Another garbage study from Tasty Trade

[luxmon]

It's amazing the flawed studies these guys assemble and promote.  Every one seems to have a severe deficiency or two and is misleading in some way.  Here is another one regarding the profitability of selling weekly credit spreads in SPX that was scrutinized very well by another options site:

 

http://sjoptions.com/spx-bull-put-spreads-taught-by-tasty-trade/

 

I've learned to take everything they say with a rather large grain of salt and use it to learn to think for yourself.

 

 

[Edwin]

Yes, a lot of their market measures are skewed to support their main theme of selling options when Vol is overpriced, and taking on a lot of risk selling naked strangles.  They have the mentality of market makers, "high probability trades" and taking profits at 50% of max profit.

[z0ned]

But why?  Tasty Trade are not selling anything, so what do they stand to gain by promoting biased studies?   Tasty Trade is unique.  There is no get rich quick pitch.

Matt.

[Edwin]

They say that they have no sponsors, but they do have a marketing relationship with TOS.  I'd assume they are trying help TOS gain more customers and transactions for commissions by "Trading Small, Trade often" slogan.

[Kim]

Tom Sosnoff still has significant stake in TOS, and also partnership with dough. What they do is huge conflict of interest. But they are not alone - look at Najarian brothers who own optionmoster and optionshouse/trademonster. Most people are not aware how corrupted this industry is.

[z0ned]

Would you mind expanding on this?  I didn't think that ToS as a company existed anymore.  It is now owned by TDAmeritrade.    Dough is a free to use platform so I don't see how Sosnoff is making money from it.   Sosnoff has stated many times publically that he pays the same commission at TDAmeritrade as any other comparable customer (volume and account size).   

 

I am not trying to defend anyone.  Just looking to get educated.

 

Thanks!

[luxmon]

But why?  Tasty Trade are not selling anything, so what do they stand to gain by promoting biased studies?   Tasty Trade is unique.  There is no get rich quick pitch.

Matt.

 

 

They are not a charitable organization.  Of course they make money off the thing; they freely admit in their FAQ that the "Bob the Trader" service that shares their trades in detail is the #1 grossing financial app (at $900 per year per subscriber).  

 

https://www.tastytrade.com/tt/faq

 

I'm not saying their information isn't useful, just that there are sometimes inherent limitations/assumptions left out when they explain their study designs and new traders may take the conclusions too literally or apply them broad-brush.

Edited March 26, 2016 by luxmon

[Kim]

Would you mind expanding on this?  I didn't think that ToS as a company existed anymore.  It is now owned by TDAmeritrade.    Dough is a free to use platform so I don't see how Sosnoff is making money from it.   Sosnoff has stated many times publically that he pays the same commission at TDAmeritrade as any other comparable customer (volume and account size).   

 

I am not trying to defend anyone.  Just looking to get educated.

 

Thanks!

It doesn't matter if you call it TOS or TDAmeritrade - Sosnoff still has a stake in it. I don't know how much commissions he pays, but it is not really relevant. As mentioned on several occasions, they do make money from tastytrade and dough in many ways.

 

My biggest problem with Sosnoff: he presents things as black and white. Things are never black and white. Not in life and not in trading. For example:

 

According to Sosnoff, you should NEVER buy premium, only sell. NOT TRUE:

https://steadyoptions.com/articles/post/steadyoptions/buying-premium-prior-to-earnings-does-it-work-r89

 

They use very specific parameters to prove that buying straddles before earnings doesn't work. We prove with our results that it does work - BUT: you need to know which stocks to use, when to buy, how to manage the trade etc.

 

According to Sosnoff, you should sell strangles on high IV stocks before earnings. NOT TRUE:

How NOT to Trade $NFLX Earnings

 

High IV does not automatically mean that you should sell those options. IV on stocks like NFLX, AMZN etc. is high before earnings for a reason.

 

Generally speaking, when someone defines everything that is different from his style of trading as "garbage", I would be very careful. 

[anand331]

Tastytrade recommends very risky trades which can potentially wipe you out.They openly recommend naked strangles. Actually they boast that as their most successful strategy. They never talk about black swans, fat tail events. You could make money 100 times and the 101st event could wipe you out. Their own trades show losing trades being rolled for months. I enjoy their educational stuff, for example, how create synthetic positions in IRA accounts as well their statistical findings on various trading strategies (have not verified that those are actually true), but one has to take a lot of their stuff with a grain of salt.

[Davidkot81]

I find " trading the close" by Tim Knight helpful

Less helpful in last few days eeks due to Yellen's direct interferencr jn the market

But ProphetCharts is right over 60% of the time (software he designed based on technical analysis).

I agree tastytrade has some good parts for education while Sosnoff and Batjsta talking about how much cake they ate (sosnoff ate) less useful haha

[RapperT]

agree on the black and white thing...heard him say the other day that " all of the best traders are discretionary traders" and something to the affect that trendfollowers wont be successful in the long run.  

 

I commented that Bill Dunn, David Harding, John Henry, Ed Seykota, Jerry Parker (etc etc etc) may disagree with that statement and you can see most of their track records online.

 

I have found some of the tastytrade content helpful. 

Edited April 23, 2016 by RapperT

[Edwin]

Here's a new one from today, I think it's been repeated, and Kim wrote a blog as a rebuttal.

 

https://www.tastytrade.com/tt/shows/market-measures/episodes/buying-premium-before-earnings-04-26-2016