According to our study, the current option market is efficient enough to correctly price the risk-reward relationship of liquid underlyings. And it’s unlikely for options on one underlying to outperform the others regarding risk-reward relationship after other variables like different buying powers have been adjusted.
We find out that after contract size is adjusted for buying power, 16 delta 45 DTE strangles on two popular ETFs, (SPY and IWM ) had similar win ratios. They also have nearly identical risk-reward relationships despite the difference of their underlying prices.
Tune in as Liz, Tony, and Anton interpret this information further!