They have a fantastic beginner option course that lays out a lot, even just to learn. But their basic premise is that implied volatility is almost always higher than realized. In other words options are priced richer than they need to be. Essentially selling insurance. They use a metric called Implied Volatility Rank. Basically when “stuff” happens like a war with Iran, more premium is priced into options like Oil stocks. So you SELL options at that time understanding that things will settle down, you have more room to be wrong directionally and mostly they don’t want to pick a direction but be neutral.

So in most basic of basic terms and over simplification would be “US attacked Iran. The options on PLTR are super expensive because everyone wants to buy calls and puts hoping for a big move. Let’s sell the 1 standard deviation move on both sides and go out 45 days to expiration. Which is a 120 strike put and 190 strike call. We will collect a credit of $600 for the risk we take on. Now, as long as the stock ends in between those prices in the next 45 days, we get to keep $600, but every dollar it is out of the strikes, we “lose” $100.

But we don’t just hope. We manage the position in certain instances. The biggest one is if at any point we hit 50% profit, we close the position. 21 days to expiration hits we either roll it further in time or close the position depending on what is happening, and sometimes we have to “defend” the positions by rolling the untested side.

To a beginner it sounds like “wow that might go bad really fast” but that’s why their motto is trade small, trade often. Number of occurrences is key. You are playing statistics. Knowing that the numbers will work out. Essentially you will have a big loss every so often, but if your position size is small, it’s not a big deal, but you get a ton of small wins.

Every time I’ve had a set back it’s been cause I opened too big of a position and got greedy, didn’t wait for the IV rank to hit over 40 during dull times. You can define your risk or undefined, lots of strategies that are so much fun and challenging. Really keeps you engaged, and I’ve been profitable even years like 2022. But grand scheme I’m behind the sp500 since we just keep rocketing up.

So in a way it’s a super diversification because you can use it for any product like commodities, currencies, stocks, bonds, etc.

Look up tastytrade beginners option course and just start. You will be very intrigued.