tastylive: The Skinny On Options Data Science

In today's From Theory to Practice, Jim Schultz closed an underperforming GLD spread at its max value of $5, demonstrating proper expiration management. He then established new positions by selling a 20-delta strangle in MES futures options expiring November 28th and adding an MNQ position despite challenging bid-ask spreads.

TSM reported strong earnings with optimistic AI outlook, though stock price movement remained underwhelming. This exemplifies the current pattern with chip stocks - stellar results but muted price reactions. TSM's positive guidance boosted related companies like NVIDIA, AVGO, AMD and Apple. CoreWeave announced a first-of-its-kind AI object storage service, positioning itself as a potential dark horse in the AI space. Regional banks Zions and Western Alliance warned of credit loan losses, signaling potential consumer struggles. This concerning trend, coupled with employment market issues, contributed to falling two-year yields as markets anticipate additional rate cuts. Gold and silver continue their meteoric rise, with gold approaching an unprecedented tenth consecutive weekly gain. Market participants are currently favoring precious metals over other investments including Bitcoin, cash, and bonds.

In today's From Theory to Practice, Dr. Jim discusses how much leverage to use in a long delta portfolio, emphasizing a different approach from short delta strategies. Unlike short delta positions where the delta-theta ratio provides protection, long delta positions lack this shield during volatility expansion. For long delta traders, he recommends using SPY as a reference point to measure leverage. A portfolio with beta-weighted delta equal to its notional value in SPY shares (1X leverage) means you're essentially holding the equivalent of being fully invested in SPY. Most traders settle between 1X-3X leverage, with experienced traders occasionally going as high as 5X-6X.

FxGlenn joined the Liz and Jenny Show to discuss their successful forex trade in USD/CHF, which netted a small profit. The hosts decided to close the position early rather than setting a stop-loss after learning about negative swap costs. The duo initiated a new long position in USD/CHF at 0.8 to capitalize on overnight carry gains, as U.S. interest rates exceed those in Switzerland. FxGlenn provided standard deviation metrics to help the hosts set realistic profit targets. Despite Bitcoin falling to $109K, the hosts maintained bullish sentiment while managing positions in crypto ETFs. The VIX climbed to 21.65 amid mixed market signals, prompting discussion about taking smaller profits in the current environment. Jenny and Liz also managed a zebra position in ETHOP, sold covered calls on LUNAR, and noted that the silver/gold ratio had returned to balance with silver outperforming gold.