Module 2 Session 3 - Profit Effect

Module 2 Session 3

8/8/2016

VIDEO: 7:36 MINUTES

This session covers statistical topics including:

Profit from Prospective
Implied Volatility
Normal Distribution (aka Bell Curve)
Fat Tail

Profit from Prospective

Mechanical application of specialized knowledge
over time produces consistent profits
- Nobody “KNOWS” the direction of the market

Implied Volatility

Measure of price
Effect of expected news, event, industry, earnings, etc.
Comparison for context
- Use of historical volatility for comparison

Normal Distribution (aka Bell Curve)

Key component used in most common derivatives (e.g. Black-Scholes)
Use in probability theories

Fat Tail

Variation in statistical law distribution
Diminished probability of staying in defined deviation
Occurs due to binary events
A key reason financial risk management is important

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Module 1

In this module, we build a foundation for the material being presented in subsequent modules. Including chart analysis study and terminology.

Module 2

In this module, we cover option details, including volatility and the option Greeks. Also, the specifics for constructing over a dozen option strategies.

Module 3

In this module, we cover the details of creating a balanced portfolio. Plus, the particulars of creating and analyzing option strategies. In addition proprietary trades scan creation is covered.