This segment, the tenth in a planned twelve part series on constructing and managing a portfolio for accounts of $250K to $2.5 million, builds on the previous segments and details how and when to use strategies for defined risk and undefined risk trades. There is something here for everyone.
This show focuses on adjusting our trading strategies once we have acquired some experience and insight. We kept things simple in the beginning. A long SPY or /ES position meant that we sold SPY or /ES calls against it. Should we be short we would sell puts against it.
Now that we have some experience we can use the three month correlations of different equities and take advantage of them. An example might be that if we are short the /ES that instead of selling puts against the position we might sell puts in IBM or DIS which recently have seen larger declines and have had higher IV.
Remember, this is an example and you want to take advantage of underlyings that have a high enough correlation and have made larger moves and or have higher IV than your core portfolio position. You also want to stick with stocks with which you are familiar. The goal is to reduce our cost basis of our core position.
Watch this segment of “Top Dogs” with Tom Sosnoff and Tony Battista to see the details of adjusting our trading strategies and derivative trades and which, when combined with what we have learned in the previous nine segments, can give you a greater chance of success, especially when compared to what the typical advisor would recommend.