The tastytrade network

Slim answers 7 viewer emails ranging from his year end projection on the SPX to how to use the SLM Ribbons. Slim discusses a viewer's question on how to handle a losing position in the XOP. Slim also examines MRVL, CELG, DAL and UAL.

Stocks continue their downward momentum, hitting Slims downside target for the week. NASDAQ gets slammed after MCHP and JNPR warn, killing the semiconductor sector. Mario Draghi talks again of Eurozone QE. Germany says no to Draghi. Crude oil touches 2 year low.

Ask SLM - October 10, 2014

With Oil continuing to influence Katie's portfolio, Tony and her decide to clean up any positions expiring soon in her portfolio. Upon evaluating EWZ, the duo think it best to close the position to free up the buying power. In SLV, they are flat on the year, so they decide to hold it longer. And in SPY, the team decides to close out the OCT call spread they have on. With the extra buying power in their pockets and a higher volatility environment than previously seen, Tony and Katie plan to put on several trades next week to compensate for these recent losses.

With Oil continuing to influence Katie's portfolio, Tony and her decide to clean up any positions expiring soon in her portfolio. Upon evaluating EWZ, the duo think it best to close the position to free up the buying power. In SLV, they are flat on the year, so they decide to hold it longer. And in SPY, the team decides to close out the OCT call spread they have on. With the extra buying power in their pockets and a higher volatility environment than previously seen, Tony and Katie plan to put on several trades next week to compensate for these recent losses.

The guys take some time to chat with viewers. Brent has warm praise for dough features, while Fred looks to manage a crude oil strangle. Joe wants to assess his options for a tested iron condor, and Mark asks why Jacob hasn't started trading yet. We can't corrupt him!

Tom and Tony look to use the beta discussion from this morning to place a trade. They decide on a pairs trade in EFA and SPY, realizing that the beta (roughly understood as correlation) indicates that EFA may be oversold relative to the historical relationship.

Matt Downs of Sandbox Industries joins the show to discuss the firm and its ventures. Sand Box Industries is a fund that invests in healthcare and agriculture businesses, with 26 portfolio companies. Looking forward, the firm hopes to promote sustainable innovation. Matt explains how being in Chicago provides the firm with pretty expansive reach, and the firm's unique approach to building relationships rather than just providing capital.

When looking at your overall portfolio, it is important to know how your positions will react to a change in the market before you make any adjustments. To do this, you can use Beta. Beta is a measure of a stock's sensitivity to market movements and is another measure of volatility. One thing to keep in mind is that Beta is based on historical movements of the underlying and is not forward looking. However, Beta is still very important and is often used in conjunction with R-Squared in order to assess how efficiently a fund or stock can be used to hedge a portfolio. Today, Tom Sosnoff and Tony Battista are joined by Dave Johnson of Investools as they discuss Beta and how they use it in their portfolios!

One of the best ways to eliminate large drawdowns in your account is to increase your number of occurrences. One way to do this is to place trades that take advantage of the high Implied Volatility (IV) that accompanies earnings announcements! When trading earnings, we are looking for a 1-day play that takes advantage of a large volatility crush. This allows us to sell options before the announcement, when they are expensive, and buy them back after the volatility crush, when they are much cheaper. However, earnings announcements can also be accompanied by large moves that breach one of your short strikes. In order to avoid a large loss, we often roll this tested side in order to buy time and increase duration. Today, Tom Sosnoff and Tony Battista look at some underlyings that are normally accompanied by large moves. The guys look at a study based on AAPL, AMZN, NFLX and GOOG. They place 1 Standard Deviation Strangles, looking for a volatility collapse. If there is a large move, the roll out the tested strike to extend duration. By buying this extra time, they are able to take what would have been a losing trade and make it into a winner!

Tom and Tony get ready for the trading day, talking through their positions in X, XOP, and the Nasdaq, along with their plans for the day. Tom pockets some profit from his TSLA trades early, stressing that being short volatility before the Tesla announcement was the smartest and safest way to trade the underlying.

When you have two highly correlated products, they provide unique pairs trading opportunities. Even with a pairs trade, it is important to hedge your positions so that you do not experience a large drawdown. Today, Tom Sonoff and Tony Battista are joined by Pete Mulmat, Director of Education, as they take a look at Gold and Silver! The guys then take this pairs trade one step further and look to hedge the movement of the spread using the Euro!

Daily Dose - October 10, 2014

We kick off your morning talking about the latest in futures activity. Tom also shares his thoughts on the real interests of professional traders, and outlines tastytrade's position on discussing market movements.

Tune in to tastytrade as we wrap up the week answering some questions! First, viewers ask about ways to hedge against their positions using the VIX. Then, the guys answer a question on comfortable levels of capital usage for a smaller account. Finally, they stress the importance of using different strategies to create many independent occurrences.