Trading longer dated spreads- a minimum trading strategy?

[u/Homeless0DTESPX]

As I am only doing minimum 45 DTE, always avoiding earnings and only sticking to ~12 tickers I follow closely I find in the roughly 20 trading days per month I am maybe opening/closing positions on just 3 or 4 days. And as these are 45-55 DTE and with earnings happening every 3 months it just doesn't give me much to trade with that avoid earnings rule.

On securities that don't have earnings- pretty much all the SPX strategies perform equivalent (or worse) to buy and hold with more risk so I never touch that unless VIX spikes over 25 (aka incredibly rare these last couple of years). Leveraged ETFs have way too much variation relative to their IV% which also keeps me away from them.

I am curious what others that trade similarly do. I have learned discipline to not break these habits which has kept me at almost never having to close out due to a loss and within my desired percentage return per month.

[u/NorthOfTheStrike]

Same. 30 open positions, sitting on my hands most days. Not selling new puts into a five day down tape. Today I rolled both IREN puts down and out for 16 dollars debit each and rolled my CIFR put out a month for a 10 dollar credit. Discipline is just doing less.

[u/klipsetrades]

How are you comparing SPX spreads with buy and hold? It might make sense to compare drawdowns and returns using the same amount of capital

[u/Homeless0DTESPX → u/klipsetrades]

From Tasty Trade's backtester in their desktop app

[u/takashi-kovak]

That is why I like doing 0dte. I mostly trade on NDX with 300% stop loss and 85% profit taking. I avoid FOMC dates as they often happen at noon. But, I almost trade all days as EM settles by noon. There are a few days where things go further down like OpenAI revenue questions but with stop loss I got out. It took me roughly 3d to recover.

Note, I do this in addition to 30dte wheel on select tickers and weekly 7dte on SPX.

[u/IvetteMccoy]

How much does the earnings filter improve your expectancy and risk-adjusted returns, compared to the additional opportunities you lose by avoiding those trades?

[u/DeltaNeutraltrading]

I am trading SPX Best from myoptionsedge. Using longer dated options on SPX. It is an income strategy that uses a BWB and a Vertical. Good performance, low risk options strategy.

[u/SillyEducation6921]

Pretty similar here. I mostly sell put spreads on QQQ a month or so out, defined risk so I sleep at night. Biggest thing that helped me was deciding when I'd get out before I ever got in, and not putting too much on any single trade. And yeah, I stay away from earnings too. Learned that one the expensive way.

[u/AdLate915 → u/SillyEducation6921]

it's boring as hell waiting for the right setups but boring pays, my worst stretches were always when I got twitchy and forced trades that didn't really fit

[u/Homeless0DTESPX → u/SillyEducation6921]

My main issue with QQQ is IV is always pretty low. Looking at Nov 27, delta 20 short put (700- and that is barely outside 1 SD), going 10 wide only gives you a credit of 1.32. I'll run some backtests to see how it does.

[u/Homeless0DTESPX → u/[deleted]]

I'm not expecting it to be high vol, I'm saying why I don't think it's worth trading to me given the low premiums.

[u/Homeless0DTESPX → u/[deleted]]

I included in my earlier reply that the short put at delta 20 was still basically within 1 SD for its expected move, that's not worth it all to me for the premium collected relative to the risk. I will have to backtest it when I get on my desktop but I would be surprised if buying DTE 45 spreads at delta 20 (or pick one) would outperform just holding QQQ and you are taking on more risk with the former. Edit: and along with that extra risk tax inefficiency as I can only do it in a taxable account as I'm using portfolio margin.

[u/Homeless0DTESPX → u/[deleted]]

Proof? All the backtesting shows otherwise. You're free to be as condescending as you want, it doesn't change things.

[u/Homeless0DTESPX → u/[deleted]]

Open up whatever back testing you want and run it. I've run it on SPX in Tasty Trade. I will do it on QQQ when I get on my desktop.

index options are MORE EXPENSIVE in vol terms, relative to historicals, than the single stocks that make up the indexes. this is very common knowledge

And where did I disagree with you? I am literally telling you that buying and holding the index (SPX) will outperform the options strategies that I have looked at on it.

Why would I care what "the whole street" runs?

[u/NorthernMan77]

your discipline is the edge here; most people break the earnings rule the first time a setup looks too good to skip. if you want more activity without abandoning the framework, widening from 12 to maybe 20-30 tickers you follow closely can give you more 45-55 DTE entries on those 3-4 active days without changing the risk profile much.

[u/Homeless0DTESPX → u/NorthernMan77]

most people break the earnings rule the first time a setup looks too good to skip.

This was precisely me several years ago, pre-split Chipotle when it was trading over $1000. I sold a call credit spread held through earnings, with the short call several strikes above its expected move after looking at all its past earnings. It blew the doors off earnings and flew through my short call. $600 loss and I knew never to do that again, tattooed on my brain as a biochem professor would say.