BTW: TastyTrade has been evolving its strategy as time goes by (and I am new there). The newest change was to say it is best to manage your trade at 21 DTE. (as far as i know)
To sum up the TT strategy soleto to the best of my recollection:
Sell premium by opening trades for a credit in high volatility underlyings usually about 45 days out.
Watch this trade but do not over-manage. The whole idea of volatility is that an option will hit the price you want eventually, and that over-managing only costs commissions and makes tracking your trade harder. IOW: if an options goes ITM, volatility should also take it back to to OTM statistically speaking. One standard deviation gives you about a 66.6% chance of being profitable as long as you stay the course.
You do not manage until 21 days out (this 45-21-day time frame is based on research that shows it's the safest combination of Greeks to give your strategy a profit). To manage you generally roll up the untested side. This should give you a credit which gives you a higher break even, but at the same time also statistically lowers your PoP.
If a trade is a big loser (unmanageable) it is usually advised to close it and start over. In fact, just starting over is often a good idea as opposed to over-managing, It is lot easier to keep track of your positions when you close and start over. However, the recommended way to manage a losing leg you cannot roll up is to roll it out in time (always for a credit).
During your trade - you should aim for a 50% profit in most premium collection strategies, while others (straddles, for example) are best managed for a 25% gain.
That is my take-away (not taken from the TT site) - and while it makes sense the problems I have personally had are as follows:
The trading platform offers very instant analysis of any trade you want to open, but it is also confusing, for example, you can have 4 legs (an IC, for example) and by opening the first put spread (where you sell your premium) at the expected move, you might see a suggested 67% of POP with anywhere from 50 to 80% expectation of 50% profit. BUT as you add the outside legs to lower your BPC (cost of buying power) - as you scroll your legs through different options you will see these stats ( POP and 50% Pop) go from highly profitable (67%) to losers (down to 20%) just by moving one leg one step. It doesn't seem to make sense.
They also have a great analysis tool where you can generate a possible trade and then go in and see the expected move of each leg for (1) each passing day and (2) moves in the underlying up or down. With this tool it is very easy to find a trade that will make money with each passing day - until you add in the volatility of the underlying, and then it seems most ICs lose money (or I should say it is very hard to find one that does NOT lose money significantly) if the underlying price moves the wrong direction.
So - the takeaway is that (and I have heard this theory before) in the days of very high volatility selling premium for a profit was easy - but the VIX is so low these days (10 to 18%) that it just is not that easy any more.
I took half of my money and started trading options at TT, and I have found I am making more in general in my old equity acct where I buy and hold stocks than I am making trying the TT approach - but I am also NOT A GOOD EXAMPLE of using the TT method.
The people who have said they DO make money at TT do this - they find high IV stocks and sell premium, and then they set up the GTC sell order for 40 or 50% profit and then they walk away because you never know when it will happen. They do not over manage, only checking in on the recommended 21 days.
Doing this, 66% of their positions could/should be winners. I know I have missed some potential winners because i did not have the GTC set up. I also tend to over-manage, and I also tend to try to scalp.
Now, I had to quit day-trading because although in the past I have been a GREAT swing/momentum trader, I have lost my touch. If anything, I am George Costanza - I should always do the opposite of what my gut tells me. I am not sure day-trading is even possible anymore. I am now a conspiracy theorist that says all brokerages cater to wanna-be day-traders and only exist to drain them of their money.
