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Options Jive

Monday – Friday | 8:40 – 9:00a CT

Whipsaw

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.

This segment of Options Jive discusses what a whipsaw is and how to defend against it.

A whipsaw is a trade that moves sharply in one direction but then reverses in the opposite direction shortly after. We have found that lower delta strangles have a lower chance of experiencing whipsaws. Therefore, one way to defend against whipsaws is to trade lower-delta strangles. Yet, this strategy does not protect against all whipsaws. When faced with a whipsaw, we can still roll as a defense strategy.

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