Explore income strategies with different DTEs for optimal risk management. Analyze Delta values, risk factors, and product choices. Compare trading strategies and the importance of brokers like Interactive Brokers for stop losses. Teasing upcoming episodes on trade sizing and portfolio allocation.
2-3 DTE strategy focuses on minimizing losses with 3x credit stop loss at entry.
45 DTE strategy aims for safer options trading with 50-60% profit target.
Deep dives
2-3 DTE Strategy
The 2-3 DTE strategy focuses on selling options with no more than five Delta on Mondays, Wednesdays, and Fridays. The goal is to enter trades at the end of the day and set a 3x credit stop loss at entry. This strategy requires the trader to collect a dollar and set a $3 stop loss, minimizing potential losses.
7 DTE Strategy
The 7 DTE strategy involves selling options seven days out on rolling Mondays, Wednesdays, and Fridays. It also requires entering trades at the end of the day and setting a 3x credit stop loss. Unlike other strategies, there is no profit target for this approach, focusing on managing losses instead.
45 DTE Strategy
The 45 DTE strategy is a longer-term approach entering trades daily with a profit target of 50% to 60%. This strategy aims to reduce capital utilization with bracket orders and 2x to 3x credit stop losses. By targeting lower Delta options and minimizing Vega risk, this strategy is considered safer with controlled losses and reduced exposure to gamma risk.
The Trade Busters provides actionable ideas to take your option trading to the next level. Through our educational podcast and YouTube channel, we aim to empower the everyday retail trader. Discover unique ways of thinking through sizing, risk and leverage in your option strategies.
-View strategy mechanics, tradelogs and more at the trading page.
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-The Trade Busters Discord server is now live! Send me an email if you would like to join.
**Everything discussed on this podcast is for informational purposes only and not to be construed as financial advice.
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