We Studied 17 Years of Rolling Trades... Here's What We Learned | Market Measures
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They see me rolling, they hating.
Patrollin', they tryin' to catch me ridin' dirty..
You referenced in general terms different methods you guys use to protect trades (rolling early, buy back the guts and sell the wings, un-invert, etc.) I'd like to see much more detail on these methods. Thanks
Exactly what I was thinking, IDK if they'll ever give up those secrets tho.
Great work has always guys, I've been rolling puts for years and you guys are right on the money with the mathematics to back it up as you always do thank you so much for enriching us with knowledge and the great work that you do.
Rolling is taking a loss. Just take the damn loss and find a new trade
that’s kind of what i think too.
I'd be interested in seeing how moving up to a straddle vs keeping about 16 delta would play out. Typically that is my move, done before the strike is tested. If one side goes in the money then adjust to straddle, then inverted if it really goes bad.
At about 30DTE the OTM strangle profit curve flattens and the ATM straddle curve steepens. So that's my play too. Straddles are easy and cheap to roll if the price hasn't moved too far. Love to see some research on it.
Would be more helpful if you walked through a real example or two.
Please do an example on tastyworks for better understanding. THX
Is there a video of actual example of these ideas on a trade using the trading platform?
How do they roll a sold call down to a straddle? Wouldn't that mean you go down below your buying price if you are selling it down at the strike price you sold the put for? Are they selling naked calls?
Rolling works when you hedge properly vs the general market. Hedging comes first before anything else.
“Buy back the guts and sell the wings” I would honestly love to see an example of that process
He can't be talking about a strangle. That's an iron fly/condor.
Spot on comment
This makes sense from the SPY, but I'd like to see the same study for a range of other underlying's.
Why don’t we roll the tested side
In wide iron condors, Something that I do, and I didn't hear nobody talking about that, is to move the long call or put closer to the shorts positions when they are cheaper.
Example, The price move closer to the put side, use that movement to roll the call long shrinking the wing, but at a low cost. The same if move close to the calls side.
Interesting, help me to understand the benefit of doing this please.
@@ts4426 He reduces the position and collects more premium. Check out whiteboard videos on adjusting iron condors.
how did you compare the pnl when you roll a trade and dont hold to expiry, at which point are you comparing the pnl, in one scenario the trade is closed, in another scenario the trade is rolled, so which pnl are you looking at? the rolled trade is still active
when long an option why not wait till day before expiry to roll the option?
If ur up ur up. Unload those contracts with biggest short interest and open smaller strikes if desired. I ignored rolling for more money in thus case cuz i was taking stock profits to pay for it.I just wanted to secure my positive account.
Good info. Confirms what I've learned from you. LOL.
If I understand you, you are attempting to maximize the probability of having a profitable trade. The problem with this approach is that the unprofitable trades could be very costly. So, hypothetically one could be profitable most of the time, but still lose money because of the losses. Wouldn't it be better to maximize the expected annual return? This would take into account both losses and wins.
I suppose that you approach works well with backtesting, because you don't have enough trades to estimate expected annual return. If you used a Monte Carlo approach with 10's of 1000s of simulated trades, you'd be able to estimate expected annual return.
Nah, you have to exactly manage like they do, when it comes to strangles. Its pure method and statistic based.
If a stock breaches your call side for example, something probably happened, some new information came in and so on. So the chance of it going back to the mid point of your initial strangle is much lower than the chance that the stock stays at those "elevated" levels or continues to go up. So you have to roll the untested put side closer in. Stocks typically don't whipsaw up down up down and end exact at the mid point where you started your strangle. The whole idea is to trade what the market gives you, with a strangle you want to try to follow the price of the underlying, keeping your delta in check/neutral.
Great info guys.. Question: How could the win rate from exiting when tested be 32% .. shouldn't 100% of the trades be a loss if the underlying is at the strangle strike??
No, if it hit late enough, it might still be a win
Or it can hit and then reverse before expiry.
@user-ob9vv6jz5c they are selling as soon as it hits.. I guess if it is really close to expiry date it's possible.
@@JBS7551 I wonder how often it reverses? I'm always confused whether to let it have a chance to come back or roll out to the next cycle. 2x seems like a big hit if you are closing winners at 50%. A win rate of even 65 percent sounds like a negative outcome if your max loss if 4x your max win. It seems like you would need a win rate of 80% to break even or 100 percent max loss verses 50 percent win with a 65% win rate. I wonder if there is a point of no return before getting to 2x or even a way to find one.
@@roy.mclean 2x is a big hit, but according to their research, only happens like 3-5% of the time with proper management
Thanks alot,
(1) what do you meen by 16 delta
(2) I also would like to see how to ( ... buy back the guts and sell the wings, uninvert, etc).
(3) moreover, it would be supper fantastic if you can support your explanations with a PL chart for executing these defensive moves. A picture is worth 1000 words
And btw. This video is pure gold! But not any gold, a gold trading at 2500!! Haha
Awesome video!!!
If you already know know where you may need to roll, up and down, why not place 1 or 2 additional spreads at the same time you enter the original trade, in anticipation that it could wrong one way or the other and you will need to roll eventually?
Hi, very interesting video. Thank you. I have one question. Do you open new SPY option trades everyday or you only do a new trade after current trade is closed? Thank you very much
so in a way if we have like 4 contracts and rolled to straddle like 1 - 3 of the the 4 contracts have you looked into this back tested. I understand that at least by doing something you reduced your loss by collecting additional credit.
Anybody knows if is it possible move the money and assets from ibkr to tasty easily?
Tom and Tony. Thank you for this super webinar.
do you all have a good lesson on managing long puts?
Great video." IF" we're looking at a Iron Condor and if your wing is being tested. Wouldn't you roll the tested wing out and then bring the other wing in ? You collect more premium on bringing in the untested side and roll out the other wing to buy more protection.
I don't think you're using the term wing here correctly.
Don't do as I do, do as I say....sosnoff
This makes perfect sense when you’re a trader and have done these trades before. What they are referring to is trading strangles and iron condors, where you have a delta neutral at 16 delta spreads. I personally remove the untested side, but I have also rolled it up occasionally. Thx to this video I will look to roll up rather than exit. It depends on how volatile the market is though. I’ve been whipsawed trying to defend as well.
They didn't test what you proposed (closing only the untested side early). So whether that's better or not is unknown.
5:58 oooh - never in the hand ...
Let’s gooooo
Ditto--would like to see walk-through examples of buying back the guts (=re-centering the position?) and what an inversion looks like. I thought buying back guts was that shot of liquor I slam after the close on a day when all my positions end up red (grin)
@@quarkzilla LMAO
Would love to see a breakdown of trading platforms - you can be the best trader in the world, doesn't matter if the platform is insolvent in the morning.
Big issue in crypto trading, which is ironic, given blockchain tech can remove middle men lol. @foxifytrade is a great example of decentralised platforms that don't require central entities who could misuse user funds. Would love to see a side by side, with a focus on how decentralisation can protect traders :)