Find out how prop trading differs from retail trading and how certain trading mechanics are the same!

The Skinny On Options Math hero image

The Skinny On Options Math

Options pricing models all revolve around probability theory. Though the math is done for you by your trading platform, we believe that understanding the number crunching behind the scenes will jump-start your trading. Join us as we show you how it's done.

May 5, 2021

Discover how trading in a variety of underlyings can allow us to reduce risk without hurting profits.

Apr 28, 2021

Find out how accurate delta is as an estimate for probability of profit when trading options. 

Apr 21, 2021

Find out what mean reversion is when trading stocks, options and futures and learn where we might find it in the market, and where we definitely don’t.

Apr 14, 2021

tastytrade discusses the Kelly Criterion, which gives a mathematically optimal answer to this question in idealized circumstances, and how we can look to apply it in real world situations.

Apr 7, 2021

Find out how "jagged" charts are measured mathematically and how pairs trading can offset risk in rapidly moving underlyings. 

Mar 31, 2021

tastytrade discusses the technical meaning of no-arbitrage, how it connects to the risk-neutral measure, and where it leaves market participants.

Mar 24, 2021

tastytraders know how to trade when volatility is high, but what can we do when it's low?

Mar 17, 2021
Second order Greeks can provide a deeper look into how option prices will evolve over time or respond changes in the market, tastytrade explains.
Mar 10, 2021

During large market movements, previously delta-beta hedged positions can pick up directional risks. tastytrade explains what to do in these situations.

Mar 3, 2021

tastytrade explains why the normal distribution remains the most ubiquitous and safest assumption to make in an uncertain trading world.

Feb 24, 2021

tastytrade explains what skew actually says about the future price movements of an underlying and how the efficient market hypothesis can contradict our intuitions.

Feb 17, 2021

Volatility smile and skew describe how the market disagrees with pure Black-Scholes. tastytrade investigates how to interpret the volatility smile and skew.

Feb 10, 2021

Option math can't always account for the herd mentality of the market. tastytrade explains using GME as a recent example.

Feb 26, 2020
tastytrade discusses clustering, why it is such a powerful technique, and how clustering can be applied to pairs trading.
Aug 6, 2015
This segment is a discussion on the probability of profit, applying it to trading and the Black-Scholes model and how to use simple math to calculate it.
Jul 30, 2015
Watch this segment for an in depth discussion of the efficient Market Hypothesis and what we can learn from it to help our trading!
Jul 23, 2015
This segment delves into the topic of standard deviation in ways besides the usual options related concepts and way beyond a normal distribution pattern!
Jul 16, 2015
This segment discusses correlation and how to use correlation figures to reduce risk as opposed to offsetting with negative correlations which does not!
Jul 2, 2015
Watch this segment for a discussion of the SABR pricing model and how it differs from Black-Scholes!
Jun 25, 2015
Watch this segment of "The Skinny On Options Math" to learn all about volatility of volatility!
Jun 18, 2015
Find out from Jacob the usefulness of cycles and what makes a good model!
Jun 4, 2015
Find out why Jacob feels momentum studies are almost perfectly useless!
May 28, 2015
Find out how you can use the sum of log normal distributions to determine the future distribution of your portfolio!
May 21, 2015
Find out everything you need to know about the models that we use to price options!
May 14, 2015
Check out this segment to learn about Dispersion Trading and how you can use it to trade your assumption of the future!

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, 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 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 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.