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Trade Options with an Edge by Dr. Russell Richards

Are you interested in a book that provides a very comprehensive coverage of the tastytrade method of trading options? Would you like to have a powerful software package that performs most of the calculations you might need to support your trading? I used to view many videos from TastyTrade website to understand their trading methodology. There are so many videos that I have to view on and off and they are not in very organised manner.  I later found a book that is written according to TastyTrade trading methodology. This book is my best reference whenever I want to trade options.

Check out this book, Trade Options with an Edge from Dr. Russell Richards. It is available in E-book form, softcopy and hardcopy at Amazon.com. The software comes with the book. If you have Excel you can run the software. It includes the Black-Scholes option pricing model, greeks, evaluation metrics for new positions, management of existing positions, pairs trading, calendars/diagonals, risk profiles, IV estimation, BPR determination, futures, exploration of P&L response surface, lists of ETFs, tax estimation, and much more. The book pulls together in one place most of what tastytrade advocates.

Earnings Play with Short Strangle

One of my trades is earnings play using Short Strangle strategy with IV Rank.

During the earnings reporting season, there are always uncertainty to the stocks that going to announce their results. Regardless the earnings results - within expectations or surprises - the implied volatility and IVR most likely will go up each day due to uncertainty right before the announcement. What we can do is to

1) scan stocks with high IVR one trading day before the earnings announcement. I usually look for the stock with IVR 70 or above.

2) ensure the IVR crushed dramatically right after announcement in the last few quarters.

3) only select stock with high liquidity.

4) no dividend or the dividend will be given around 20 days or more after earnings so that I have enough time to BTC (buy to close) the strangle.

5) check the historical gap up /  gap down. Then setup the width of strangle wide enough to avoid potentially tested and try to get at least USD100 premium from this strategy.

6) close the position right after announcement when IVR crushing down. Ideally getting 30 to 50% from max profit.

Options Strategy - Strangle

A strangle is an options strategy involves a put at a strike price Kp and a call at a strike price Kc, where Kp < S < Kc and S is the stock price.

Both put and call options are at the same expiration.A strangle is an options strategy involves a put at a strike price Kp and a call at a strike price Kc, where Kp < S < Kc and S is the stock price. Both put and call options are at the same expiration. 

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