TastyTrade Method

I think TT is great to learn about options but I ultimately wouldn't do what they recommend. As others have said, they are all about pennies in front of a steamroller.
 
These places are not designed to make money for you , but from you .If any education has to given , it is normally sold on related sites.Rebates from every trades you make through them , costing you an edge.

Here is the question I meant to pose: do you expect an accomplished trader to hang out on TT forum? do you expect an accomplished trader to hand out free lunches on TT forum?Why would he? He has nothing or not much to learn from it and is likely to be mightily annoyed by the silly posturing of losers desperately trying to impress their peers. Meaning, other losers.
 
Texas Johnny said:
Good points by Stymie and DTB2, but I would still much rather sell premium than buy an underlying. IE. sell a PUT ATM every month. It will have a higher return with a lower standard deviation versus buying that particular stock and holding. Why? Premium / extrinsic value of the option. Again, I am assuming two things: 1. The trader is being mechanical; 2. This is over the long run...meaning, years. Obviously, buying IWM since the election would have been better than selling Puts, but over time, selling Puts will outperform the buying strategy.

That's the Put perspective. If you add the idea of selling Calls, it can perform as well, but I wanted to use the Put idea first since to me, "buy and hold until your old" (passive investing) is an inferior strategy.

Regarding TT's P&L, I don't really care about it. The key takeaway is the info they provide. Figure out the type of risk you want to take and go for it. They aren't there to spoon feed you.

More importantly, TT is sure better than what you get from any other financial network. We can al least all agree on that. Suerte!
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2. Following the TT method you are never being mechanical, you are making discretionary decisions.

Their back testing is amateur at best. They cherry pick/ curve fit their own testing universe and inputs, sample size is always too small, there's no out of sample testing, no real Monte-Carlo( only when it suits). It's embarrassing

Tom believes that no quantitative strategy has ever been profitable or ever will be( fails to acknowledge the giants in the room eg, Renaissance Technology/ Medallion), and tries to prove his points by backtesting generic indicators eg moving averages. It's joke. I think Tom has seriously underestimated quantitative finance and how sophisticated modern retail investors have become .
 
ironchef said:
Can you explain, I don't quite understand what you wrote.
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Simply sell the ATM ES or NQ strangle that expires in 120+ days and sell the OTM call to eliminate the potential for infinite losses should the index rise to much.

If the present price is 2250 on the ES, and the ATM call that expires in 150 days has 100 points of premium and the put has 100 points then you would sell the strangle and buy a single 2400 call .

If the price is within a 50 point range within at least week of opening the position, you are guaranteed to make some money because there is so much premium being decayed
 
Selling premium mechanically works. I sell naked straddles systematically for a living, own account. I've been doing so for several years even through three market lock limit downs over night. It works. I backtested it before trading it live in 2012. The reason I'm on this forum is simple. I want to wake people up. There is no magic formula. If you take 20 TTs and put them in a room, they will all sell premium differently.

Making money? I find I do better when staying mechanical. That's it. Easy to say, hard to do for most traders.

I run a meetup once a month telling people how to trade by selling options. Why? I want to share. Again, it works. That Rice study has many holes in it. Great school but they missed the boat on that study. I read about 15 pages of it...too theoretical. Note: selling straddles very short term is not a great strategy due to gamma risk. It is optimal around 45 DTE. I could go on and on, but I'll stop.

Overall, if you disagree with selling premium. That's ok. It works. We always need a counter party. :)
 
Texas Johnny said:
Selling premium mechanically works. I sell naked straddles systematically for a living, own account. I've been doing so for several years even through three market lock limit downs over night. It works. I backtested it before trading it live in 2012. The reason I'm on this forum is simple. I want to wake people up. There is no magic formula. If you take 20 TTs and put them in a room, they will all sell premium differently.

Making money? I find I do better when staying mechanical. That's it. Easy to say, hard to do for most traders.

I run a meetup once a month telling people how to trade by selling options. Why? I want to share. Again, it works. That Rice study has many holes in it. Great school but they missed the boat on that study. I read about 15 pages of it...too theoretical. Note: selling straddles very short term is not a great strategy due to gamma risk. It is optimal around 45 DTE. I could go on and on, but I'll stop.

Overall, if you disagree with selling premium. That's ok. It works. We always need a counter party. :)
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I am not arguing with you and I am glad mechanically selling options worked for you. I was just trying to understand why it worked for you and not for me? Perhaps we traded different underlying or perhaps I was doing it wrong?

Questions:

1. Did you do covered for your short straddle or did you go naked?

2. Did you do ATM, OTM or ITM?

I can tell you when I did my short calls/puts, brokerage required covered or cash secured. Also I almost never did straddle, only went single leg calls or puts and I always went OTM. I think Maverick74 was the one that explained the danger of selling OTM to me: gamma and delta. I was profitable mind you but my profit was not as much as just "buy and hold" the underlying so as far as I am concern, I was losing money trading.

Best wishes.
 
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