Best friends Joel and Matt are the co-hosts of How to Money which is all about providing the knowledge & tools that normal folks need to thrive in areas like debt payoff, DIY investing, and crucial money tricks that will provide continuous help along your journey. We believe that access to unbiased and jargon-free personal finance guidance is more necessary than ever before. When you handle your money in a purposeful, thoughtful way that works for your lifestyle, you can really start living ...
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Market Measures - November 14, 2025 - What Makes BPR a Reliable Risk Gauge
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Manage episode 519431082 series 68544
Content provided by tastylive. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by tastylive or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://podcastplayer.com/legal.
The market measure segment explored how buying power serves as a reliable risk gauge for undefined risk positions. Using SPY strangles as a study case over five years (2020-2025), the analysis showed that buying power effectively quantifies potential risk exposure. Research indicates a mere 0.1% chance that losses exceed the buying power reduction on trade entry. Three key drivers of buying power—price, delta, and implied volatility, create a dynamic risk assessment tool. Higher deltas and underlying prices increase buying power requirements linearly, while implied volatility has an inverse relationship. The 10-20 delta range offers optimal risk-reward. When volatility spikes, traders should defensively reduce position sizes and maintain cash reserves for potential opportunities. For those concerned about undefined risk, turning naked positions into spreads can significantly reduce buying power requirements while maintaining strategic exposure.
…
continue reading
1696 episodes
MP4•Episode home
Manage episode 519431082 series 68544
Content provided by tastylive. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by tastylive or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://podcastplayer.com/legal.
The market measure segment explored how buying power serves as a reliable risk gauge for undefined risk positions. Using SPY strangles as a study case over five years (2020-2025), the analysis showed that buying power effectively quantifies potential risk exposure. Research indicates a mere 0.1% chance that losses exceed the buying power reduction on trade entry. Three key drivers of buying power—price, delta, and implied volatility, create a dynamic risk assessment tool. Higher deltas and underlying prices increase buying power requirements linearly, while implied volatility has an inverse relationship. The 10-20 delta range offers optimal risk-reward. When volatility spikes, traders should defensively reduce position sizes and maintain cash reserves for potential opportunities. For those concerned about undefined risk, turning naked positions into spreads can significantly reduce buying power requirements while maintaining strategic exposure.
…
continue reading
1696 episodes
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