hey i wanted to play this clip for you from tastytrade options trading and also provide
you with my feedback and my commentary. I'm going to play it at 2xb so that way it's more efficient
because it's relatively long, it's about a two minute and 34 second clip but what do you say
let's go next slide i know every year will be different but what do you say but what would you
say a good percentage return for 2021 was using the taste of trade methods i mean how much risk
are you taking i mean I mean i put this into context like you know is it ten thousand ten
thousand dollars ten thousand dollars acting like a hundred thousand dollars kind of it's kind of
hard to say i mean the amount of risk that we take i mean i don't throw out a number one to one half
percent a month is doable all right so my thoughts here and i'll play the rest of the clip later is
they seem extremely uncomfortable talking about returns but the fact of the matter is that
we don't invest time if you're watching this you're an adult we don't invest time just to
learn something and just have it be educational all right the reason why we're trading is because
we want to make money we want to focus on returns we want to make sure that we beat the market
so to educate ourselves to spend a lot of time to invest a lot of time and effort into just
learning theory but not actually applying it and have it work out so that we beat the market and
that we achieve alpha is something that is just simply not acceptable and additionally i don't
know why they're completely uncomfortable talking about returns i mean the reason why you're going
to watch tastytrade the reason why you're going to sell options is because you want to make sure that
you can beat the market and if you're only going to earn one percent or one and a half percent a
month then you really shouldn't be trading options at all if that's going to be your return then the
best strategy that you can possibly have would be to simply go long the spy and sell covered calls
against it there is no reason for you to spend the time spend the energy selling options if
you are only going to earn one to one and a half percent a month and it really baffles my mind why
tastytrade both Tom Sosnoff and Tony battista are so uncomfortable talking about the returns
that their system teaches the reason why they only earn around one to one and a half percent a month
are primarily for for two or three reasons the first is that they trade way too often and they
don't really discriminate about their entries to try to maximize the amount of premium that
they collect secondarily they keep short delta and especially considering that
i think over like the past 40 years there's only been nine down years in the stock market so when
you have that drag by being constantly short delta it's going to act like an anchor and it's going
to eat up a substantial amount of the premium that you that you actually sold because you're going to
take losses on those short calls and or if you're using futures to to get some static short delta
then you're also going to be taking losses on those futures so keeping short delta in
my opinion is especially during a bull market is is a really bad strategy now i sell calls as well
on stocks that i believe are overextended but it seems like tom and tony they keep perpetual short
delta and i think that that is a drastic mistake you know so selling calls and then also um you
know being indiscriminate and selling like way too many options um yeah i think that those are the
two primary reasons and then i had a third reason but for some reason i can't remember it yeah oh
yeah so selling selling way too often um you know selling just like uh having too many trades on but
then also i think that tc trade does a a pretty bad job you know not really looking at the recent
trading ranges of the stocks that they're selling and i said they rely too heavily on ivr and iv
and um yeah i do understand that when ivr is high then that usually means that a stock pulls back
but i definitely think that it's better to look at the recent trading range of the stock and then
sell and out of the money put because from our perspective i mean we target a return of about
three to three and a half percent a month so we're pretty much tripling the returns of
tastytrade so for them to be uncomfortable talking about returns that makes me very suspect of
their overall trading methodology but you know look at the same time they are selling premium
which inherently comes with a positive expectancy but um yeah it's just a little
bit it's a little bit baffling to me that they feel so uncomfortable and then they're telling
you that they're only gonna earn like one to one and a half percent and i think that later
on in the clip tom kind of like walks it back and he increases the return because hey look if
you're only making one to one and a half percent a month you should just buy the spy and sell covered
calls against it because you're going to receive those returns with significantly less investment
in your time and also significantly less risk but um here let's play the rest of the clip
um first of all we don't we put this question because even though we don't like to discuss
returns because i don't think yeah i don't understand why they don't discuss in returns
it doesn't make sense to me the entire reason why people trade and the entire reason why we invest
is because we want to optimize our return so it doesn't make sense to me why they
don't want to talk about returns do they mean much because you know somebody wrote this once
i was up 50 percent in the first half here in the second half of the year i lost 50 percent
fishing up small like you know what does that mean okay yes tom we we definitely understand
that there is portfolio volatility and that experienced options traders their best bet
is to try to mitigate that portfolio volatility we definitely understand that if someone's up 50
over the first half of 2021 then that means that their targeted returns are significantly higher
and it's just a matter of time until they either blow up their account or experience
even significant volatility but for experienced options traders who target a return of about three
percent a month there's no way they're going to be up 50 in just six months of trading so in my
opinion using that example to then defend yourself as to why you don't want to discuss returns
that doesn't make any sense we all know that when the longer time you spend selling options the more
experience you get the more you value a decrease in overall portfolio volatility and my point is
that you can experience decreased portfolio volatility while still targeting a return and
averaging a return of about three to three and a half percent a month so i started the earth down
finishing up twenty percent the answer is we give you the opportunity to create as big as you like
relative to the risk you're taking what's a good percentage return i would say you know like if
you want a crazy target before the year starts we try to you know crank out at least some multiple
risk free returns usually we say some multiple of like passive returns but this year past returns
for three percent last year so saying that there's some multiple that usually would like like three
or four times past returns and they average about six six six nine percent you're aiming for between
eighteen and thirty five but last year maybe you know good to me one to one if you're if you're
lucky um but i don't know two three four one half three percent a month something like that
if you want to get some multiple higher risk returns so it's gotta be something interesting
yeah i do agree with tom that last year when the market was up around 30 that's not something
that's going to be replicable and obviously i mean the s p is usually up about seven or eight percent
on average a year so the fact that it was up like 20 or 25 or 30 last year that probably
means that 2022 is not going to be as good a year um when we sell option premium as i mentioned one
of my previous videos we actually outperformed the most and perform alpha and achieve alpha
when the market is in a grind down market and it's down by about five or ten percent a year
um but you know so i do definitely understand that if you're gonna sell premium
then you do want to achieve about probably three times what the average market is so if the market
is going to achieve like seven percent a year then i would say it would make sense for you to um
sell premium if you can make about 20 to 25 a year probably around 20 is fine but for tony to say
that you're going to make one percent or one and a half percent a month that should be your target
that's not going to move the needle for anyone and then it's not worth it because you could
just simply go long spy and then sell cover calls against it but i definitely think that tastytrade
has a problem because like i said i don't i think my biggest problem with tastytrade is
that they lose money on the calls and they also encourage you to sell strangles and inherently
like from my experience and from speaking and from also having a lot of students almost all
those call options are going to end up getting challenged i am extremely careful in selling call
options and i only trade stocks that are extremely oversold and even on positions such as like tesla
like last week tesla hit a high close to like 1200 and you can sell like the 1600 call on tesla that
expires in one to two weeks and at that time you could collect it about five to six dollars for
every contract that you sold the problem is that if you were even slightly early on that tesla call
position and then tesla had gone up in incremental like 50 or 60 dollars if you sold that that
position that 1600 call strike on tesla for three dollars you would be showing about 100 to 150
loss before that position started showing you a profit and tesla started to decrease in price
so i definitely think that you have to be careful when you sell call options you only have to sell
call options when a position is very oversold and that you're patient and disciplined and but
having perpetual call options on during a bulk market is not something that i would recommend
and um yeah i think that just tasty trade they don't they don't optimize the amount of premium
that they received upon entry and in my opinion making sure that you capture
the greatest amount of premium and that you're extremely disciplined when you open new trades and
that you optimize your premium capture rate in my opinion that is one of the hallmarks of successful
and profitable traders but i almost feel that tastytrade they value mechanics too much and
by always relying on being quote unquote mechanical to take like the thought process out
of trading i feel that they indiscriminately trade options and they leave a lot of money on the table
while also subjecting their followers to a significant amount of risk and also subjecting
their followers to under performance and i think that tony admits this by saying that they're only
going to make about one to one and a half percent a month and then time tom walks that back and and
says hey you're going to make somewhere between like one and a half and three percent because
tom knows inherently that if you're only making if you're targeting like you know if you consider a
good month to be one to one and a half percent a month then tasty trade is going to lose all
of their viewers because no one wants to earn 12 you can make more than that by simply being long
spy and selling cover calls against it all right let's let's listen to the remainder of this uh of
this you know what time and tony said and see if there any more valuable information in the audio
some people know a hundred percent some people some people need nothing
something like two percent some people lost money i don't know
like i mean it's not the same thing as a passive it's passively trading
tom basically said that anything positive would be a good return for 2020. i completely disagree if
the market is up 30 and you're up 1 then you have significantly underperformed look the reality is
that you're watching this video you listen to tastytrade because you want to outperform the
market you should be rewarded for the time for your education and unfortunately in my opinion
i believe that many people who try to educate themselves and who try to invest in themselves and
who trade using the tastytrade methodology because they rely too much on being mechanical they trade
indiscriminately they're not super disciplined or patient and they also maintain short delta
by selling call options and when you combine a lot of these factors and you also combine the
fact that tom frequently says that he usually has positions on like 90 different underlyings
i don't know how you can possibly keep track of 90 different underlines in your account
that's just that's just crazy it's just completely overwhelming so i i believe that if you do follow
the tasty trade methodology and you trade like tom or trade like tony then i really do believe that
you're kind of accepting mediocrity i definitely believe that if you're going to trade like tom and
tony then you're resigning yourself and accepting mediocrity because i don't even believe they're
going to outperform the market david jaffee with beststockstrategy.com please like comment share
and subscribe you can visit bestdocsstrategy.com enter in your email address and receive over $400
valuable free content please leave a comment below and let me know your thoughts on whether
you believe that tom and tony by trading their style you're only going to make about
one to one and a half or one and a half to two percent a month and i appreciate your attention