Market Measures

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Rolling Puts - In Difficult Times

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.

Rolling and managing has historically worked better than holding to expiration. As some of our studies have shown, the longest rolling duration for a losing position could be as long as 2 years. What if we initiated a short Naked Put immediately before a market crash?

In this study, we tested two "worst case" scenarios: sell puts right before the 2008 and 2015 crashes. We compared rolling this strategy to holding to expiration. From there, we also looked at comparing rolling to buying and holding SPY in a model portfolio to determine how both recover after a crash.

Watch this segment of Market Measures with Tom Sosnoff and Tony Battista for the interesting takeaways on volatility, portfolio recovery and trade defense.

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