Market Measures - April 30, 2024 - Stop Losses for 0 DTE Strangles

The tastylive network

Financial experts Tom Sosnoff and Tony Battista analyze current market conditions, noticing a lack of momentum with no significant moves to the downside or upside, suggesting a period of stagnation or minor fluctuations ("sloshing around"). They delve into the nuances of stop-loss management in zero-day-to-expiration (0 DTE) strangle strategies, evaluating different stop-out percentages (25%, 50%, 100%) to minimize losses and optimize profits. Surprisingly, the 100% stop-loss strategy outperformed the tighter stop-loss strategies, leading to a relative increase in both win rate and average daily profit and loss (P&L). They emphasize the importance of adjusting trading strategies in the 0 DTE space to safeguard against rapid market movements and underscore the potential pitfalls of aggressive stop-loss strategies, suggesting that a more conservative approach may yield better long-term results.