Originally Posted by
Jiggawatt
Mispoken and JamesBond, your posts are great, thanks for the info and discussion. I just started dabbling in options using the Tasty approach. Question: if I understand correctly, the overall goal is a lot of trades, each with a potentially small reward ($100-$500) and often with limited risk (maybe $500-$1000). By using tools such as IV, the goal is to tip the odds in our favor over the course of a lot of trades. Is that about right?
I’ve started trading with some small-scale, limited risk covered calls and iron condors/butterflies just to watch them play out and learn. Do you guys keep the majority of your portfolio in buy-and-hold stocks and use a small portion for options? Obviously if a few hours a month of option trading can average 1-10% per month, that seems pretty worthwhile, so I’m wondering how you diversify your funds.
I’m loving the options world, and how it appears to be somewhat of an art and a skill that can be learned, so again, thanks for the time in posting.
Hey Jiggawatt!
Generally speaking, yes; the tastytrade method is trade small and trade often. They use spreads to limit risk and they don’t swing for the fences. Generally; depending on the trade you put a GTC order in at a specified profit target between 25-80%, but this is trade dependent. You look for elevated IVR as this leads to higher premiums.
tastytrade is “ticker agnostic”, they don’t care what underlying stock is provided it meets minimum volatility. They open the trade 45 days before expiration, put the GTC in, if it doesn’t trigger reevaluate at 21 days from expiration, close or adjust.
I would recommend you look on the tastyworks platform and check out the “follow” tab (the three people). Pay close attention to trades from BOB IRA, Liz and Jenny, Jim Schultz, Johnny and Lindsay. See what they’re trading and why. You can easily click the duplicate button and it builds the same trade for you.
1% per month (12% annually) is a piece of cake to do some trades with minimal involvement every month. The more aggressive you get the more time you spend managing your trades. I’ve almost created another full time job for me, but I love it, so it’s all good.
hope this helps and wasn’t too scattered.