Managing losers in risk defined strategies has proven to be ineffective in enhancing performance. So what about managing earlier?
- SPY, closest to 45 DTE, 2005 to Present
- Put Spreads with 30 delta Short Puts
- Compared the Width of the Wings at:
- 2, 10
- Holding to expiration
- Managing Earlier (21 DTE)
Results: When trading spreads, it is better to manager early (21 DTE). Regardless of the width of the strikes, managing earlier provides better P/L and better volatility control than holding to expiration.