From Theory To Practice - March 8, 2021 - Collecting More Credit on Defined-Risk Trades
A big part of the tastytrade philosophy is our focus on duration over direction, and giving our losers more time to come back to us through management and adjustment. Oftentimes, this can allow losing positions to become winning positions. With defined-risk strategies, however, we have fewer adjustment opportunities over the life of the position. As a result, it could be worth collecting a bit more credit on entry for a defined-risk position, while sacrificing some of the probability of profit.
In the portfolio today, we work through this tradeoff in a potential TSLA position.