Tastytrade changes their mind about Calendars

[deftone]

I thought you might find this interesting. 

 

TastyTrade previously did not like Calendars and swayed viewers against it, as seen in their older videos.  At the beginning he states how very much against it he is (you can skip the rest past the first minute):

 

https://www.youtube.com/watch?v=Ywu1AueH2b8

 

In this video he spends the whole video attacking Calendars in general:

 

https://www.youtube.com/watch?v=NgSbfGXdDx4

 

But, their newer video is showing they are surprised how Calendars work as of Feb 2014:

 

https://www.youtube.com/watch?v=NWR0pWmhlYo

 

In this last video they claim Calendars 1 Strike OTM had a crazy high success rate of 68.97%.

 

Whereas before they say they studied and said it was never worth it.

 

Do you have any thoughts on this, especially the last video, where he shows the backtesting stats making Calendars look amazing, but only for 1 Strike OTM, at minute 2:

 

https://youtu.be/NWR0pWmhlYo?t=2m19s

 

Given their service is about Options, I'm surprised that they are surprised and previously hated Calendars, and I'm surprised by the results myself.

[Edwin]

I would take it with a grain of salt.  The video on Feb '14 is only backtesting IWM and EWW, the first video is on SPY, and the second video is on AAPL.  They are advocates of selling premium with IVR is high and selling premium through earnings.  They have done studies that contradict the strategies that are on this forum, such as buying straddles and calendars going into earnings, and they do back tests that blindly ignore backtesting that is done here.  They conveniently pick data that supports the strategies that they advocate.  They are good for investing/trading general awareness, beginner education, and dough is a good and easy interface for beginners to learn trading options. 

 

Here's more TastyTrade videos on Calendars:

SPY & XLP (5/19/2015)

https://www.tastytrade.com/tt/shows/market-measures/episodes/whats-not-hot-trading-calendars-05-19-2015?locale=en-US 

 

8/15/2013: Using Calendar Spreads in Your Options Strategy (SPY)

 

4/27/2015: Calendar Spreads Best Practices:

https://www.tastytrade.com/tt/shows/best-practices/episodes/calendar-spreads-04-27-2015?locale=en-US 

Edited June 2, 2015 by edboc

[Emptyeternity]

I know Robbin one of the traders there that you can follow recently was using calendars due to low volatility. 

[Kim]

I'm surprised as well. They are surprised that calendars perform well in low IV environment?? They are surprised that SPY calendars make money when VIX goes up and lose money when VIX goes down?? They are surprised that in range bound market calendars perform better than ATM debit spreads??

Actually, after seeing their studies about pre earnings straddles, I probably shouldn't be surprised.

[Edwin]

The Liz & JNY show discussed calendar trades going into earnings for NFLX and IBM today on TastyTrade under Options FAQ segmen (6/5)

 

https://www.tastytrade.com/tt/shows/options-faq?locale=en-US 

[Edwin]

Tastytrade and our SPY/TLT trade related, Tastytrade did a study on selling SPY and TLT strangles the day before the FOMC announcement.

 

Slides: Start at slide 7: https://s3.amazonaws.com/tastytradepublicmedia/show/117/episode/19929/slide_decks/en/ReadyToStart061715Bullish_in_WMT_NTWK.pdf?1434573777 

 It starts at 13:30 of the I'm Ready to Start segment today: https://www.tastytrade.com/tt/shows/i-m-ready-to-start?locale=en-US# 

[Edwin]

Sosnoff is laughing that Goldman is recommending to clients to buy and hold NFLX and AMZN straddles through earnings.  He's going to have his research team go back and check performance on those.  It'll be interesting if they actually present the results.  I suspect that they would present it as though these two underlyings are anomalies.

It looks like through the backtesting charts does show gains holding through earnings.

[Edwin]

Sosnoff is laughing that Goldman is recommending to clients to buy and hold NFLX and AMZN straddles through earnings.  He's going to have his research team go back and check performance on those.  It'll be interesting if they actually present the results.  I suspect that they would present it as though these two underlyings are anomalies.

It looks like through the backtesting charts does show gains holding through earnings.

Funny thing is that someone bought 3,000 Sept 665 NFLX straddles (for 95.55)  today at 12:04pm, which is over $28M in premium, and 3,500 Sept 435 AMZN straddles (for 49.27) at 12:10pm, which is over $17M in premium.

[Kim]

Another example of "quality" of tastytrade "studies".