tastylive: Options Jive

In this episode of "Confirm and Send," the discussion centers around trading strategies, particularly in volatile markets. Tom highlights the challenges of managing defined risk trades compared to undefined risk trades, emphasizing the difficulty of defending positions when volatility is low. He also discusses strategies for handling losing scalps, such as selling calls against futures to reduce delta exposure. The conversation wraps up with insights on vertical spreads, particularly regarding implied volatility ranges, and concludes with caution against predicting market downturns.

Tom and Tony navigate market chaos with Oracle exploding $25 higher in an insane 40% move that leaves Tom speechless about defending short premium positions! Watch them execute systematic trades while Tom struggles with his Oracle positions and celebrates perfect timing on S&P futures from morning highs. The drama peaks when they debate whether anything can defend against such massive single-stock moves beyond buying outright stock. Witness real money moves on 8 out of 10 Oracle-shocked tickers - successfully trading RBLX (Christmas tree call ratio), GC/SI (winning pairs trade), META (call spread into weakness), ETHA (neutral strangle), DAL (jade lizard), UNH (hard-fought strangle), SPX (zero-day iron condor), and GDX (naked calls on relentless rally) while passing on post-rally COIN and overextended TSLA. From pairs trades to Oracle disasters, this episode showcases systematic trading amid single-stock explosions!

The S&P futures traded up 30 handles at $55.62, just below session highs of $56.65. Nasdaq climbed $123, with both indices showing strength throughout the morning. Russell gained $8 while the Dow lagged, down $17 after weakness yesterday. VIX futures rolled to the new front month, trading at $18.29, down $0.15 and sitting at session lows. Bonds remained unchanged at $117.04 after ranging between $116.22 and $117.09. Cryptocurrencies showed momentum with Bitcoin up $2,700 to $113.04 (1.5%) and Ethereum rising $68. Oracle was the standout stock, surging approximately $80 to $318 per share. Tom and Tony discussed covered call management strategies, rolling tactics for positions in trending stocks, and backtest results for premium-selling strategies versus buy-and-hold approaches.

Tom and Tony examined how significant stock rallies affect options sellers, focusing on Palantir (PLTR) and Robinhood (HOOD), which gained 109% and 195% respectively in 2025. Selling naked 20-delta calls in these stocks produced win rates of 56% for PLTR and 45% for HOOD, but with substantial maximum losses (10x and 8x the credit received). When balanced with short puts, maximum losses decreased dramatically to around 2x-3x credit received. The analysis demonstrated that while three-times expected moves do hurt sellers, adding the opposite side significantly reduces risk exposure. Options markets had already priced in substantial moves for these volatile stocks, keeping losses within reasonable expectations for balanced strategies.

In this Options Jive segment, Tom and Tony discuss the importance of controlling what you can in trading while accepting what you can't. They emphasize that successful traders focus on controllable elements rather than worrying about unpredictable market movements. Key controllable aspects include trade entry decisions (initial delta, strike selection, position sizing), risk management through defined risk strategies, and disciplined exit strategies. The hosts stress the value of the "law of large numbers" – making frequent, smaller trades to increase statistical success probability.

Sosnoff and Battista discuss market conditions, with indices mostly positive except for the Russell, and volatility showing slight movement. Sosnoff mentions taking short positions to scalp the market. In viewer questions, they clarify that in-the-money short calls at expiration aren't automatically assigned, as buyers can submit "do not exercise" instructions. For pre-earnings positions that haven't decreased in value, Sosnoff typically adjusts by widening strikes rather than exiting completely. The hosts explain why they prefer trading in high implied volatility environments—not because it improves probability of profit, but because successful trades yield greater returns for the same risk. They dismiss trading logs as unnecessary for active traders who naturally remember their positions. Regarding correlated assets, they focus primarily on directional relationships rather than magnitude of moves. When discussing interest rates, they note that while rate cuts affect the short end of the yield curve, traders typically watch longer-term instruments like ZB and ZN futures.