As we approach the end of the year, we tend to see many “best of” lists. tastytrade decided to jump on the bandwagon to bring you 3 of our top segments on.
In this study, we tested buying 100 shares in 30 well known equities versus selling the 45at-the-money (ATM) Puts in the same equities. The study revealed that the amount in profitable trades of selling ATM Puts was higher and the Standard Deviation of risk was lower and it added a 4.5% downside buffer.
In terms of analyzing more neutral strategies, this study compared a short wideusing the 40 and 5 strikes versus a narrow short Iron Condor using the 15 and 5 Delta Strikes. The was lower with the wider Iron Condor, but the average P/L at expiration was double and the average P/L when managed at 50% of max profit was nearly triple.
Last but not least, the Research Team tested SPY shortwith a 45 DTE from 2005 to present. We compared holding to expiration and managing the trades at 25% of max profit (if possible). The study showed that managing Straddles greatly improved the success rate, and average P/L per day. More importantly, we learned that we should expect to take some “heat” on our Straddles as 73% will be losers at some point.
Watch this segment of Market Measures withand for an important recap of three of the best 2016 Market Measure segments on selling premium.