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Trading

Buying Power

Buying power is a term used to describe the amount of capital you have to trade with. There are different rules, regulations and leverage opportunities for different accounts, so this is an important term to un...

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Dividend Risk

Dividends are usually quarterly distributions of cash to shareholders of stock. This distribution represents a portion of the stocks earnings, and many investors view dividend stocks as great long term trading ...

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Beta

Beta is one of the greeks of the trading world. At tastytrade, we beta weigh our positions against market indicators to see what our true market risk is. Beta weighing is a common option practice, and essentia...

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Delta

Delta is one of the greeks of the option trading world. Delta shows you the rate of change of the option price, given a $1.00 change in the underlying's price. For example, if an option has a delta of 0.50 and...

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Intrinsic & Extrinsic Value

Intrinsic & Extrinsic Value are what make up an option's premium. Intrinsic value is what's left at expiration. Out of the money options have zero intrinsic value at expiration. In the money options have a...

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Undefined Risk

In the options world, undefined risk is a classification of risk that is associated with selling options. Undefined risk when selling calls refers to losses that one can incur if the stock price moves up. Thi...

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Probability of Touch (POT)

If the underlying is moving close to a short strike, you may feel pressure to close the trade in order to avoid a large loss. The probability of touch is important to understand because it helps to decide on ho...

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tastytrade lingo

We get it. Sometimes Tom and Tony ramble on with words us Johnny's have never heard of. Fortunately, we put meaning to those words and phrases! Tom and Tony lingo Common Trading Terms

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Premium

Premium is simply the price of an option! If you are buying an option, you are paying a premium for it - called a debit. If you are selling an option, you are receiving premium for the option - called a credit...

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Tested & Untested

You may hear the terms "tested" and "untested" on the network when the guys or gals are talking about their trades. These two terms mean two different things, so let's break them down here in the example of a s...

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