Diversification in non-correlated products reduces risk. Watch full video here.
Tag: Strangle
When To Adjust Strangles
When should we adjust strangles?
Study shows that it is more profitable to adjust when the strike has been breached.
Undefined Risk is Less Risky
What??!! Can’t really understand this one. But sounds like Kai is saying that there is a <1% chance of strangle losing an amount that is the same as premium collected. Iron Condors on the other hand, have 4% chance of losing BPR. As a result, portfolio is more volatile if it comprises mainly of defined risk trades. I need to look at this more in depth.
QCOM Post Mortem
26 Mar 19 – STO QCOM 50/65 17 May Strangle @ 1.07
QCOM won court case against AAPL and that caused the long green bar. It happened so fast that I couldn’t adjust my untested side in time. There was simply not much credit left in the untested put option. I wasn’t confident in going inverted because I just read up on going inverted after the long green bar.
22 Apr 19 – BTC QCOM 50/65 17 May Strangle @ 17.46
I decided to just cut my losses before earnings in case the price head further north after earnings. On hindsight, my losses could be much lesser if I had waited it out. Then again who knows. Subsequently saw a Tastytrade video that describes loss > 3x initial BPR is far and few between. I don’t know. Perhaps I would be more confident if armed with this info?
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.
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)
20 Percent Freedom 