Do sector ETFs present solid diversification for our short premium trades while still sticking with liquid, equity markets?Study
Sold 1(16 ) strangles in SPY, XLK, XLV, XLP, and XLU to observe how sector performed when SPY strangles lost
trades at 50% of credit received
2010 to Present; 45 DTE options
We find that with non-underlyings to the SPY, like XLU and XLP actually helped improve performance when the SPY lagged.
Checking correlation in the tastyworks platform as well as knowing the makeup of ETFs we trade is essential to having a diversified portfolio of stock or options trades.