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In this clip from Stocks in Translation, tastytrade Founder and tastylive CEO Tom Sosnoff, joins Markets and Data Editor Jared Blikre and Producer Sydnee Fried to discuss opportunistic options trades while managing risk in our “Trade This Way” segment, presented in partnership with tastytrade.
Blikre and Sosnoff analyze two real-world examples, breaking down the risks and rewards of an options trade on Tesla (TSLA) or NVIDIA (NVDA).
“These are the two most actively traded equities with respect to options,” Sosnoff explains. “Tesla trades three to five million contracts a day. NVIDIA has been trading five to seven million contracts a day.”
Both companies’ stocks are down right now, which poses a level of risk when trading.
Sosnoff’s advice when navigating trading companies like this: start small.
“It is very difficult to manage something that you can’t control,” Sosnoff says. “If you sell a put, for example, in Tesla or you sell a put in NVIDIA, that’s the decision you can control. You do that based on subject price extreme, you do that based on implied volatility, you do that based on lots of reasons. However, if that stock starts to go against you, now you get concerned. The only thing that everybody can protect themselves on, is by staying small to start with because that is your best risk mitigation. Just stay small.”
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To hear more of Sosnoff’s thoughts, watch the full interview here.
Twice a week, Stocks In Translation cuts through the market mayhem, noisy numbers and hyperbole to give you the information you need to make the right trade for your portfolio. You can find more episodes here, or watch on your favorite streaming service.
Listen and subscribe to Stocks In Translation on Apple Podcasts, Spotify, or wherever you find your favorite podcast
This article was written by Lauren Pokedoff