Tackle Today: Abandon Direction, Embrace Volatility
April 28, 2022
«A pair of volatility bets.»
Coach Tyler here. When markets turn squirrely and forecasting direction seems foolhardy, you have two choices. Wait on the sidelines until better conditions return or build volatility-based bets.
A volatility bet wagers on the magnitude of market movement. There are two types.
Long volatility trades profit if the market moves more than expected. These include long straddles and strangles, inverted butterflies, and debicons.
Short volatility trades profit if the market moves less than expected. These include butterflies and iron condors. In last night’s Trade Masters, I pitched an iron condor on the S&P 500 ETF (SPY) and a debicon on Apple ahead of earnings. The former is a prime example of shorting vol. The latter showed how to go long volatility.
Video of the Day: Jedi Options – Bear Put Spread Explained
In today’s Jedi Options, Coach Tyler explains what the Bear Put Spread is.
Chart of the Day: Facebook ($FB)
Facebook delivers the goods Wednesday night, sending shares up over $30. Let’s see if buyers can press their advantage and vault over the 50-day moving average.
Today’s line up
Traders Lounge 11 AM EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
Cashflow Club 8:30 PM EST
Held every Thursday before Friday’s option contract expirations, this show helps you perfect your favorite cashflow strategies.
Halftime Report 12:30 PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.
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