In today’s Tastytrade Options Crash Course episode, we begin to put all the pieces together at the portfolio level, and the first thing we learn is that you can be bullish, bearish, or neutral. For traders who want to be bullish, they will have the positive drift of Geometric Brownian Motion in their favor (which can help buffer the shocks of GBM).
For traders who prefer a bearish bias in the market, the short vega hedge, tail risk, and downside velocity arguments all make this a viable option.
And for traders who would rather be neutral (simply because “nobody knows anything”), that too, is a great portfolio strategy.
LINKS TO ALL CRASH COURSE EPISODES:
Ep #1: The Source of all Strategies
Ep #2: Deconstructing Option Prices
Ep #3: Extrinsic Value Extras
Ep #4: Profit, Direction, and Probability
Ep #5: The Natural Decay of Options
Ep #6: Trading Changes in Implied Volatility
Ep #7: Gamma: Sign, Magnitude, and Risk
Ep #8: Contracts, Decay, and IV Overstatement
Ep #9: Defined-Risk Strategies: Part One
Ep #10: Defined-Risk Strategies: Part Two
Ep #11: Undefined-Risk Strategies: Part One
Ep #12: Undefined-Risk Strategies: Part Two
Ep #13: Managing Winners, Losers, and Rolling
Ep #14: Directional Bias at the Portfolio Level
Ep #15: Positive Theta at the Portfolio Level
Ep #16: Putting it all Together: Trade Entry and Exit
Ep #17: Putting it all Together: Trade Management