have a potent impact, too.
Oct 12, 2020
While most of us at tastytrade know what gamma risk is, the why behind this what is a bit more hidden. So today, we unpack why gamma risk exists.
Oct 5, 2020
The probability density functions, which are found in the N(d1) and N(d2) pieces of the BSM, pave the way for a probabilistic approach to our portfolios.
Sep 28, 2020
From volatility to stock prices, Monte Carlo Analysis is far-reaching, and here we see it applied to the P50 metric that we use to help manage our trades.
Sep 21, 2020
With a leptokurtic distribution, most of the observations will be more tightly clustered around the mean than they would have otherwise been.
Sep 14, 2020
A 5-10 Delta Short Put might look like an easy win, but it can begin to rack up losses quickly if IV spikes from Vomma alone.
Aug 31, 2020
When we study OTM or ITM decay curves, as opposed to ATM decay curves, we see an even stronger case for trade management at 21 DTE.
Aug 24, 2020
The Square Root of t, the time variable that is found in most option pricing models, is pointing towards option price decay everywhere.
Aug 17, 2020
ARCH Models are the link between heteroskedasticity and kurtosis, but they also yield volatility clusters, which means more opportunity for tastynation
Aug 10, 2020
An ARCH model can not only help us better understand volatility changes over time, but it can help explain the positive kurtosis we observe.
Aug 3, 2020
The default longness of the investing public, couple with realized volatility consistently underwhelming implied volatility, gives tastytraders a boost.
Jul 27, 2020
We enter trades at 45 DTE to maximize our returns from positive theta, and we exit trades at 21 DTE to minimize portfolio risk
Mar 2, 2020
While Geometric Brownian Motion assumes some level of risk aversion, Option Pricing Models, such as Black-Scholes, more often assume risk neutrality.
Feb 18, 2020
As retail traders that are making decisions in real-time, the continuous nature of option pricing is not super practical or useful. Dr. Jim explains.

tastytrade content is provided solely by tastytrade, Inc. (“tastytrade”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. tastytrade, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastytrade is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. tastytrade is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors. Prior to trading securities products, please read the Characteristics and Risks of Standardized Options and the Risk Disclosure for Futures and Options found on tastyworks.com.

tastyworks, Inc. ("tastyworks") is a registered broker-dealer and member of FINRA, NFA and SIPC. tastyworks offers self-directed brokerage accounts to its customers. tastyworks does not give financial or trading advice nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastyworks’ systems, services or products. tastyworks is a wholly owned subsidiary of tastytrade, Inc (“tastytrade”). tastytrade is a trademark/servicemark owned by tastytrade.

Quiet Foundation, Inc. (“Quiet Foundation”) is a wholly-owned subsidiary of tastytrade The information on quietfoundation.com is intended for U.S. residents only. All investing involves the risk of loss. Past performance is not a guarantee of future results. Quiet Foundation does not make suitability determinations, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of Quiet Foundation’s systems, services or products.

Small Exchange, Inc. is a Designated Contract Market registered with the U.S. Commodity Futures Trading Commission. The information on this site should be considered general information and not in any case as a recommendation or advice concerning investment decisions. The reader itself is responsible for the risks associated with an investment decision based on the information stated in this material in light of his or her specific circumstances. The information on this website is for informational purposes only, and does not contend to address the financial objectives, situation, or specific needs of any individual investor. Trading in derivatives and other financial instruments involves risk, please read the Risk Disclosure Statement for Futures and Options. tastytrade is an investor in Small Exchange, Inc.

© copyright 2013 – 2021 tastytrade. All Rights Reserved. Applicable portions of the Terms of use on tastytrade.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastytrade’s podcasts as necessary to view for personal use.