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  December 9, 2019  Visualizing Probabilities
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
The probability of profit is found on...
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
The 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/97939/TTL_BP_191209_POD.m4a
Mon, 09 Dec 2019 08:31:00 0600
704.256

Best Practices  December 9, 2019  Visualizing Probabilities
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
The probability of profit is found on...
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
The 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/97938/TTL_BP_191209_SEG_EDIT.mp4
Mon, 09 Dec 2019 08:31:00 0600
598.565

tastytrade LIVE  December 2, 2019  Defined Risk Trade Mechanics
Join Tom and Tony in today's discussion on defined risk spreads. Covering everything from the entry to
management of the trade.
* ###ENTRY
When looking to enter a short defined risk spread, tastytrade tends to default to collecting 1/3rd the widt...
Join Tom and Tony in today's discussion on defined risk spreads. Covering everything from the entry to
management of the trade.
* ###ENTRY
When looking to enter a short defined risk spread, tastytrade tends to default to collecting 1/3rd the width of the strikes. This allows us a higher probability of profit, and the maximum loss is only 2x the credit received. Additionally, having a maximum loss in mind that aligns with the rest of our positions or portfolio allows longerterm probabilities to play out.
* ###DEFENSE
Because we know our maximum loss on entry, tastytrade typically does not defend/roll defined risk spreads, and instead allow the initial POP of the position to work.
* ###MANAGEMENT
Like in undefined risk spreads, we also manage our winners, looking for 25 50% of maximum profit. This allows us to take winners off the table, reestablish new, high probability positions to boost our number of occurrences and maintain a high probability portfolio.
http://feeds.tastytrade.com/media/97712/TTL_BP_191202_POD.m4a
Mon, 02 Dec 2019 08:39:00 0600
649.152

tastytrade LIVE  December 2, 2019  Defined Risk Trade Mechanics
Join Tom and Tony in today's discussion on defined risk spreads. Covering everything from the entry to
management of the trade.
* ###ENTRY
When looking to enter a short defined risk spread, tastytrade tends to default to collecting 1/3rd the widt...
Join Tom and Tony in today's discussion on defined risk spreads. Covering everything from the entry to
management of the trade.
* ###ENTRY
When looking to enter a short defined risk spread, tastytrade tends to default to collecting 1/3rd the width of the strikes. This allows us a higher probability of profit, and the maximum loss is only 2x the credit received. Additionally, having a maximum loss in mind that aligns with the rest of our positions or portfolio allows longerterm probabilities to play out.
* ###DEFENSE
Because we know our maximum loss on entry, tastytrade typically does not defend/roll defined risk spreads, and instead allow the initial POP of the position to work.
* ###MANAGEMENT
Like in undefined risk spreads, we also manage our winners, looking for 25 50% of maximum profit. This allows us to take winners off the table, reestablish new, high probability positions to boost our number of occurrences and maintain a high probability portfolio.
http://feeds.tastytrade.com/media/97711/TTL_BP_191202_SEG_EDIT.mp4
Mon, 02 Dec 2019 08:39:00 0600
437.537

Best Practices  November 27, 2019  45 Days: Vega Edition
Vega represents the change in the price of an option when the underlying implied volatility changes by 1%.
We see that strikes closer to at the money have a higher vega
than strikes in and out of the money. This means trades like straddles are mor...
Vega represents the change in the price of an option when the underlying implied volatility changes by 1%.
We see that strikes closer to at the money have a higher vega
than strikes in and out of the money. This means trades like straddles are more sensitive to moves in volatility than wider strangles.
Additionally, when the trade is at 45 days to expiration, we exhibit a much larger Vega value than when the trade is 5 days to expiration. This places more importance on managing positions early, since closer to expiration, we will no longer benefit from an IV decline since Vega is low.
http://feeds.tastytrade.com/media/97693/TTL_BP_191127_POD.m4a
Wed, 27 Nov 2019 08:35:00 0600
601.368

Best Practices  November 27, 2019  45 Days: Vega Edition
Vega represents the change in the price of an option when the underlying implied volatility changes by 1%.
We see that strikes closer to at the money have a higher vega
than strikes in and out of the money. This means trades like straddles are mor...
Vega represents the change in the price of an option when the underlying implied volatility changes by 1%.
We see that strikes closer to at the money have a higher vega
than strikes in and out of the money. This means trades like straddles are more sensitive to moves in volatility than wider strangles.
Additionally, when the trade is at 45 days to expiration, we exhibit a much larger Vega value than when the trade is 5 days to expiration. This places more importance on managing positions early, since closer to expiration, we will no longer benefit from an IV decline since Vega is low.
http://feeds.tastytrade.com/media/97692/TTL_BP_191127_SEG_EDIT.mp4
Wed, 27 Nov 2019 08:35:00 0600
389.723

Best Practices  November 18, 2019  Take Advantage of Time
Options expire. Because of this, time remaining is of great importance.
Theta is the rate at which the premium on the option decreases over time. The more time available, the greater the premium.
Larger thetas, along with greater premium levels,...
Options expire. Because of this, time remaining is of great importance.
Theta is the rate at which the premium on the option decreases over time. The more time available, the greater the premium.
Larger thetas, along with greater premium levels, coincide with higher implied volatility
environments.
Additionally, the rate of an option’s decay increases as we near expiration.
We can extend theta by rolling tested positions; studies have shown that this has a positive impact on both profitability and probability.
http://feeds.tastytrade.com/media/97362/TTL_BP_191118_POD.m4a
Mon, 18 Nov 2019 08:32:00 0600
792.912

Best Practices  November 18, 2019  Take Advantage of Time
Options expire. Because of this, time remaining is of great importance.
Theta is the rate at which the premium on the option decreases over time. The more time available, the greater the premium.
Larger thetas, along with greater premium levels,...
Options expire. Because of this, time remaining is of great importance.
Theta is the rate at which the premium on the option decreases over time. The more time available, the greater the premium.
Larger thetas, along with greater premium levels, coincide with higher implied volatility
environments.
Additionally, the rate of an option’s decay increases as we near expiration.
We can extend theta by rolling tested positions; studies have shown that this has a positive impact on both profitability and probability.
http://feeds.tastytrade.com/media/97360/TTL_BP_191118_SEG_EDIT.mp4
Mon, 18 Nov 2019 08:32:00 0600
581.281