You're conflating a non-discretionary trading trigger rule for a risk-recognizing trading practice. This is often missed on ET, so your point is granted (with a ).
No, I stick to vertical spreads. I have looked into trading the others but I like simplicity. Straight verticals work best for me, Best
Yes, trade often trade small. The Sosnoff/tastyworks mantra. Although that was my style before tastyworks/tastytrade came into vouge. As to positions I normally carry current week and 5 puts and calls next week. I generally don't trade beyond the current and next week. My Monday weeklys expire tomorrow. I've already closed out (tonight) the PUT vertical for a profit. The /ES is up 16.00 at the moment so I took the profit on the PUT side, the CALLs are still OTM but a little less than 1 SD from ATM. I'll watch them and see what happens when Tokyo, Shanghai and Hong Kong do when they open in a few minutes. Then sit tight, roll, close, etc. I am not inclined to take a position at the end of this week (Friday) because it is triple witching Friday. The /ES futures, /ES options and SPX all expire on the same day. Crazy things seem to happen on triple witching day. So I'll probably take some positions for Week 4. The Asia Dow index just opened up and the Nikkei 225 just opened down. I'm sitting tight on my CALL spread. Best
K, my understanding is that tasty trades guys prefer unlimited risk trades, which makes sense if you trade small. Why do you prefer spreads?
I prefer credit spreads because thy offer Limited (i.e. defined) risk. Yes, Tom Sosnoff and Tom Preston and the rest of the tastytrade gang seem to like undefined risk trades. That is short strangles and straddles. But they do spend a fair amount during their daily show going over their recent studies about spreads and condors. I have hundreds of their segments with slides that I've saved on my hard drive and at least a third of them are studies they've done on defined risk trades. Best
Not sure what "lots" means (25%, 50% o5 75$) nor how you are defining a "small account" (e.g. 2,000, 10,000, more) My account is pretty decent (high enough to not have to worry about FINRA's Pattern Day Trading rules) and am a proponent of defined risk trades.
I am thinking of accounts which do not have enough capital/margin to either take assignments or even open undefined risk trades. So someone who wants to collect premium on TSLA but doesn’t have account large enough to survive the worst case scenario. TT talk a lot about how much more flexible one can be trading undefined risk. I am not arguing against your approach, just thinking out loud.
a few questions about your strategy. -why pick /es over spx, where there's more liquidity? -how do you determine the % take profit or % loss in your trading plan? i personally trade more on the discretionary side. the chart usually tells you whether buyers or sellers are in control. yours seems more systematic. But as market conditions change, how do you modify your strategy and rules? If you have put credit spreads that are at 50% profit, but market is looking strong, would you close it anyway and follow your list of rules, or make a call to let them expire worthless? - when you say risk a certain % of your account, do you mean max loss, or just the stop loss, and maybe some slippage? - how important is put/call ratio compared to ATM skew? I feel like the skew at least lets you have some sense of the direction bias, while put/call ratio, you don't really know whether they're being bought or sold.