Alert

Cardano, the sixth largest crypto asset by market cap, is now available to trade on tastyworks. Here’s what you should know.
tastytrade

The Loser's Strategy | Truth or Skepticism

Mar 3, 2016

By: Josh Fabian

Some people just can’t let it go. Take our favorite skeptic, Dylan Ratigan. After a flat 2015 for the S&P and a 2016 S&P currently down 3%, Dylan is still arguing for passive investing. Dylan argues active investors are down more than passive investors. If there were a wall nearby, Tom would have been banging his head against it (luckily the beret would bear some of the impact).

Tom made a bold statement but most true statements are bold: “We are a society of loser traders.” Passive investing does not work in the long run. After generating one or two decent years of returns, far too many people believe passive investing works. But it doesn’t.

Not to toot our own horn, but we believe tastytrade is the future of active investing. If we didn’t, we would be wasting a lot of time and money. Investors need to become financially literate and we’re out to create a culture of risk-taking.

The notion you can make money doing nothing is a fallacy, fantasy or both. With few exceptions, the most successful people are risk takers. They saw opportunity and strategically attacked. It’s not a head-first dive in shallow waters approach. That isn’t what we’re about. Small trades, frequent trades, that create probabilistic outcomes in uncorrelated, liquid products is our roadmap. Passive investors ultimately lose and deservedly so.

So what does an active investor’s core portfolio look like? Tom currently has 20% - 25% of his investment capital at work. Core positions are short bond futures and short puts on those bonds; short S&P futures, short puts on those S&Ps; long resources (i.e., oil) and short calls against those resources. Using highly liquid products that expire quarterly is what Tom calls the “New Age portfolio.”

The structure creates a zero correlation risk portfolio. Selling premium around those core holdings lowers cost basis and extends duration. Passive investors are ignorant to these strategies but we’re working on changing that.

Finally, it’s a topic you can’t avoid, like that car wreck that you crane your neck to stare at: Trump. What, if any impact does a potential Trump presidency have on markets? It’s not something we need to worry about, argued Tom. Markets suggest Trump can’t win. But what Trump’s rise does suggest is the Republican Party is no more. Let’s put it in market terms because that’s how we see the world. Trend traders are long the breakout stock ticker: TRUMP. We’re selling calls and collecting rich premium because implied volatility in TRUMP is HUUUUGGGGEEEE.


Josh Fabian has been trading futures and derivatives for more than 25 years.

For More On This Topic See:
Truth or Skepticism - The Loser's Strategy: March 3, 2016


Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Related Posts

tastytrade content is provided solely by tastytrade, Inc. (“tastytrade”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. tastytrade, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastytrade is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. tastytrade is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors. Prior to trading securities products, please read the Characteristics and Risks of Standardized Options and the Risk Disclosure for Futures and Options found on tastyworks.com.

tastyworks, Inc. ("tastyworks") is a registered broker-dealer and member of FINRA, NFA and SIPC. tastyworks offers self-directed brokerage accounts to its customers. tastyworks does not give financial or trading advice nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastyworks’ systems, services or products. tastyworks is a wholly owned subsidiary of tastytrade, Inc (“tastytrade”). tastytrade is a trademark/servicemark owned by tastytrade.

Quiet Foundation, Inc. (“Quiet Foundation”) is a wholly-owned subsidiary of tastytrade The information on quietfoundation.com is intended for U.S. residents only. All investing involves the risk of loss. Past performance is not a guarantee of future results. Quiet Foundation does not make suitability determinations, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of Quiet Foundation’s systems, services or products.

Small Exchange, Inc. is a Designated Contract Market registered with the U.S. Commodity Futures Trading Commission. The information on this site should be considered general information and not in any case as a recommendation or advice concerning investment decisions. The reader itself is responsible for the risks associated with an investment decision based on the information stated in this material in light of his or her specific circumstances. The information on this website is for informational purposes only, and does not contend to address the financial objectives, situation, or specific needs of any individual investor. Trading in derivatives and other financial instruments involves risk, please read the Risk Disclosure Statement for Futures and Options. tastytrade is an investor in Small Exchange, Inc.

© copyright 2013 – 2021 tastytrade. All Rights Reserved. Applicable portions of the Terms of use on tastytrade.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastytrade’s podcasts as necessary to view for personal use.