Review of "The Best Options Trading Strategy For Consistent Income"

 


Summary

The narrator of the video suggests that strangles are the best for consistent income.  He uses an example where he shows strangles over SPY.

The reason strangles are better than iron condors is because it is has more theta decay on both sides of the current stock price.  Iron condors have their theta decay limited by the long options.

The narrator goes on to indicate that the premiums are greater than the expected and the likelihood of breaches is lower than expected.  He shows a case of 100 trades where he had a 77% win rate, with a 32 delta strangle.  The 77% win rate is greater than the expected 100 - 32 = 68% win rate.  He netted $169 per trade.

Here is some other advice:

  • Limit the buying power reduction (BPR) to 5% of the account total to reduce risk.  (How do you compute BRR?  How does the broker compute BRP?)
  • Never take the trade past 21 DTE.  Either manage it or take a loss.  (What is the initial DTE?)
  • Trade index ETFs because there are fewer spikes - so can trade it more frequently.
  • Spread out trades across
    • Time
    • Price levels (how is price level different than time?)
    • Strikes (how?)
    • Expiration dates (how is expiration date different than time if we have a fixed DTE?) 

Questions

  • How is the win rate affected by trade management versus a neutral strike trade?
  • How is this trade funded?  Does he not have to own the underlying?  What is his option level?
  • I do not understand the buying power reduction (BRP) topic he covered.
  • Why is the average win ($269) greater than the average loss ($203)?
  • If we do not go beyond a 21 DTE then are we really getting all the theta decay?  What if we start at 45 days and are winning at 21 DTE?  We are possibly leaving 50% of the premium on the table.

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