Market Measures

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Managing Winners | Varying Profit Targets

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.

You may change your trading game plan after seeing the results from this new study on managing winners which goes into greater detail than ever before regarding percentage levels. Even long time tastytraders will gain from the info here.

Our studies have shown that managing winners helps to improve both our average daily return and our win ratio. Closing the positions before expiration reduces the risk of a law drawdown too.

Our previous studies compared the 50% level to the 25% level as well as expiration for 1 SD strangles. This study tests many more levels. A study was conducted selling SPY (S&P 500 ETF) 1 standard deviation strangles from 2005 to present. We entered a trade every 2 business days. and had 1325 occurrences. We managed winners at 10 percentage point increments (10%, 20%, 30% etc) as well as holding to expiration.

A table of all the management levels (10%, 20%, 30%, 40%, 50%, 60%, 70%, 80%, 90%) was displayed. The table included the average P/L per trade, win rate, average duration of the trade and average P/L per day. A graph of the management levels versus the average P/L per day was displayed. A second table of all the management levels was displayed. This table focused on how the P/L per day changes between different management levels. The table included the additional duration and P/L per day.

Watch this segment of “Market Measures” with Tom Sosnoff and Tony Battista for the takeaways (including important info about gamma risk) and the results of our most detailed study about managing winners.

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