Market Measures

Monday – Friday | 9:00 – 9:20a CT


Market Measures

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

According to our study, extreme 2 Standard Deviation reversals a day after a 2 SD move is independent. However, when we increased the timeframe, chances of price reversal would increase, which implies contrarian trading opportunities.

We tested if the stock would “fill the gap” in 1 Day, 5 Days, or 45 Days after a 2 SD move on one year price data of all S&P companies, and the results show that there is a 5% chance that the gaps are filled in 1 day, which aligns with normal distribution suggestion for random moves.

There is a 22% and 61% chance that the gaps are filled in 5 Days or 45 Days, respectively. The increasing probability of filling the gaps with the increase of timeframe shows an increased chance of price reversal and contrarian trading when timeframe increases.

Tune in as Tom and Tony examine this studio in more detail!

Market Measures More installments

See All »

Latest tastytrade Videos As of December 09

Most Shared From the last 30 days