If you are looking for reasons not to take ownership of your own money, don't expect Tom to beg you otherwise. As far as Tom is concerned, tastytrade provides mathematically-backed evidence for why we trade how we trade. tastytrade provides the tools, but you have to provide the desire to use them. Dylan, however, wants to know: but what if….?

Have you ever worked out with a trainer that just did not care? Not that they did not care about you, but they didn’t care what reason you gave for not being able to do something? Tired? “This will give you energy.” Knee hurts? “Because you have not strengthened the muscles around it enough.” Lightheaded? “If you pass out, I’ll catch you.” Maybe those were your reasons. To that trainer, they were just excuses. That is also how Tom sees Dylan’s argument that being an active investor is too time-intensive. (It’s much harder than it seems to work “Tom” and “working out” into the same paragraph.)

Turning to markets and volatility, Dylan accurately points out volatility is currently low and we know it will move higher (there’s hope for him yet). Why not simply get long volatility and wait? Reminds me of wanting to buy Toys R Us stock just before Christmas. It sounds logical, but it does not work.

Yes, volatility is low. Future volatility is not. We all know volatility is going to eventually move higher. Because of that, future volatility is priced higher than current volatility. For that trade to work, volatility not only needs to move higher, like everyone expects, but it then has to move higher than that. The cost to inventory volatility is too great for individual traders which is why you will not see Tom buying volatility outright.

Understanding why we cannot buy inventory is an example of the information tastytrade provides. We have the empirical evidence supporting our strategies. However, we cannot put our knowledge to work for you. You need to decide if you want to better yourself or would rather make excuses.   

Josh Fabian has been trading futures and derivatives for more than 25 years.


For more on this topic see:

Truth or Skepticism | Trading with a Day Job: May 26, 2016