tastytrade walks through the differences between a portfolio full of iron condors versus a portfolio full of strangles.

When market uncertainty is high, is it better to switch to defined risk strategies in lieu of undefined risk strategies?

Today we compare the PNL, alpha and beta of two strategies: 1. only investing in strangles 2. investing in strangles for IVR < 30 and iron condors for IVR > 30.

Our research has found that switching to defined risk strategies when IVR > 30 makes minimal reductions to market exposure and significantly reduces alpha and daily average PNL per contract.

Tom and Tony discuss how much we can expect to make in a certain account trading the tastytrade way.

In a recent Market Measures, the Research Team explored the cost and benefits of consistently buying protective puts. Today, we are going to test the long call strategies.

Although long calls can generate a positive return under certain circumstances, there doesn’t appear to be a consistent way to keep it profitable. A simple short put is a great alternative to produce better performance.

Is there any proof to say that some months outperform others simply because of the time of year? tastytrade investigates.

Alpha and beta are useful metrics for gauging the performance of a portfolio relative to the market. While alpha estimates an investment's percent excess return relative to the market, beta is a measure of its systematic risk/market exposure. Generally we are interested in high alpha strategies (alpha > 0) that have low market exposure (beta < 1), so today we compare the alphas and betas for different strangle strategies.

In this study, the research team takes this concept one step further to see if varying management targets can improve performance. Although long puts generate a positive return during severe market corrections, there doesn’t appear to be a consistent effective management strategy for buying puts. Whether we let profits run, consistently take small winners, or manage by time, the long put doesn’t provide an adequate portfolio hedge.

Market gurus are prominent in the financial community, and their forecasts often influence how people trade. Today we discuss a recent study by David Bailey, Jonathan Borwein, et al. that investigates the accuracy of these market predictions. They introduce a new method for evaluating forecasts, where forecasts are weighted based on the timeframe and specificity of prediction. They found that 48% of all the forecasts tested were correct and that 66.1% of the forecasters had accuracies below 50%.

Tom and Tony discuss how theoretical risk (Vega) compares to actual risk incurred (volatility of P/L).

Tom and Tony discuss how earnings plays differ from traditional non-earnings short premium trades.