Best Practices

Weekdays 8:00 – 8:20a CT

Diversification

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.

When we diversity in the stock world, the only way of doing so is by purchasing many uncorrelated underlyings. When trading options, however, we have many more avenues to explore in order to achieve diversification.

  • Diversify by Underlying/Trade Small
  • Diversify by Strategy
  • Diversify by Implied Volatility
  • Diversify by Duration

Not included in the above slides, diversifying by duration is simply selling premium in different months of the option chain or by spreading out your position across different days instead of selling a lot of contracts at once. This reduces portfolio volatility.

Best Practices More installments

See All »

Latest tastytrade Videos As of February 22

Most Shared From the last 30 days