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Market Measures

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Core Components

Market Measures

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Two of our core components at tasytrade are trading when Implied Volatility (IV) Rank is high and managing our winners before expiration. We have found that by taking advantage of these two aspects of trading can greatly increase our win rate and overall profit.

Today, Tom Sosnoff and Tony Battista discuss these two facets in great detail. The guys beginning by looking at the effect of trading when IV Rank is high. They highlight the fact that by waiting for high Implied Volatility, you can increase your win rate by 5%. Additionally, your average profit per trade and average profit per day increase by 200%. You are also able to get about 32% more credit per trade, on average.

Then Tom and Tony look at managing winners. By this we mean that we will look to close a trade before expiration after it has reached our desired level of potential profit. We do this in order to avoid losses and mitigate the gamma risk that expands as expiration approaches. By managing our winners, we can increase our win rate by another 1%, increase our average profit per trade by 125% and our average profit per day by 141%!

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