The Skinny on Options: Abstract Applications

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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.

tastytraders understand market velocity better than the rest of the industry. The notion that markets fall much faster than they rise is something that we all know, expect, and trade. Generally speaking, volatility’s inverse relationship with market prices is given as a driver of this phenomenon. Well today, we offer up a second causal relationship that could be contributing to this market dynamic. It is the notion that market makers (such as Tom and Tony in a former life) will more aggressively move their bid prices down in falling markets than they would move their ask prices up in rising markets.

Do Tom and Tony agree? Is this what they actually did in the pits? Tune in to find out!

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