Review of "How Anyone Can Be Profitable Selling Options Using Simple Math"

 


Summary

There's some interesting findings here.  The key one is why to have longer DTEs.  There is a slide that indicates that theoretical win rates are lower than actual win rates.  The "expected moves" are (I assume) larger than actual in percent magnitude by at least 2.1% and get higher with higher DTEs.  So, this means that increasing DTEs increases safety.


I'm not sure why the table is green at the 45 days column.  Is there statistical significance here...

So, this finding addresses win rate which is critical for average win.  (We also have to figure out win size and the related max loss.)

One thing this finding did not address is whether this difference is enough to have naive hold until expiration options contracts be profitable on average...  assuming that average profitability = win rate * average win size + loss rate * average loss size.

Other topics

The narrator also covered the psychology of losing streaks and average profit.

The narrator recommends a high winning probability strategy to allow the law of large numbers to kick in.  This would allow a theoretically winning strategy to be actualized.

Upshot

This video addresses a questions I've had about DTEs.  It seems that longer is better.  The question now is, how does this affect average profit?  The narrator seems to end trades after 21 days with a 45 DTE.  But this is before theta decay really takes place.  Is this the best thing to do for maximizing average profitability?

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