What is the rationale behind trading 45 DTE options as opposed to 7 DTE options? Generally, there is more risk and less return for these trades, but let's see what the research shows...Study
- SPY, 2009 through 2018 (10 years)
- Sold at-the-money puts
- 45 DTE, 30 DTE, 7 DTE
- Held to expiration for 7 DTE, managed at 21 days for 30 DTE and 45 DTE.
- Daily P/L, Win Rate
We find that with proper management, the 45 DTE puts outperform and have less losers than the 7 DTE puts. By cherry picking the bull market from 2009 - 2018, we are able to see the best case scenario for short puts, and still prove that managing early can further improve results.