Finding the best Strategy; Condors, Lizards, Butterflies

motterpaul said:
Just to be clear - Tastytrade is a very successful site and brokerage. And they are gaining more credibility every day. Karen the supertrader? Look up her story, she was a very big success until she made a technical error in reporting her income to her investors.

Her strategy is to sell premium with very large buys (usually credit spreads or Iron condors) and using TWO standard deviations are her guidelines (meaning her POP (probability of profit) would be around 95%.

Trading this way makes money very slowly and it requires careful stock picking, but her typical move if a position moved against her would be to roll out the strike to the following month (which is what TastyTrade generally recommends since you can buy the next month's same position and receive a credit to your account for time premium). That would give her 30 more days for the stock to move back within the 95% POP.

She got the large sums of money required to use this slow strategy by taking investor's money (which is generally what brokerage houses do). But what she did wrong was one time when she used this rollout strategy she failed to report the first month before the rollout correctly as a "closed trade" - which it is technically, even though the same strategy is going going forward.

I am not excusing her - she should have known better, but one can't deny her incredible success for a few years before this happened.

Myself - I am in Tastytrade, and I find the hardest thing is finding the initial buy-in strategy. Iron condors move very slowly, and credit spreads use up buying power. It is better to have some directionality to to your trades - along with some trades that are purely for premium collection.

The right stocks (high IV) in the right environment (high VIX) not moving against you too much can make this kind of trading a pretty good deal.

But if anything, I find it really hard to work the TT strategy as directed, because when stocks move my first impulse to is to take profits by rolling up my legs 0 and that makes it pretty hard to keep track of my initial cost.
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My broker does not offer Lizard, does Tastytrade?
 
motterpaul said:
Just to be clear - Tastytrade is a very successful site and brokerage. And they are gaining more credibility every day. Karen the supertrader? Look up her story, she was a very big success until she made a technical error in reporting her income to her investors.

Her strategy is to sell premium with very large buys (usually credit spreads or Iron condors) and using TWO standard deviations are her guidelines (meaning her POP (probability of profit) would be around 95%.
.
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Just in case you missed the outcome of her 'technical error' ...

https://www.elitetrader.com/et/threads/karen-at-court.312629/page-13
 
An iron condor, or any other multi-leg opening trade, is just an opening trade that results in a complex position with a non-linear payoff. Being complex doesn't make it a "strategy"; a strategy must include processes of entering, adjusting and exiting your positions. "Buy 10000 shares and hold forever until price triples" is a strategy; an iron condor is not, just as "buy shares" alone is not.
 
my biggest loss ever was while I was still following the tasty trade method..

sell strangles at 30Delta OTM, roll up one strike, roll out the other, protective stop at 2X max credit yada yada yada..

Then you get caught in a 5-sigma move, your stop does not trigger and your are blown out of the water.
 
Baozi said:
my biggest loss ever was while I was still following the tasty trade method..

sell strangles at 30Delta OTM, roll up one strike, roll out the other, protective stop at 2X max credit yada yada yada..

Then you get caught in a 5-sigma move, your stop does not trigger and your are blown out of the water.
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Does Tasty Trade recommend protective stops of any sort or just managing winners and staying small?
 
drmark27 said:
Does Tasty Trade recommend protective stops of any sort or just managing winners and staying small?
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What makes you think they "just manage winners and stay small" when all the evidence is
... they spend most of their time managing losing trades ... by rolling the untested side ... and managing "inverted" ( Guts ) strangles
... their really big losses come from 'scalps' gone wrong ... small scalps on index ... that turn into big losers ... that turn into core positions ... that can take years to work through

Most TastyTrade concepts are just full of BS ( BlackScholes ? )
 
Baozi said:
they actually recommend to exit when the loss goes beyond 2X max credit
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Do you know "which" TT personality recommends this
... when they started recommending it
... whether they actually follow that rule themselves
 
I used to watch tons of TT videos those days (believing I was educating myself, ahaha).. Sosnoff for sure said it more than once, probably it was also in the section "Mike and his whiteboard".

Edit: as for following their own rules, nobody knows.. I guess they make most of their money on commissions, not on active trades
 
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