Market Measures

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Management in Different Markets

Market Measures

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Managing winning trades at a percentage of max potential profit and managing trades after a certain number of days are both effective management strategies with their unique pros and cons. Today’s study investigates how each management strategy performed during varying historical market periods.

Study:
  • SPY 16 delta Strangles Closest to 45 DTE
  • Compared:
    • Holding to expiration
    • Managing Winners at 50% of the Max Profit
    • Managing Earlier at 21 DTE
  • Market:
    • Bull: 2005 – 2007, 2007 – 2018
    • Bear: August 2007 (Top) – April 2009 (Bottom)

Volatility control is one of the most important aspects of trading and although managing at 50% of the max profit provides the highest P/L, managing earlier provides great P/L and better volatility control, especially in market downturns.

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