uploaded image

Tasty Review: Portfolio Management

By:Sage Anderson

Options trading without effective portfolio management is a bit like canoeing without a paddle. You may make progress, but you probably won’t get close to achieving your ultimate goal.

One positive is that traders can improve their portfolio management proficiency, much like any skill can be practiced and mastered.

Experience obviously plays a big role in effective portfolio management. However, it’s not the only factor. One must also be cognizant of the tactics that encompass optimal portfolio management and make a concerted effort to acquire and develop these skills.

This speaks to why traders that embrace continuous learning are typically so successful in the industry - or in any industry, for that matter.

Much of the programming on the tastylive network is dedicated to portfolio management, which means the ability to acquire additional knowledge is literally at your fingertips.

Two great series on the tastylive network that highlight and reinforce the main concepts of portfolio management are Top Dogs and Top Dogs For Smaller Accounts. If you haven't already watched these episodes, we recommend you do so when your schedule allows.

Beyond those two series there are many other great sources of portfolio management information housed within the tastylive archives (as well as live programing).

However, before diving into those links, let's first review some of the most important portfolio management categories. These are tasks and considerations that active portfolio managers utilize to improve their probability of success:

Trade Deployment: This relates to your actual interaction with the market in terms of execution. Are you executing at the best possible prices? For example, if you are planning to deploy and position that involves both options and stock, how do you ensure that you trade in a manner that maximizes your price targets (and minimizes risk) on each leg of the trade?

Positional Risk: Once a position is fully deployed, what processes have you put in place to help you monitor the position for potentially increasing, reducing, or closing it (i.e. Managing winners/losers)? Or for hedging and/or rolling?

Portfolio Risk: How do you manage the net risk of your portfolio? Do you have targets for your portfolio Greeks (delta, gamma, theta, vega)? Do you have exceptions, and under what conditions?

Capital Allocation/Scaling: Are you scaling positions in accordance with your vision of capital allocation and risk? What are the grounds for exceptions to these rules, if any?

Expiration Strategy: What rules/processes govern your approach to expiring positions? In the week before? On the day of?

Special Circumstances: Are there conditions in the market that should trigger an increase or decrease in net risk exposure (i.e. "Brexit). If so, what is the process for setting and acting upon these signals? What other circumstances might dictate the need for specific behavioral responses?

While portfolio management can certainly mean different things to different people, the main point is that it involves the best practices, processes, and other guidelines by which you execute your individual strategy.

Airline pilots go through a detailed routine during their pre-flight inspection and follow specific guidelines/rules for take-off, flight, and landing. Close attention to these checklists and processes helps minimize the risk of negative outcomes to the smallest degree possible.

Certainly, trading as a profession inherently involves risk. However, by implementing and continuously improving a formal approach to portfolio management, traders can increase their probability of success, and minimize the risk of losses.

Included below is a list providing links to some of the portfolio management topics featured on the tastylive network. We hope this information helps you refine your approach and skills.

Additionally, both the “Learn” page and the search functionality on the tastylive website can be used to uncover additional information.

If you have any further questions or feedback on the topic of portfolio management please reach out at support@tastylive.com.

We look forward to hearing from you!

Sage Anderson has an extensive background trading equity derivatives and managing volatility-based portfolios. He has traded hundreds of thousands of contracts across the spectrum of industries in the single-stock universe.


Portfolio Management - Managing Winners/Losers (12/4/13)

Portfolio Management - The Greeks (6/5/15)

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Related Posts

tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer.  Options, futures, and futures options are not suitable for all investors.  Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.

tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.

tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.

tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.

© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved.  Applicable portions of the Terms of Use on tastylive.com apply.  Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.