This strategy focuses on profiting from selling put options on ETFs during sharp market pullbacks. The first step is to identify suitable ETFs with high liquidity and strong fundamentals. For example, using technical analysis, one can spot potential pullback points by monitoring market trends and economic indicators. Regularly reviewing ETF performance and consulting financial experts enhances decision-making.
The next step involves setting optimal entry points. Key support levels and historical pullback patterns are crucial here. Traders can use moving averages and option Greeks to assess risk, while alert systems and paper trading simulations help in refining entry strategies.
Lastly, robust risk management is essential. Determining position size and setting stop-loss orders reduce downside risk. Implementing a risk-reward ratio policy and maintaining a diversified portfolio further limit potential losses. For instance, using options spreads can mitigate risk, while discipline ensures adherence to the strategy.
The strategies
⛳️ Strategy 1: Identify suitable ETFs
- Research ETFs with high liquidity
- Analyse the historical volatility of potential ETFs
- Select ETFs with strong fundamentals
- Monitor market trends and overall economic indicators
- Use technical analysis to identify potential pullback points
- Evaluate the impact of current news events on ETF choices
- Shortlist ETFs with attractive risk-reward profiles
- Regularly review the performance of shortlisted ETFs
- Seek expert opinions or financial advisors' views
- Create a watchlist for continuous monitoring
⛳️ Strategy 2: Set optimal entry points
- Determine key support levels of chosen ETFs
- Identify historical pullback patterns
- Use moving averages to find entry signals
- Assess the option Greeks to understand risk exposure
- Check implied volatility for potential spikes
- Set alert systems for entering sell put positions
- Adjust entry levels based on market conditions
- Combine technical indicators to refine entry points
- Practice patience and wait for high-probability setups
- Simulate entry strategies using paper trading
⛳️ Strategy 3: Prepare for risk management
- Determine an appropriate position size
- Set a maximum acceptable loss for each trade
- Use stop-loss orders to manage downside risk
- Implement a risk-reward ratio policy, minimum of 1:2
- Maintain a diversified ETF portfolio to mitigate risk
- Use options spreads to limit potential losses
- Review the portfolio performance regularly for adjustments
- Set aside a reserve fund for unexpected market volatility
- Stay informed about global market events impacting ETFs
- Train psychological discipline to stick with risk management rules
Bringing accountability to your strategy
It's one thing to have a plan, it's another to stick to it. We hope that the examples above will help you get started with your own strategy, but we also know that it's easy to get lost in the day-to-day effort.
That's why we built Tability: to help you track your progress, keep your team aligned, and make sure you're always moving in the right direction.
Give it a try and see how it can help you bring accountability to your strategy.
