tastylive: Opening Bell

Vertical spreads offer directional trading opportunities with defined risk. Bullish strategies include long call spreads and short put spreads, while bearish strategies include short call spreads and long put spreads. These synthetically equivalent positions differ primarily in execution placement. Market conditions dictate strategy selection. In high volatility, out-of-the-money credit spreads are preferred, targeting approximately one-third the strike width as premium. In low volatility environments, at-the-money debit spreads become more attractive. Position selection involves probability trade-offs. Further out-of-the-money spreads increase probability of profit but reduce potential reward. Traders typically aim for 60-70% probability setups when selling premium. Put-call parity principles apply across all vertical spreads, though liquidity considerations often favor short spreads over long spreads due to tighter bid-ask differentials in out-of-the-money options.

Is the stock market still broken after the shocking pushback on interest rate cut expectations from Fed Chair Jerome Powell? tastylive's Head of Global Macro Ilya Spivak investigates what traders might learn from price action in stocks, bonds, currencies, and commodities after last week's fateful FOMC meeting, then previews the week ahead.

Markets are hovering near record levels, attempting a ninth consecutive positive Monday. The S&P 500 has posted gains for six straight months, while the NASDAQ extends its winning streak to seven months. Amazon (AMZN) surged after announcing a deal to provide OpenAI with Nvidia chips, continuing the trend of AI partnerships boosting tech stocks. Meanwhile, Kimberly-Clark announced a $49 billion acquisition of Tylenol-maker Kenview, though Kimberly-Clark shares dropped 15% as investors questioned the deal's size relative to the acquirer's $34 billion market cap. Volatility remains in contango with the VIX at 17, implying 1% daily moves. Bitcoin struggles around $108,000-$110,000 after an underwhelming October. Key earnings reports include Palantir (PLTR), Uber (UBER), and Spotify (SPOT), while traders await Supreme Court arguments on tariffs Wednesday.

On today’s From Theory to Practice, Dr. Jim examines his PANW Straddle that is now inside of 21 DTE. Given that the stock has earnings coming up in a couple weeks, he decides to carry the position a few extra days - in the hopes that it can be closed around a scratch before the earnings release. Then, Dr. Jim looks to add a LEAP to his SBUX position and possibly trade UBER earnings in the morning.

The segment explored risk management strategies for bullish traders, comparing naked puts to defined-risk alternatives. While naked puts offer higher potential returns, defined-risk strategies like put spreads significantly reduce buying power requirements and maximum loss exposure. For smaller accounts, particularly Tastybytes accounts (small acounts like around with $25K), defined-risk strategies show approximately 90% correlation with naked options while requiring substantially less capital. This approach offers traders with limited capital access to higher-priced securities like SPY and Apple (AAPL) with manageable risk profiles.

Hosts Tony and Jamal welcomed researcher Kai to discuss a week where Fed policy overshadowed market action, with the 25bp rate cut accompanied by hawkish commentary that sent December cut expectations plummeting from 90% to 67% (now 69-70%). Kai noted the Fed Watch tool has been highly accurate historically when above 65%, suggesting December cut remains likely but not guaranteed. The government shutdown entered its sixth week (31 calendar days) approaching the 2018-2019 record of 34 days, with less than 25% probability of resolution this week and 50% expecting it to extend past November 16th. Global markets rallied with all nine major indices up, though US gains were modest compared to Asian markets led by Japan and Hong Kong (both up 30%+). The earnings picture showed last week's major names delivering more red than green among liquid stocks, with the season now perfectly balanced at 50% winners/losers and zero average returns across 1,200+ companies. Upcoming week features busy slate including Palantir and HIMS today, Uber/Shopify/Spotify tomorrow, and AMD Tuesday as the standout.