Top Dogs | Portfolio Strategies
Sep 29, 2015
tastytrade has been working hard to provide targeted knowledge on building and managing accounts valued at approximately $250,000 to $2.5 million.
On this episode, hosts Tom Sosnoff and Tony Battista delve into one of the most important aspects of a larger account - strategies to consider for the portfolio.
In the episode immediately prior to the one covered in this post, Tom and Tony kicked off the conversation by discussing some guidelines for the portfolio's core position.
This week, they take the portfolio strategies topic one step further by highlighting possible "defined" and "undefined" allocations and examples of positions in each.
The graphic below provides a bird's eye view of the overall Top Dog sample portfolio:
Using the remaining $30,000 in the account, the defined and undefined portion of the account focus on positions with the following characteristics:
After filtering the options market for the above conditions, Tom and Tony demonstrate the deployment of the "undefined" part of the portfolio.
The slide below illustrates the "undefined" nature of a portfolio which consists of exclusively short premium (unhedged) positions. Please note the trades have been initiated in small quantities across companies in a wide range of sectors with large market capitalization (as well as an index):
Conversely, the "defined risk" portion of the portfolio is comprised of spreads and long premium positions which have unambiguous profit and loss parameters. The reduced risk of such positions means they require less up-front capital. In the “defined risk” category, the team is able to execute a greater number of absolute trades because they require less capital outlay per contract, as compared to the “undefined” category.
For example, we might see 8-15 positions within the undefined risk portfolio and closer to a firm 15 in the defined risk portfolio, depending on risk appetite.
The defined risk portfolio example from this episode of Top Dogs is shown below:
While the fourth and fifth episodes focused on potential strategies and composition of the portfolio, the sixth installment of the Top Dogs series provides insights on adjusting and managing them - and can be viewed by following this link.
We encourage you to watch the entire Top Dogs series to gain the best possible understanding of large accounts.
Any questions or feedback you might have on this or other tastytrade programming is greatly appreciated and can be shared with us in the comments below or by emailing email@example.com!
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
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.
tastytrade is a trademark/servicemark owned by tastytrade.
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”).
tastyworks, Inc. (“tastyworks”) has entered into a Marketing Agreement with tastytrade (“Marketing Agent”) whereby tastyworks pays compensation to Marketing Agent to recommend tastyworks’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastyworks. tastytrade is the parent company of tastyworks. tastyworks and Marketing Agent are separate entities with their own products and services. tastytrade has different privacy policies than tastyworks.
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.