tastylive: Today's Assignment

This episode examines a completed iron condor position on an Ethereum ETF, exploring how volatility contraction and time decay affected this position's outcome. The analysis covers strike selection methodology, position management considerations, and the impact of market movement on multi-leg option strategies.

In this episode of Engineering the Trade, host Jermal Chandler welcomes guest Errol Coleman to discuss the implications of a longer government shutdown on the financial markets, particularly focusing on the S&P 500 (SPX) and its recent performance. They analyze volatility in various sectors, and individual trades such as a SPY diagonal spread a Jade Lizard in UNH and a short strangle in natty gas. The conversation emphasizes market patterns and the importance of risk management amid fluctuating market conditions.

In today's From Theory to Practice, Dr. Jim continues his deep dive into delta, with a look at using Delta as a measure of directional bias. Arguably, using Delta in this way, either at the individual position level or the overall portfolio level, is the most common way that active traders use Delta. This is likely because Delta can help quickly gauge the approximate directional bias of an individual position or total portfolio at a glance.

Hosts Liz and Jenny conducted a fast-paced trading session executing six viewer-suggested trades while noting the shift toward bullish sentiment. Key trades included a UPS November 85/89 earnings diagonal for $2 (positioning ahead of 10/23 earnings), Rivian 12 put/13 put/14 call Jade Lizard capitalizing on the structure's advantages over straight put selling, and DocuSign 65 puts at $1 using only $600 capital. The SPX zero-day trade featured a $5-wide put spread at $1.75 with immediate GTC order to close at $1.30, demonstrating disciplined profit-taking. The session included colorful discussions about Oklahoma's extreme call skew (Liz sold 160 calls despite prior promises not to), personal anecdotes about the "Black Widow" getting randomly attacked in Millennium Park, and passing on trades due to existing positions (Exxon, DraftKings, BABA) or poor liquidity (micro copper futures). The hosts emphasized visual platform demonstrations to help viewers follow along with trade execution.

Tesla reported strong global deliveries amid the expiration of the $7,500 EV tax credit, yet shares fell 4% in a classic "buy the rumor, sell the news" scenario. The stock bounced off its 10-day moving average at $438.10, potentially creating an opportunity for short-term call options. Warren Buffett, already a major Occidental Petroleum (OXY) shareholder, purchased the company's petrochemical unit. Surprisingly, OXY shares declined despite the asset sale, which management intends to use for share buybacks. Fair Isaac (FICO) is disrupting credit reporting by providing scores directly to lenders, bypassing traditional agencies like Equifax and TransUnion, whose shares weakened on the news.

In this educational session of From Theory to Practice, Jim Schultz continues his deep dive into Delta by explaining how traders can use it as a probability gauge - the second most common application beyond the textbook definition of measuring option price movement. Delta serves as an excellent probability approximator in two key ways: 1. **Probability of expiring in-the-money**: This explains why traders typically select 30-35 delta strikes for short options strategies. The inverse (1 minus delta) indicates the probability of expiring out-of-the-money - crucial for premium sellers. 2. **Probability of touch**: Calculated as two times the delta, this measures the likelihood that a price level will be reached at some point before expiration, helping traders assess potential market movements.

XLV, the healthcare ETF, surged from $134 to $144 in just two days, exceeding its implied volatility projections. This movement reflects significant gains across several healthcare stocks, creating potential opportunity in the sector. With implied volatility under 20%, traders are eyeing directional trades with defined risk parameters. Meanwhile, Lululemon (LULU) appears to be finding support around $170 after significant losses, prompting interest in bullish strategies like put spreads. Costco (COST) and UnitedHealth (UNH) continue to attract attention, with traders implementing diagonal spreads to capitalize on potential recoveries with defined risk. Oil futures also present opportunity at multi-month lows, with traders entering long positions around $60 using micro contracts (MCL).