WDIS: Two Yutes - Beginner Options Trading - April 19, 2021 - Buying Into Weakness

published 3 weeks ago by tastytrade, Inc.

Today it’s pretty much red across the board, but Kay notices her P/L is up. Tom reminds Kay she’s not “public” anymore (like everyone else). She’s now a trader--a short delta contrarian. Just because the market’s down doesn’t mean she is. The yutes are both a little heavy on short delta, so they decide to put on some bullish trades to even things out. Both E and Kay follow the tastytrade way--they buy into weakness (go long when an underlying is down).SQ is down 10 points so E sells a short put spread.Kay follows suit by putting a short put spread on in TWTR, which is down $2.50 today. Bonus Lesson: Tom puts some more context around why he has the yutes put their short options at around 25 delta. It’s right at the tip of the expected move! On the tastyworks platform, the orange bar gives you a visual representation of the expected move in the Trade table view.

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