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Adjusting Directional Risk

Best Practices

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

Managing portfolio directional risk according to an individual’s preferences is essential for options traders, but the ideal way to adjust for this risk is not always clear.

For example, if a portfolio is too long delta, should you add more short delta positions or remove existing long delta positions?

Join Tom and Tony today as they discuss how the Theta Ratio could be used to address this problem.

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