Hello all, Greetings. I need your expert suggestions. I recently entered the realm of Options Selling, particularly focusing on intraday trading using the Short Straddle strategy. However, I find myself in a state of uncertainty, and I would greatly appreciate your insights.
My primary concern revolves around establishing a clear Risk-to-Reward ratio for my trades. Currently, I implement a 20, 25 and 30% (depending on the segment) stop-loss strategy on regular trading days and a fixed 50% on expiry days, while my exit point is predetermined, occurring at 14:55. Despite conducting back-testing over the past 2-3 years, specifically in the post-COVID period, the actual results have been somewhat underwhelming.
I am grappling with the decision of whether to set a fixed daily return target on non-expiry days and exit once it is achieved, or to adhere to the end-of-day exit strategy. The challenge lies in the fact that, more often than not, I encounter situations where I hit a stop-loss or experience a trend reversal, erasing accumulated profits. This has proven to be quite disheartening.
A colleague who employs a similar Short Straddle approach has suggested focusing on the monthly profit and loss rather than scrutinizing daily outcomes. Despite this advice, my recent months haven’t been as fruitful, prompting me to seek your guidance on this matter.
Thank you for your time and consideration.