Sweet Bobby Chats with Tom Sosnoff at tastytrade

[BlueWaterSailor]

So your strategy is something like this, then:

16 Sep 22/55d
Put spread: +3750P/-3700P ($10 debit)
Short put: -3425P ($20 credit)

That takes roughly $8k in buying power and gives you a max profit of $6k - with a max loss of $336.5k. The most likely outcome (i.e., if the price at expiration is above 2750) is a max return of $1k on that risk.

I fail to see how this is a 65% return on your money, unless you're doing something ridiculous like using buying power as a proxy for max risk.

 

[Sweet Bobby]

So your strategy is something like this, then:

16 Sep 22/55d
Put spread: +3750P/-3700P ($10 debit)
Short put: -3425P ($20 credit)

That takes roughly $8k in buying power and gives you a max profit of $6k - with a max loss of $336.5k. The most likely outcome (i.e., if the price at expiration is above 2750) is a max return of $1k on that risk.

I fail to see how this is a 65% return on your money, unless you're doing something ridiculous like using buying power as a proxy for max risk.

I use futures, so I’m using span margin. I do use buying power as a measure of risk, and I’m usually under allocated from my maximum limit. I also use theta guidelines, since theta is also a measure of risk.

Since I’m positive deltas, I limit the amount of positive deltas that I carry. The trade is extremely flexible, and can be managed together or separately. By example, when the naked put gets to 50% profit, I can close it and have a put debit spread hedge on for free.

 

[ET180]

So your strategy is something like this, then:

16 Sep 22/55d
Put spread: +3750P/-3700P ($10 debit)
Short put: -3425P ($20 credit)

That takes roughly $8k in buying power and gives you a max profit of $6k - with a max loss of $336.5k. The most likely outcome (i.e., if the price at expiration is above 2750) is a max return of $1k on that risk.

I fail to see how this is a 65% return on your money, unless you're doing something ridiculous like using buying power as a proxy for max risk.

That's a ratio. I do the same. My returns are lower, but I also play further away from the money.

 

[Sweet Bobby]

So, if I receive $1.00 credit for the trade, on average I’m capturing around 65% as profit.

 

[BlueWaterSailor]

So, if I receive $1.00 credit for the trade, on average I’m capturing around 65% as profit.

"Capturing 65% as profit" seems to be double-speak for "I pay no attention to what the actual risk is as long as I can collect 65% of max return." Not all that surprising that you blew 50% of your account...

 

[BlueWaterSailor]

That's a ratio. I do the same. My returns are lower, but I also play further away from the money.

Not exactly. Ratios are spreads in which you buy or sell more of one strike than another, not three different strikes. This is more like a put ladder... not that names for odd/uncommon trades matter all that much; they change all the time anyway.

 

[traider]

So your strategy is something like this, then:

16 Sep 22/55d
Put spread: +3750P/-3700P ($10 debit)
Short put: -3425P ($20 credit)

That takes roughly $8k in buying power and gives you a max profit of $6k - with a max loss of $336.5k. The most likely outcome (i.e., if the price at expiration is above 2750) is a max return of $1k on that risk.

I fail to see how this is a 65% return on your money, unless you're doing something ridiculous like using buying power as a proxy for max risk.

LOL thanks for the summary. Just selling puts till one blows up.
You saved me 20 minutes of my life from watching the video.

 

[Sweet Bobby]

"Capturing 65% as profit" seems to be double-speak for "I pay no attention to what the actual risk is as long as I can collect 65% of max return." Not all that surprising that you blew 50% of your account...

That was a long long time ago!

 

[Sweet Bobby]

LOL thanks for the summary. Just selling puts till one blows up.
You saved me 20 minutes of my life from watching the video.

Thanks for your comment, Karen!

 

[Sweet Bobby]

"Capturing 65% as profit" seems to be double-speak for "I pay no attention to what the actual risk is as long as I can collect 65% of max return." Not all that surprising that you blew 50% of your account...

You are clueless as to how I manage the account, plus you watched the entire video! I know you did.