The tastytrade network
Summary: 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 showing America a new way to quickly find low risk, high return strategies in bullish, bearish and sideways markets.
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Podcasts:
Today on Talkin' With Tom & Tony, Bobby Lee divulges his trading team's location with some images as well. Viewers discuss the theory behind managing winners, Tony from Mexico's follow page trades, and much more!
Tom and Tony take a page out of their Market Measures playbook and look to place a straddle with defined risk on the call side. They place the trade in USO because it has had a large sell off recently and the trade will add some long deltas.
Mike Lynch is the CEO Box Score Games. They created the first ever real-time casual gaming platform that enhances the sports fans' experience while watching live sporting events.
R-Squared is a statistical measure that is often included in a mutual funds prospectus. This measure is used as a historical measure that represents how closely a fund's movements correlate with a benchmark index. This is important to be aware of for a number of reasons. First, if you are looking to diversify your portfolio, buying a fund that is highly correlated might not achieve your desired result. Additionally, it's important to know R-Squared and the expense ratio of the fund. If you are paying 1.5% for a fund that has an R-Squared value of 98%, you are better off buying SPY which only has an expense ratio of 0.09%.
tastytrade's first Rising Star explains this strategy using USO. Robyn explains the criteria for short naked Put strategies. These include low priced stocks with recent sell-offs in high IV ranking underlyings, as you want to be able to collect a significant amount of premium. Given the premium collected, Robyn shows how to calculate the break even to the down side, the delta (directional risk) of the trade and her probabilities of success in the trade.
Strategies with undefined risk will generally provide a better win rate and a higher probability of success compared to their defined risk counterparts. However, one drawback to these strategies is that they have a higher capital requirement and can not be placed in an IRA! Due to this limitation, a number of high probability strategies that we use around earnings can not be placed in a retirement account. In order to get around this limitation, we can buy a cheap out of the money (OTM) call to define our risk and create a similar position. By doing this, is it possible to place a straddle in an IRA to take advantage of the high implied volatility that accompanies earnings announcements? Today, Tom Sosnoff and Tony Battista see how buying a cheap OTM call to define their risk on a straddle compares to a standard straddle. The guys find out that using lower priced underlyings, buying the call reduces your overall profit but your win rate stays exactly the same!
Tom and Tony review the markets as they wait for the opening bell. They take a look at a couple earnings plays from last night and see what might be in play this afternoon. After the market opens, they look to play defense on a couple of positions that have gone against them!
As premium sellers, we look to sell options that only contain extrinsic value. This allows us to capitalize on Theta, or time decay. Since all options that expire out of the money (OTM) expire worthless, the value of these options will decay as expiration approaches. This is known as Theta decay. Due to this, we always want to know how much Theta we are collecting for the amount of buying power we are using. Today, Tom Sosnoff and Tony Battista explain why they always say you should be collecting 0.1% of your account in Theta each day. They then take this one step further and show a sample trade and how you can figure out how much theta you will be collecting, all else being held equal. Knowing how much theta you are collecting is very useful when evaluating your overall account.
Daily Dose - October 8, 2014
Tom and Tony look at the recent market behaviors in /ES and /NQ.
Tom Sosnoff and Tony Battista answer viewers' questions. First, they answer whether or not straddles are an ideal options strategy for binary events, such as earnings events. Second, they consider a futures market where /ZB, /ZN, and ZT are quoted in decimals. Lastly, Tom and Tony share why they think it's better to close a Chicken Iron Condor once the spread has achieved 50% of max profit, rather than holding it until expiration.
tastytrade LIVE - October 8, 2014
On today's show, Ryan discusses some of the changes and features in dough. He also explains extrinsic value and shows how to place a GTC order using the platform.
On today's show, Ryan discusses some of the changes and features in dough. He also explains extrinsic value and shows how to place a GTC order using the platform.
The research team wraps up the day sharing some ideas for tomorrow. James pitches a tasty BITES segment on theta decay and setting targets, and another study will look at IRAs and the different trading permissions around them. Finally, the Doctor previews some research on the correlation between mutual funds and their underlyings, outlining a study on risk and performance metrics that can shed some light on ways to allocate one's portfolio.
