Monthly positional strangles have become underrated.
Back in the day NIFTY only had monthly options,
Here's a summary of the research done by Tastytrade on how to trade it.
I have binge watched @tastytrade 's options content when I started out.
So here it is🧵🧵 1/n
First question..When to enter?
The tasty way has always been 45 days to expiration.
According to them it is the "Goldilocks' Zone" .
So Let's say you want to initiate a trade for Dec monthly Expiry, around 15th Nov would be the ideal date to enter the trade. 2/n
Second question..which strike price to trade?
The answer is 16D strangle ie -0.16D for PUT sell and 0.16D for call side.
This offers 68% probability of profit in theory which is equivalent to 1 standard deviation. 3/n
Philosophy of exiting early..
Tastyworks mechanism has this unique style of exiting based only on TIME and nothing else.
When the options are 21 days away from expiry just simply exit.
This reduces you gamma risk significantly.
4/n
How to manage winners and losers.
You can also try this if you're not interested in trading "only time".
Keep it simple,
Manage(exit) winners at 50% of max prodit
Manage losers at a loss of 200% of the initial credit received.
This reduces you profit but also your losses!
5/n
