So I was saying that I wanted to confirm Tastytrade’s mechanics at 21 DTE. I chanced upon this video in which Mike and Nicky talked not rolling defined risk trades such as iron condors and butterflies especially when the deltas between the 2 strikes are small. They said something about gamma effect is not so pronounced, which I don’t really understand. I went ahead to maintain all my losing defined risk positions without rolling. Let’s see how it goes.
Managing Losers at 2x Credit Received
I was managing my trades at 21 DTE last night when I decided to double check if Tastytrade advocates to close losing positions at 21 DTE. More on that in a later post. I saw this video which I thought was a classic on why losing trades are managed at 2x credit received.
Debit Spread (Again)
I put on a debit call spread after a long while. After 14 years to be exact. Wanted to add some deltas to my portfolio.
Saw this video that shows that 60-40 delta debit spread is the most profitable. Managing at 50% improves win rate significantly.
Diversify through Strategies
I started to deploy strategies other than iron condors, strangles, and credit spreads. I deployed my first jade lizards and debit spreads. TastyTrade teaches to diversify through (1) selecting underlyings that are uncorrelated and (2) using plethora of options strategies. I sort of experienced the effect of this diversification as gold rallied along S&P500, most of my iron condors were ITM but my jade lizards helped to save some grace. As the underlying move up, jade lizards don’t really make money but at least I don’t lose my pants off.
I was forced to deploy debit spreads due to the low IV environment recently and the need for me to add more deltas to my portfolio. I am also looking at calendars which may be the next strategy that I may deploy if this low IV environment persists.
When market makes consecutive up or down days
Selling calling as market makes consecutive up days is not as profitable as selling puts when market makes consecutive down days.
Key reason is because as market moves up, implied volatility contracts. Hence, selling calls is not as profitable.
But how about buying put after market consecutive up days?
Selling calling as market makes consecutive up days
Selling puts when market makes consecutive down days
Consecutive up days video here
Fading market moves video here
Options vs Dividend Stocks
Options are better! Even more profitable than buy-and-hold dividend stocks!
Full video here
Jade Lizard Management
Jade Lizard Options Strategy
Jade Lizard has better profitability over selling naked put and call spread. Good for small size accounts.
Full video here
Reserve Capital
This video provides guidance on how much buying power (BP) to use for trades based on the VIX level.
Lower delta trades have bigger BP expansion. 5 delta strangle BP can expand up to 3.4x.
Full video here (3 Jun 2019)
Iron Condor Setup
The wider iron condor is, the more it resembles strangle. This video explains iron condor basics and also a study to show that wide iron condors average loss is a smaller percentage of potential loss and that wide iron condors seldom experience max loss.
Full video: https://ontt.tv/2Msk0g9 5 Jun 2019
20 Percent Freedom 