The VIX represents the current implied volatility of the market, and it exhibits three types of behavior: expansion, contraction, and lull.

As volatility is mean-reverting, periods of steep expansion are typically immediately followed by slightly longer periods of contraction.

While the VIX is in a period of lull the majority of the time (during periods of 42 days on average), volatility expansion occurs over 12 days on average with a subsequent contraction for 17 day periods on average.

Tom and Tony discuss how soon we can expect implied volatility to contract when it is at certain elevated levels.

What is beta weighted delta hedging? How can we use it to hedge?

In this piece we compare a portfolio of short options hedged with SPY shares and a portfolio of long stocks hedged with SPY shares.

The assumption is that the portfolio of short options will perform better because there is a theta decay component.

tastytrade examines various probabilities of closing higher or lower given that we had an up or down opening.

Tom ands Tony discuss how many short deltas we should look for in an account.

Today, tastytrade discusses the two important ways to control portfolio volatility.

Piggybacking off of yesterday's segment, the team tests if there is a correlation between volatility overstatement and a strategy's risk profile.

Implied volatility overstatement is the concept that forward-looking price estimators "overestimate" the actual price movements that occur. In this segment, we are going to test in several assets, by how much has implied volatility overstated these moves. In the next segment, we are going to tell you what to do with this information.

Why trade one product against another if you have the same chance of being right as trading one product outright?

In a recent Market Measures, the Research Team explored the pros and cons of buying calls over the long-term. Today, we are going to test the same strategies from a portfolio perspective. We are going to find out why they don’t work well by analyzing the volatility.

The results suggest that it is difficult to construct a healthy long call portfolio over the long-term. It is even harder to manage it. A simple short put portfolio not only produced greater return on capital, but also lower volatility.