The Skinny on Options: Abstract Applications

How to Pick Direction

The Skinny on Options: Abstract Applications

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

As tastytraders, we are well aware that picking direction is a futile effort from the start. The markets are far too random and unpredictable to be able to consistently profit from a directional bias, one way or another, in a short-term time horizon. Still, as we build out our portfolios, we will undoubtedly be directional to some degree.

So how do we reconcile our a directional bias at the portfolio level, with the directional biases at the individual position level? On today’s Skinny, that’s exactly what we look to answer, and we ultimately see that the directional bias you select at the portfolio level doesn’t matter much at all.

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