The Skinny On Options Math

Dispersion Trading

The Skinny On Options Math

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

Dispersion Trading is a directionless attempt at index arbitrage based around trading options for an index against options for (some of) its constituents. That is, you either sell strangles or iron condors in the index while buying them in one or a few of the components or vise versa.

Today, Tom Sosnoff and Tony Battista are joined by Jacob Perlman as Jacob discusses Dispersion Trading. Next, Jacob explains why someone would use a dispersion trading strategy and what it attempts to accomplish. Finally, the guys talk about how the volatility can be different when looking at the index and its components and how you can use this to trade your beliefs about the future!

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