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The short put option strategy is a trade used by bullish investors and traders with a high tolerance for risk. In this video, we’ll cover short put management results from 41,600 trades (2,600 trade entries with 16 different management combinations).
After watching this video, you’ll have a very good idea of how the short put option strategy has performed from 2007 to present, which management approaches were the most (and least) profitable, and how implied volatility at the time of entering the trades impacted the profitability of each approach.
Here are the specific metrics we analyzed for all short put trades in the study:
Win Rates: The percentage of profitable trades.
Win Rate – Breakeven Win Rate: The percentage of profitable trades relative to what was required to break even over time (based on average profits and average losses).
Average P/L: The average profitability of trades in each short put management approach.
10th Percentile P/L: The “worst-case” drawdowns of trades in each short put management approach.
45-Day Average P/L: The estimated average P/L of each approach in a 45-day period [Avg. P/L x (45 / Average Days in Trade)].
At the end of the video, we split the short put trades into four evenly divided buckets based on the level of the VIX Index at the time of entering the trades.
All in all, the results from this short put management study were extremely eye-opening. Every options trader will be better off after consuming the information discussed in this video.
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