Curious on the trades that DO NOT RECOVER without management, what type of losses are we looking at? When factoring in expected loss, does it make sense to manage to mitigate loss size?
Thanks for the interesting study guys. In a bubble, it seems that managing at 21 days locked in a loss. However, in real life, this is not the end of the trade as you obviously know. You widen your breakeven’s and can turn the trade around even though on paper after rolling you have a loss.
Yes, trade management is the key that transforms a trader to a profitable one. Small losses are ok but manage the bigger ones at least to small losses.
you talk about cutting or rolling at 21dte when something is up but i cant find any videos on how u like to decide on dealing with losers. do u just cut everything at 21dte or is there a percentage of a losing trade that you recommend to cut at? also tom advocates for cutting at 25% profit, so is it 21dte or 25% profit or whichever comes first?
It would appear from this data that the 50 Delta performs as good if not better than the 30 and 20. If that is the case, perhaps we should revisit the idea that the 30 is the optimal strike to sell?
Keep in mind that this works both ways on average. Example: if 50 delta trade reaches a .5 loss 10% of the time then taking a profit at 50% of credit received (.5 of max profit) will only be reached 10% of the time. Hope that makes sense.
By management do you mean close the trade, roll in uncontested, roll out, other? By the way your talking it makes it sound like they simply closed the trade at 21 DTE.
Need to define what the specific "management" is in the context of this study. Your presentation is technically incomplete and unevaluatable without it.
when a trade moves against you, isn't it best to roll the untested side sooner than later (rather than wait till 21dte)? Generally the implied volatility, and premiums received, would be higher soon after a big move.
Curious on the trades that DO NOT RECOVER without management, what type of losses are we looking at? When factoring in expected loss, does it make sense to manage to mitigate loss size?
Thanks for the interesting study guys. In a bubble, it seems that managing at 21 days locked in a loss. However, in real life, this is not the end of the trade as you obviously know. You widen your breakeven’s and can turn the trade around even though on paper after rolling you have a loss.
Yes, trade management is the key that transforms a trader to a profitable one. Small losses are ok but manage the bigger ones at least to small losses.
you talk about cutting or rolling at 21dte when something is up but i cant find any videos on how u like to decide on dealing with losers. do u just cut everything at 21dte or is there a percentage of a losing trade that you recommend to cut at? also tom advocates for cutting at 25% profit, so is it 21dte or 25% profit or whichever comes first?
Great point -- Weighing in buying power (opportunity cost)
Just the study I've long been curious about. Thanks!
Thanks for the analysis!! Very helpful.
Thanks for the work. Would you guys look at the chart at all when the trade goes against you?
Our video tomorrow digs into the value of charts
what do you mean by 20 delta, 30 delta? Is that how far OTM?
Yes that is the probability of being OTM
It would appear from this data that the 50 Delta performs as good if not better than the 30 and 20. If that is the case, perhaps we should revisit the idea that the 30 is the optimal strike to sell?
Keep in mind that this works both ways on average. Example: if 50 delta trade reaches a .5 loss 10% of the time then taking a profit at 50% of credit received (.5 of max profit) will only be reached 10% of the time. Hope that makes sense.
By management do you mean close the trade, roll in uncontested, roll out, other? By the way your talking it makes it sound like they simply closed the trade at 21 DTE.
I have the same question. What so they mean by "managing at 21 days"? Close, roll up/down, or move out date? Some examples would be nice.
All I can say is…NVDA
That would make it hard to order a beer.
Amazing work guys love these research pieces
Need to define what the specific "management" is in the context of this study. Your presentation is technically incomplete and unevaluatable without it.
It means bail on the trade or roll it or DO something.
when a trade moves against you, isn't it best to roll the untested side sooner than later (rather than wait till 21dte)? Generally the implied volatility, and premiums received, would be higher soon after a big move.
In this case, I think that managing is closing the trade, due to the commend of Tom at 5:00.