Tastytrade
- Thread starter just21
- Start date
You have been a member here for 13 years and you missed the incredibly long Tastytrade thread? Do a search man! The thread proved Sosnoff can't trade options. That being said:
"Trade small and trade often?" Mind you they have a vested interest in you signing up with their preferred brokerage, so that advice is good for generating commission. Due diligence and such...
Edit: Apparently mentioned thread got pulled, but OP had plenty of time to read it through the years:
http://www.elitetrader.com/et/index.php?threads/wow-what-happened-to-the-tastytrade-thread.290683/
"Trade small and trade often?" Mind you they have a vested interest in you signing up with their preferred brokerage, so that advice is good for generating commission. Due diligence and such...
Edit: Apparently mentioned thread got pulled, but OP had plenty of time to read it through the years:
http://www.elitetrader.com/et/index.php?threads/wow-what-happened-to-the-tastytrade-thread.290683/
Mostly backtested Iron Condor and covered call strategies.
And a bucketful of strangles and straddles, all sold with no mention of TOS' commissions. ("Phew!")
Further:
1) News doesn't matter. (The market's gonna do whut it's gonna do.)
2) Graphs don't matter. (The market is random, dont'cha know.)
3) Trade only with IV/HV. (Which they invented. to hear tell...)
4) If your position is approached, either
i.) wait for the market to revert to mean, or
ii.) move your position out in time.
(To all of which I would respond per Keynes: "The markets can eschew Reversion To Mean longer than you can remain liquid.")
Just21,
As an avid Tastytrader, I would recommend watching the show, but choose your own course of action. Blindly following them would not be wise. In turn, turning the show off b/c of some of the comments in this thread may do you a disservice as well. Keeping an open mind is key.
The others in this group may remember me from the previous tastytrade post that was unforunately taken down. I love the show and make a living trading my own account using their methodology, but I agree the show like everything else has its flaws. My two cents can be summed up below regarding the benefits of tastytrade:
1. Cost basis reduction. They advocate using options to reduce the cost basis of one's long exposure. The simple option strategy of buying covered calls outperforms the market over time (buy and hold in 2013 beat everyone, but a 30% annual return is not normal).
2. Sticking to your plan of selling (ie. straddles) is key. TT recommends selling only when IV Rank is "high", but as their market measures will show, the systematic approach makes more money; the winning percentage is less but the P&L is higher (this is what I think counts). This is why I sell straddles versus selling strangles. Note: Sosnoff mentioned on Friday that if had just stuck to selling in a systematic way over the past 10 years he would have been one of the most successful traders, but he didn't. He said his ego kept him putting on "directional" trades.
What do you mean, or what does Sosnoff mean, by systematic?
You cannot just sell volatility blindly. You have to make some kind of correct prediction about the direction of volatility or the direction of the underlying, or both. Yes, you can sell your straddles, flies, condors, or what have you on a regular basis. But selling them without any proper assessment of volatility will result in a net return of close to zero, if you look at it over time. The expected value of most options trades is zero. So you still need an edge.
You cannot just sell volatility blindly. You have to make some kind of correct prediction about the direction of volatility or the direction of the underlying, or both. Yes, you can sell your straddles, flies, condors, or what have you on a regular basis. But selling them without any proper assessment of volatility will result in a net return of close to zero, if you look at it over time. The expected value of most options trades is zero. So you still need an edge.