Market Measures

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The Importance of Capital Allocation

Market Measures

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In this study, the tastytrade Research Team tested the portfolio performance of 1 Standard Deviation SPY Strangles by allocating varying capitals (10%, 20%, 30%, 40% and 50% of a hyporthetical $1M account) . The study began in 2005 and all Strangles were held to expiration. The team then measured the long term P/L of the overall portfolio.

Using a series of visuals, the team presents the data on how each level of capital allocation faired while also noting how volatility and selloffs in 2008 and 2018 played a role in P/L. Watch this segment of Market Measures with Tom Sosnoff and Tony Battista and understand why capital allocation is so important.

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