TastyTrade Method

srinir said:
https://www.nomura.com/events/9th-a...rence/resources/upload/3_30_Nick_Firoozye.pdf
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Some of the facts in this presentation are a bit twisted, since it's essentially a sales pitch for the VRP indices for Nomura QIS. Just FYI.

Short risk premium strategies work. Unfortunately, the drawdowns in short risk premium strategies tend to correlate with other unfortunate events in traders lives. For example, if you lose money and get fired, it would be usually in the worst possible time :/
 
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sle said:
Short risk premium strategies work. Unfortunately, the drawdowns in short risk premium strategies tend to correlate with other unfortunate events in traders lives. For example, if you lose money and get fired, it would be usually in the worst possible time :/
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Very much agree. That is why i mentioned, leverage is the key. Cash secured put of the index or at the most 1.4 to 1.5 leverage (one of the journal study, I have seen) when investor is in early time of his/her investing life is optimal. This is much more of investing strategy, than a trading strategy. Antti Ilmanen says in his book, Covered Put strategy comes with the best performance statistics and worst risk statistics.

As you mentioned, Short vol has very high downside correlation with other trading strategies like carry. Also Sharpe Ratio of vol selling is less in other asset classes (commodities, currency) compared to short equity index vol.
 
sle said:
Some of the facts in this presentation are a bit twisted, since it's essentially a sales pitch for the VRP indices for Nomura QIS. Just FYI.

Short risk premium strategies work. Unfortunately, the drawdowns in short risk premium strategies tend to correlate with other unfortunate events in traders lives. For example, if you lose money and get fired, it would be usually in the worst possible time :/
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Buy and hold works too...
 
TradingDemystified said:
I would like comments on this from anyone here:
1.- The information provided on tastytrade is free for us. As far as I can see there is no scam since absolutely no money is ever requested and as a matter of fact no single trade is even recommended since they are not an advisory service. All they try to teach is their methodology which is based on three basic premises, all of which I agree with: a) Implied Volatility overstates actual movement (over the long term), b) Managing winners improve overall return on capital and c) There is no way to PREDICT market movement since everything is priced in as of that point in time (i.e. Efficient Market Theory)

1. Scam - They try to convince people that they have an edge and get people to pay them 30 or $50 a month to see all of their wonderful trades. The big Cherry for them is when you trade via their brokerage and get paid when you "trade often". They lose money if you follow along on paper - why would you follow their trades??

Methodology:
a. IV overstated - it's not overstated as it's fair Long term. They confuse people by focusing on more winners than losers which is true but the dollar losses are higher which is why they are lucky when they break even. No edge!

b. Managing winners improves over all capital returns? It increases their commissions as you go back and put on the next trade but that's it. Letting losses run you into the ground does not improve returns. But given their strategy is flawed, anytime they see any profit, they are better off taking it!

c. Efficient Market Theory - Randomness. Really? Warren Buffet is what - an anomaly for 65 years in a row? He doesn't run a brokerage. Focus on sound fundamentals and avoid leverage with a time horizon of forever and the markets keep your boat well maintained. All the investment Bankers deploy the traditional pump n dump scheme for every funding round they do to max out their free warrants and liquidate at the top. That happens every time - random?

Focus on making "profits" for the year instead - much easier.
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