Written by A.J. Brown

Ep. 3 - The Three Dimensions of Vertical Spreads

CB023151Did you miss us?  It’s been about a week and as promised, my friend, head coach, and trading peer, Jason and I are back with our third episode of our video training serial on vertical spreads.  Every week we intend to bring you a new episode.

In this episode we discuss volatility; comparing historical and implied. We look deeper into implied volatility and derive that it is function of traders bidding up and down the call and put options; non-optional stocks do not have an implied volatility.  We touch on the subject of probability theory and with that knowledge we delve into what a standard deviation measurement is and on what time frame.  We use all of this background to form a basis for placing our vertical spreads.  Finally, we’ll wet your whistle for our next episode by showing you a vertical spread that we intentionally placed within our standard deviations.

So, without another second going by, lets get on with episode 3 of our video training.  Please, comment with any questions or comments you might have.

To your good trading.

A.J. Brown

2 Responses to “Ep. 3 - The Three Dimensions of Vertical Spreads”

  1. Jay @ 8:36 pm:

    I like it very helpful!If you can change the colors on the graph to make it easier to see the different lines that would be great!! Thanks fellas.

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  2. Mark Michael Lewis @ 9:41 pm:

    OK - I am now hungry for the next video - well done! Again, this is a surprisingly clear and digestible explanation of implied volatility. It actually seems simple and straight-forward, which is an impressive achievement. I can’t wait to learn why you chose the option you did. See you in the next video!

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