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Straddles | Managing Winners

Market Measures

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Managing our winner has proven to increase our win rate and our overall profitability. We have also shown that managing a 1 standard deviation strangle at 50% of max profit has provided the best time to manage a trade. Knowing this, does the 50% management level apply to a straddle as well or since we are collecting a larger amount of premium, should we manage the trade sooner?

Today, Tom Sosnoff and Tony Battista look at a large study on Straddles to find out where they should look to manage their winning trades. The guys compare closing the trade when it has reached 50% of max profit to closing the trade when it has reached 25% of max profit. By closing the trade sooner at 25% of max profit, they were able to increase the total profits by 11% and had a win rate that was 16% higher. Additionally, by managing the trade quicker, they reduced the time they were in the trade by 40%!

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