Market Measures

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Trading Probability's Few Inefficiencies

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.

As premium sellers, we derive profit from slight inefficiencies that exist in the market. Three of these inefficiencies are:

  • Theoretical win rates of short strangle understate actual win rates
  • Stocks have been known to trade consecutive days down less often than the theoretical probability
  • There is a slightly better chance of short strangles rebounding to profits after a losing trade rather than it being 50/50

With these inefficiencies in mind, short premium trades have been profitable over the long run.

Tune in as Tom and Tony expand!

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