tastylive Options Strategy: tastylive Mechanics
tastylive is a well-known options content network that caters to active traders. In this article, we'll delve into the details of the tastylive options strategy, exploring the trading criteria and permissible strategies across different account levels.
Additionally, we'll examine the criticisms and legitimacy of tastylive's approach to options trading.
Decoding the tastylive Options Trading Strategy
The tastylive mechanics are anchored on specific trading criteria, each of which is designed to optimize trading outcomes:
1- Sell Options With High Implied Volatility (IV)
tastylive recommends selling options when IV is high. This approach allows traders to collect higher premiums, but caution is required as high IV can continue to rise, posing risks.
2- 45 Days to Expiration (DTE) Preference
The strategy suggests using expirations closest to 45 DTE. Throughout tastylive’s backtesting, they conclude that 45DTE expirations are the most optimal for selling premium.
3- Selling 30 Delta Options
A key criterion is selling options with a 30 delta. This balances premium collection with a theoretical 70% chance of options expiring worthless, making it a popular choice for traders. However, within their studies, they analyze selling deltas ranging from 10-40.
4- Taking Profit at 50%
Traders are advised to take profit when they collect 50% of the premium. This ensures that they realize gains efficiently without having to wait until expiration to realize profit.
5- Manage Positions at 21 DTE
To manage gamma risk, positions are rolled forward at 21 DTE. While effective, traders should be aware that continuous rolling may result in long-term positions with little to no premium. Options with 21 DTE and lower will have larger price swings due to higher gamma.
6- Trade Small, Trade Often
Risk management is crucial, and tastylive emphasizes keeping trade sizes small while trading frequently to optimize outcomes. Keeping trade size small allows you to place more trades and avoid overleveraging your account.
Exploring Cash and Margin Accounts
As an options trader, it is crucial to understand the two main account types—cash accounts and margin accounts. Each account type permits different strategies:
Cash Accounts: In cash accounts, traders can buy stock, buy options, sell cash-secured puts, sell covered calls, and trade cryptocurrencies. However, cash accounts restrict traders from short selling stocks or ETFs, trading defined-risk spreads, selling uncovered options, and trading futures.
Margin Accounts: Margin accounts come in several levels, offering varying degrees of permissible strategies, including selling naked puts and calls, trading defined-risk options spreads, and trading futures. Margin accounts also offer leverage for stock trading, enhancing the trader's buying power.
Is tastylive Legit: Pros, Cons, and Legitimacy
While tastylive has gained popularity among options traders, it is not without criticism. Some traders question the approach of selling options during high IV, as it may result in trades facing higher risk. Additionally, the choice of 45 DTE expirations is debated, with some traders preferring longer-dated expirations to mitigate gamma risk.
Despite these criticisms, tastylive is considered a legitimate and valuable resource for options traders. The team provides extensive research, data, and educational content that has helped many traders understand the nuances of options trading.
Final Thoughts: Harnessing the tastylive Strategy
The tastylive options strategy is based on clear trading criteria designed to enhance the trader's outcomes. From selling options with high IV to managing gamma risk, each aspect of the strategy aims to optimize the trading experience. While tastylive's approach may not be suitable for every trader, it is undoubtedly a resource worth exploring for those interested in options trading.
As with all trading strategies, traders should conduct their due diligence, consider their risk tolerance, and make informed decisions. By doing so, they can harness the potential of tastylive's strategy to achieve their trading goals.
tastytrade Disclosure
tastytrade, Inc. (“tastytrade”) has entered into a Marketing Agreement with Marketing Agent (“HaiKhuu LLC.”) whereby tastytrade pays compensation to HaiKhuu LLC. to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of HaiKhuu LLC. by tastytrade and/or any of its affiliated companies. Neither tastytrade nor any of its affiliated companies is responsible for the privacy practices of HaiKhuu LLC. or this website. tastytrade does not warrant the accuracy or content of the products or services offered by HaiKhuu LLC. or this website. HaiKhuu LLC. is independent and is not an affiliate of tastytrade.
tastytrade was previously known as tastyworks, Inc.
