Market Measures

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It Pays to Stay Active

Market Measures

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

Almost all of our studies performed on Market Measures have a management target in mind that varies across our many strategies. We often show how managing profits in trades reduces volatility of our trades and produces the best per day profits in the long run, but we rarely talk about what is required of us after management.

Today, the guys talk about the importance of staying active and engaged after taking a winning trade off the table. It is too easy to relax and be content with our winners, so we have put together some research showing how staying active after profits have been taken is of the utmost importance.

The Study
  • S&P 500 (SPY); 2005 to present
  • Sold at-the-money Put using 45 DTE options
  • Compared results of the following management tactics:
  • Manage at 50% and immediately redeploy
  • Manage at 50% and wait until expiration to redeploy
  • Held to expiration and immediately redeploy
The Results

We saw that our go-to strategy of managing and immediately redeploying that capital somewhere witnessed the best results. And actually, managing without the immediate redeployment saw by far the worst results of these three techniques. Check out what the guys had to say about all this in the segment above.

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