Karen the Supertrader - TastyTrade Hybrid Experiment

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Sweet Bobby said:
I did learn something from Karen. Try to make this as simple as possible. So if you're watching tastytrade every day you're going to get bombarded with way too much information. Don't worry about learning all the various strategies. Just focus on about two - strangles and straddles and their components short calls and short puts.

Out trades on at about 45 days to expiration, manage winners at 50%, limit losers to 2x the initial credit received. Close trades at about 21 days to expiration regardless of profit or loss. Don't use more than about 35% of your buying power. Try to keep a delta vega ratio of -1/-2. You can Expect to keep about 25% of the premium that you sell on average. Keep a theta of between 1/10 of 1% to 1/2 of 1%.

I deviate from tastytrade in that I primarily sell premium around the S&P 500 and. It much else. I'm not interested in trading 100 different products. I don't want to watch the screen all day. Take 5-10 minutes every day to make your trades, set good till cancelled orders to take your profits at 50% and then do a one cancels the other order to close it at a loss of 2x loss. If you're trading /ES, do a GTC order to take your profit and then set an alert to notify you if it reaches a loss of 2x loss or greater. Then go spend a little time with your friends and family. Don't worry about the markets and where it's going, just trade what it gives you.

I hear there's an active volcano under Yellowstone that could potentially erupt and wipe out 50% of the US population. I'm going to sleep pretty well tonight and so should you.

The present value of future fear is overpriced! I should be thankful for all these stupid idiots that tell me that I'm going to blow my accounts up and that this is going to end in disaster. These folks are the ones that allow us to continue to make money. They buy protection and I'm more than willing to sell it to them. I'm the insurance company and they are driving the Volvo.

Just don't over complicate this stuff. My experiment is evolving but so far I'm pretty happy. Please let me know if you have any questions.
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Thank you for your reply. Let me take a careful look to try understand the strategy and its implications.

Regards,
 
The experiment had a nice week. The Net Liq was up $3,618.23 for the week and up $33,477.49 since April 5, 2016 (22.3%). I initiated 10 opening trades for the week. My theta is 366, delta is -8, vega is -2345. As you can see, my delta is out of line and I begin the process of pecking away to get it back in line. Have a great weekend and Roll Tide!
 
Hi Bobby,
are you aware of the new Study from Tastytrade regarding the portfolio allocation to strangles? I think its the first time they provide actual capital curves. This is the third section and it includes basically your strategy selling strangles and managing and allocation of 25 %

upload_2016-10-15_13-35-19.png


So the good news is they outperform B+H. But look like in 2008 the curve stayed high even when SPY already was falling and then it dropped like a stone. And inbetween there are sharp downspikes too. I think its a positive strategy but still pretty volatile. Maybe it should be applied to different underlyings to flatten the curve.
 
JoeLeTrader said:
Hi Bobby,
are you aware of the new Study from Tastytrade regarding the portfolio allocation to strangles? I think its the first time they provide actual capital curves. This is the third section and it includes basically your strategy selling strangles and managing and allocation of 25 %

View attachment 167339

So the good news is they outperform B+H. But look like in 2008 the curve stayed high even when SPY already was falling and then it dropped like a stone. And inbetween there are sharp downspikes too. I think its a positive strategy but still pretty volatile. Maybe it should be applied to different underlyings to flatten the curve.
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Yes, this was a great study! Further validation that I'm on the right track.

Bobby
 
Sweet Bobby said:
If you have read anything regarding my strategy, you realize that there is a relationship between the two - delta and vega. Unbelievable!
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Of course there is a relationship - anyone who understands anything about option greeks already knows that. That doesn't change the fact that you're still way more short vol than anything else. All it'll take is one gap down open that doesn't come back to smoke you out.
 
i960 said:
Of course there is a relationship - anyone who understands anything about option greeks already knows that. That doesn't change the fact that you're still way more short vol than anything else. All it'll take is one gap down open that doesn't come back to smoke you out.
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Keep talking old man.
 
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