Market Measures - August 26, 2021 - What If We Hold to Expiration?

published 3 weeks ago by tastytrade, Inc.

From first glance, “average P/L” and “volatility of P/L” tell us that holding until expiration is definitively a bad deal; but we know from liquid and efficient markets, there is no “bad” or “good” deal: just two sides of a fair trade. While managing at 21 DTE is simple and provides the most “well-balanced” risk and return for most investors, holding to expiration may be considered to maximize the trade’s POP (especially if a trade is at a mild loss at 21 DTE).

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