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.

  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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