Ep. 3 - The Three Dimensions of Vertical Spreads
Did 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
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.
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!