The Market Measures segment from March 7th, 2016 called Jade Lizards : Part 1, revealed the results of our study that indicated managing winners at 50% of max profit was the best approach to use with this strategy. Today, we follow-up with a study indicating when a loss should be taken.
A Jade Lizard combines a short naked put and a short call spread. The Jade Lizard is essentially a Strangle with upside protection that eliminates the upside risk. The study we ran indicated we should manage winners at 50% of max profit. For the downside, we compared the percentage of profitable trades, average trade life (in days), and the average P/L per day to test the idea of managing losers (with virtually unlimited risk to the downside) at:
Watch this segment of “Market Measures” with Tom Sosnoff and Tony Battista for the valuable takeaways and the results from our study on managing Jade Lizards.
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