The Skinny on Options: Abstract Applications

Short, Short, Long

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.

Many of us who actively trade and follow the tastytrade philosophy prefer to carry short delta, if we have a directional stance at all with our portfolios. Still, even with this bearish bias, we lean heavily on Short Puts to create some long delta positions against this core short position. As a result, we’re actually carrying long vanna, too. Vanna measures delta’s sensitivity to changes in implied volatility, and while this higher order Greek is no charm and might seem to be only a theoretical construct, it actually has extremely practical applications - especially inside of a short portfolio with Short Puts.

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