This post is to provide the terms and definitions you will frequently see in regards to our trading strategy.

• Fair Value: This is what is considered the fair or true price of the underlying. It is the value of the 200 MA and it is what we trade around.
• Spread: This is the distance between the current price and it’s fair value.
• Premium: This refers to the positive spread of an asset. When the spread is positive, the market is trading at a premium.
• Discount: this refers to the negative spread of an asset. When the spread is negative, the market is trading at a discount.
• Theta: In option theory, this is the rate at which the option’s price declines over time. In our model, this is the rate at which the fair value is converging towards our entry or the current price. This rate is the rate at which our position will lose its premium or discount over time. Traditionally, Theta was used as a shorthand for the Greek word meaning death (Thanatos).