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Forming an Assumption

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

Before we can choose an options strategy, we need to formulate and assumption about the underlying.

In today's installment of Tastybites, Tom and Tony take a look at what we need to consider when deciding how to trade an underlying. The four main factor that they look at are:

  • Market Awareness
  • Liquidity
  • Recent Price Action
  • Volatility and IV Rank

Tune in as Tom and Tony explain how each of these components play a role in strategy selection and directional assumption. Plus, get a few more tips specifically geared at the traders in smaller accounts.

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