Options Jive

Monday – Friday | 8:40 – 9:00a CT

What Happens in a Market Correction?

Options Jive

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

For this segment of Options Jive, Tom and Tony discuss what happens in a market correction. In the middle of a bull market, it’s easy to forget what a recession looks like.

When the market makes a correction one hidden risk is that diverse assets become more correlated. Also during a down turn, strategies also tend to become more correlated, adding to the difficulties of diversification.

One benefit of trading a market correction is the rich premium we can take due to high IV. Tips to help avoid excess drawdowns:

• Keep position sizing consistent and rebalance portfolio as needed

• Avoid single stocks, stick to indices

• Diversify across multiple asset classes

• Use a mix of defined and Undefined Risk Strategies

• Stay mechanical

Options Jive More installments

See All »

Latest tastytrade Videos As of December 12

Most Shared From the last 30 days