The market capitalization of a stock is the total market value (dollars) of a company’s outstanding stock shares. Market cap is a way to estimate a company’s value according to the stock market, and it can be used as an approximate metric for d

Diversification and IV Contraction

Jul 7th, 2020 8m 53s

ETFs are inherently diversified, making them less prone to outlier moves and less volatile in general. However, does this diversification also make them more likely to experience significant short-term IV contraction? Today we determine how lik

Volatility Indices

Jun 30th, 2020 12m 16s

IVR can sometimes misrepresent IV inflation due to IV Skew, and referencing the raw IV of an underlying can give context to IVR. There are volatility indexes that track a range of instruments including U.S. indexes, commodity-related ETFs, sing

Intrinsic and Extrinsic Value

Jun 17th, 2020 9m 17s

An option’s value is comprised of two components: Intrinsic Value and Extrinsic Value. Today, Tom and Tony discuss the important concepts between these two.

Profiting From Trading Neutral

May 18th, 2020 15m 46s

For Bullish and Bearish trades we profit from a directional move. Whereas Neutral trades are short premium plays that profit from little to no movement. Join Tom and Tony today as they dive deeper into how trades can profit from a starting poin

Trading ETFs and Stocks

May 11th, 2020 20m 3s

New traders trading stocks and ETFs should be cognizant of the trade-offs for each. Today, Tom and Tony explains the important concepts between trading stocks and ETFs.

High Implied Volatility and Greeks

May 6th, 2020 12m 41s

High implied volatility (IV) markets provide premium sellers with strategic advantages. Today, Tom and Tony want to dig a little bit deeper to see what the Greeks tell us.

Earnings Announcement

Apr 30th, 2020 14m 35s

Earnings announcement is a binary event for traders. The uncertainty around the results can cause large swings in the stock price and is often reflected in higher option premium. What should traders look at before earnings and what can they do?

Strangle Breaches

Mar 2nd, 2020 7m 36s

SPY is roughly normally distributed with constant mean and volatility. The strangles we sell we base on standard deviation of risk. Today, we are going to dig a little deeper into the 1 Standard deviation strangle and run a study to find metric

Managing 21 Days Early

Feb 25th, 2020 9m 21s

This segment of Best Practices discusses the advantages and disadvantages of active management. When we actively manage strangles, we typically sell at 45 DTE and manage at 50% of max profit or 21 days. We do this because we can increase the nu

Trade Mistakes

Feb 10th, 2020 12m 6s

Mistakes happen. Common ones that new traders can run into include: Not using probabilities Trading illiquid underlyings Legging in and out of trades Getting too big Buying out of the money options By keeping these in the back of your mind an

The Volatility Edge

Feb 3rd, 2020 9m 57s

Volatility is a deciding factor in how much an option costs. The higher the volatility the higher the premium. But just how much of a difference does it make, and how does it impact our bottom-line. Join Tom and Bat in today's segment as they l

Allocating Risk

Jan 27th, 2020 11m 8s

Generic rules for capital allocation depends on VIX levels. The higher the volatility in the market, the more capital we want to allocate in our account. Within the main allocation, we want to allocate 75% of our capital to undefined risk strat

Something to Avoid

Jan 21st, 2020 10m 15s

Periods of negative returns are unavoidable with any strategy, but excessive drawdowns may indicate that strategy adjustments are necessary. Here we discuss what is considered an appropriate amount of drawdown, how not to respond when drawdowns

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