By Anton Kulikov & Mike Hart
The research team at tastytrade created the options strategy flowchart below to serve as a mental roadmap in the trade decision process. As with nearly everything in the world of options, the first metric to consider is volatility. Here, the implied volatility rank breaks down into two categories: high is over 30% and low is below 30%. The next step calls for developing an assumption, meaning and expectation around future price movement. Investors have their pick among three choices: bullish, bearish and neutral. The result is an options strategy that a trader might want to consider when placing a trade.
Anton Kulikov is a trader, data scientist and research analyst at tastytrade.
@antonkulikov. Mike Hart, a former floor trader at the Chicago Stock Exchange and proprietary futures trader, specializes in energy markets and interest rates. He’s a contributing member of the tastytrade research team. @mikehart79