Best Practices

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45 & 21 Days

Best Practices

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

There are several important numbers to remember when trading the tastytrade methodology, however two of the most important are 45 and 21. These are the number of days we use to help determine entry and exit points for our trades.

When selling premium, we prefer to sell options with approximately 45 days to expiration and manage those trades with 21 days to expiration. Selling options with 45 days to expiration optimizes theta collection while also providing enough time to manage against adverse price movements. Managing trades at 21 days to expiration greatly reduces gamma exposure and delta expansion improving cumulative portfolio performance.

Tune in to see how managing by these numbers impacts trade performance.

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