Best Practices Podcast
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℗ & © 2011 tastytrade, Inc.
The tastytrade network teaches investors innovative, simple ways to trade stocks, options, and futures, take advantage of market volatility and build a successful portfolio. Tom Sosnoff leads an irreverent and playful band of floor traders who are show...
tastytrade, Inc.
This segment is designed to show every investor the best ways to execute their trading strategy. We deliver the practical side of options trading. It's tastytrade's research broken down to a more beginner level!
This segment is designed to show every investor the best ways to execute their trading strategy. We deliver the practical side of options trading. It's tastytrade's research broken down to a more beginner level!
tastytrade, Inc.
support@tastytrade.com

Best Practices  May 20, 2019  Naked Assumption
Usually, when we have a directional opinion, we like to express that in the form of short options.
The reason we choose short options instead of long options is because historically, long options underperform short options in terms of average P/L.
...
Usually, when we have a directional opinion, we like to express that in the form of short options.
The reason we choose short options instead of long options is because historically, long options underperform short options in terms of average P/L.
Although long options have theoretically unlimited profitability, in actuality, they underperform the short side.
Since we can get directional with both short and long options, we usually choose the short side because of it's higher average profits historically and its greater probability of profit.
http://feeds.tastytrade.com/media/91510/TTL_BP_190520_POD.m4a
Mon, 20 May 2019 08:28:00 0500
564.936

Best Practices  May 20, 2019  Naked Assumption
Usually, when we have a directional opinion, we like to express that in the form of short options.
The reason we choose short options instead of long options is because historically, long options underperform short options in terms of average P/L.
...
Usually, when we have a directional opinion, we like to express that in the form of short options.
The reason we choose short options instead of long options is because historically, long options underperform short options in terms of average P/L.
Although long options have theoretically unlimited profitability, in actuality, they underperform the short side.
Since we can get directional with both short and long options, we usually choose the short side because of it's higher average profits historically and its greater probability of profit.
http://feeds.tastytrade.com/media/91509/TTL_BP_190520_SEG_EDIT.mp4
Mon, 20 May 2019 08:28:00 0500
353.286

Best Practices  May 13, 2019  Price Discovery
Especially in illiquid underlyings, the process of price discovery is of great importance. For every quote, there is a bid price and an ask price. The bid is the price that the market is looking to buy, and the ask is the price that the market is looki...
Especially in illiquid underlyings, the process of price discovery is of great importance. For every quote, there is a bid price and an ask price. The bid is the price that the market is looking to buy, and the ask is the price that the market is looking to sell.
If the market is highly liquid say 1 to 2 pennies wide, we don't need to worry about price discovery as the market has already done this for us. If however, the market is 10 cent or more, then we will implement a mechanical price discovery process.
Initially, if we are looking to sell we will make an offer close to the ask price. If we do not get filled we will work our way down to the mid price. This is the price that literally middles the bid and the ask.
We will continue this process until we get filled at the best price possible. If you are looking to up your mechanical game, check out today's episode!
http://feeds.tastytrade.com/media/91280/TTL_BP_190513_POD.m4a
Mon, 13 May 2019 08:29:00 0500
804.72
Liquidity,Learn the Basics,Beginning Trader

Best Practices  May 13, 2019  Price Discovery
Especially in illiquid underlyings, the process of price discovery is of great importance. For every quote, there is a bid price and an ask price. The bid is the price that the market is looking to buy, and the ask is the price that the market is looki...
Especially in illiquid underlyings, the process of price discovery is of great importance. For every quote, there is a bid price and an ask price. The bid is the price that the market is looking to buy, and the ask is the price that the market is looking to sell.
If the market is highly liquid say 1 to 2 pennies wide, we don't need to worry about price discovery as the market has already done this for us. If however, the market is 10 cent or more, then we will implement a mechanical price discovery process.
Initially, if we are looking to sell we will make an offer close to the ask price. If we do not get filled we will work our way down to the mid price. This is the price that literally middles the bid and the ask.
We will continue this process until we get filled at the best price possible. If you are looking to up your mechanical game, check out today's episode!
http://feeds.tastytrade.com/media/91279/TTL_BP_190513_SEG_EDIT.mp4
Mon, 13 May 2019 08:29:00 0500
593.093
Liquidity,Learn the Basics,Beginning Trader

Best Practices  May 6, 2019  It's All About Cost Basis
Cost Basis is the effective price that a trade is placed. Using stock as an example, if we were to buy 100 shares of SPY, our effective cost basis would be the price paid to acquire shares.
Here are the following ways basis can be improved:
* Cov...
Cost Basis is the effective price that a trade is placed. Using stock as an example, if we were to buy 100 shares of SPY, our effective cost basis would be the price paid to acquire shares.
Here are the following ways basis can be improved:
* Covered Call
* Covered Put
* Call and Put Spreads
* Poor Man's Covered Call or Put
Essentially, cost basis improvement is a power attribute associated with the collection of credit through the sale of options.
http://feeds.tastytrade.com/media/91040/TTL_BP_190506_POD.m4a
Mon, 06 May 2019 08:32:00 0500
630.432

Best Practices  May 6, 2019  It's All About Cost Basis
Cost Basis is the effective price that a trade is placed. Using stock as an example, if we were to buy 100 shares of SPY, our effective cost basis would be the price paid to acquire shares.
Here are the following ways basis can be improved:
* Cov...
Cost Basis is the effective price that a trade is placed. Using stock as an example, if we were to buy 100 shares of SPY, our effective cost basis would be the price paid to acquire shares.
Here are the following ways basis can be improved:
* Covered Call
* Covered Put
* Call and Put Spreads
* Poor Man's Covered Call or Put
Essentially, cost basis improvement is a power attribute associated with the collection of credit through the sale of options.
http://feeds.tastytrade.com/media/91039/TTL_BP_190506_SEG_EDIT.mp4
Mon, 06 May 2019 08:32:00 0500
418.785

Best Practices  April 29, 2019  Game of Cones
By dealing with options, we enter into the world of dynamic probabilities.
We can use the following metrics to gauge different measures of probability:
* Probability of Profit
* Delta
* Probability Cones
Probability of profit is found on the...
By dealing with options, we enter into the world of dynamic probabilities.
We can use the following metrics to gauge different measures of probability:
* Probability of Profit
* Delta
* Probability Cones
Probability of profit is found on the tastyworks platform and tells you the probability that your trade will be at least $0.01 profitable by expiration.
The delta of an option tells you the probability of that option expiring in the money.
Finally, probability cones allow us to visualize where the one standard deviation move is for a particular underlying. Wherever the cone ends is the one standard deviation move for that stock in that particular timeframe.
http://feeds.tastytrade.com/media/90795/TTL_BP_190429_POD.m4a
Mon, 29 Apr 2019 08:37:00 0500
721.944

Best Practices  April 29, 2019  Game of Cones
By dealing with options, we enter into the world of dynamic probabilities.
We can use the following metrics to gauge different measures of probability:
* Probability of Profit
* Delta
* Probability Cones
Probability of profit is found on the...
By dealing with options, we enter into the world of dynamic probabilities.
We can use the following metrics to gauge different measures of probability:
* Probability of Profit
* Delta
* Probability Cones
Probability of profit is found on the tastyworks platform and tells you the probability that your trade will be at least $0.01 profitable by expiration.
The delta of an option tells you the probability of that option expiring in the money.
Finally, probability cones allow us to visualize where the one standard deviation move is for a particular underlying. Wherever the cone ends is the one standard deviation move for that stock in that particular timeframe.
http://feeds.tastytrade.com/media/90794/TTL_BP_190429_SEG_EDIT.mp4
Mon, 29 Apr 2019 08:37:00 0500
510.343

Best Practices  April 22, 2019  The Setup
Trade setup is key when placing an options trade. Factors to consider include:
* Develop assumption
* Consider prevailing Implied Volatility environment
* Identify time frame (expiration month to trade)
* Risk profile (Delta)
By considering th...
Trade setup is key when placing an options trade. Factors to consider include:
* Develop assumption
* Consider prevailing Implied Volatility environment
* Identify time frame (expiration month to trade)
* Risk profile (Delta)
By considering these four steps to place a trade will ensure consistency, confidence, and awareness around the trade's life.
http://feeds.tastytrade.com/media/90569/TTL_BP_190422_POD.m4a
Mon, 22 Apr 2019 08:31:00 0500
685.512

Best Practices  April 22, 2019  The Setup
Trade setup is key when placing an options trade. Factors to consider include:
* Develop assumption
* Consider prevailing Implied Volatility environment
* Identify time frame (expiration month to trade)
* Risk profile (Delta)
By considering th...
Trade setup is key when placing an options trade. Factors to consider include:
* Develop assumption
* Consider prevailing Implied Volatility environment
* Identify time frame (expiration month to trade)
* Risk profile (Delta)
By considering these four steps to place a trade will ensure consistency, confidence, and awareness around the trade's life.
http://feeds.tastytrade.com/media/90568/TTL_BP_190422_SEG_EDIT.mp4
Mon, 22 Apr 2019 08:31:00 0500
473.873