Trade Management
By Mike Hart
Prepare for almost anything by outlining and organizing a trading response for every for every short option position
Investors should formulate a contingency plan as soon as they place a trade.
In the example of trade management below, the flowchart lays out actions to take for several possible scenarios. Improving mechanics this way is a key to successful trading, and a tool like this can help.

Mike Hart, a former floor trader at the Chicago Stock Exchange and proprietary futures trader, specializes in energy markets and interest rates @mikehart79. Anton Kulikov is a trader and data scientist @antonkulikov. Both are research analysts at tastytrade.
Cheat Sheet
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Dollar-cost Averaging
|DCA, the strategy of investing an equal amount of money at regular intervals regardless of the price of the underlying stock, removes emotion from the equation -
Long Call Speculation
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Maximum Dividends
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Stay Logical
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|Traders should always bear in mind that markets are random and that the future remains unknown. Predicting prices presents a challenge, but traders can improve their chances by creating and… -
Looking for Liquidity?
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|Liquidity is essential to successful trading Traders think of price discovery—an essential characteristic of any market—as the process that sets spot prices. It’s a matter of buyers and sellers making… -
It’s Your Move
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|Trading platforms offer built-in tools that point toward expected stock prices The market is defined from moment to moment by every single decision made by each trader—combined with all of… -
Cyber Scrutiny
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|Finding the best cyber companies to trade doesn’t have to be hard. Here’s the secret formula. Cyber security companies are big and growing bigger. The industry generated $120 billion in… -
Cryptocurrencies
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|This cheat sheet shows the results of studies testing for average volatility and correlations Cryptocurrencies have become a trading realm onto themselves. Investors have hundreds of coins to choose from,… -
The Trading Game
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|Be ready to revise your game plan. New products and new types of trades are making investing feel more like a game. But don’t look to reinvent an approach to… -
Risk Mechanics
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|Knowing how and when to evaluate and control risk Trading is commerce, and commerce is the relationship between the markets’ vast number of buyers and sellers—all aiming to end the… -
Four Pillars of Options
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|These four elements can provide the key to successful investing. In statistics, the law of large numbers says that as the sample size grows, outcomes will more closely resemble the… -
Outsmarting the Machines
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|Be prepared when the algorithms switch from BUY to SELL In his cutting-edge 1950s I, Robot science-fiction stories, Isaac Asimov created a world where robots gained more than a bit… -
Metrics & Mechanics
By Mike Hart
|Alleviate the guesswork and reduce the risk of trade decision-making The market reacts to the decisions of millions of traders and even expresses their emotions. It does both by establishing… -
Market Awareness
By Mike Hart
|Getting in touch with your inner guru The phrase “market awareness” isn’t commonly used in finance, but it’s essential in the trading world. It’s broad but not specific. It’s not… -
Calculating Tradability
By Mike Hart
|Before placing a trade, confirm liquidity, implied volatility rank and risk exposure. Then make sure it fits the portfolio. Before executing a trade, confirm a product’s tradability. Do it by… -
The Strangle
This trading strategy can add a short premium and an element of time to a portfolio Elegant in its simplicity, the strangle captures a range of possible price movement in… -
Acquiring Short Delta
By Mike Hart
|Delta can be either static or dynamic. Here’s how to get either one. Acquiring short delta means adding positions that benefit from a move to the downside. Keep this cheat… -
Delta Force
By Mike Hart
|Choose from the many ways to add positive delta to a portfolio A contrarian strategy suggests buying into weakness and selling into strength. From that standpoint, the market currently resides… -
Volatility: Best Friend or Worst Enemy?
The VIX quantifies risk and fear: Check it to take the pulse of the market The VIX measures implied volatility, making it one of the most important metrics in options… -
Understanding Delta
Delta can gauge a position’s directional bias and also do so much more Investors use “delta”—one of the most common terms in options trading—to describe risk in many different ways.…