LD Lossdog Research
strategy

defined risk trade

2 matching records.

Trade idea

Trade idea defined risk trade

The speaker recommends using a bullish strategy on a down day, such as a vertical spread, to capitalize on potential upward movement. This approach is considered a defined risk trade, which limits potential losses while allowing for profit if the stock moves in the desired direction.

View full notes
Strategydefined risk trade
Assetstock
Time horizonshort-term
Entry / triggeron a down day
SpeakerTony
Structure / legs
  • vertical spread
Risks
  • Market volatility
  • Incorrect assumptions about stock behavior
bullishEquitybullishdefined risk tradeshort-term
high confidenceVerify in video at 30:04 ↗
Trade idea

Trade idea Defined risk trade

If IVR remains elevated, it is preferable to defend and adjust the position. This is based on the idea that defined risk trades have a 60% chance of reaching the strike price. If volatility collapses, the position should be closed as it may be exposed to significant risk. The strategy involves reducing delta by 50% if the trade is a defined risk strategy.

View full notes
StrategyDefined risk trade
Time horizonShort-term
Entry / triggerIf IVR remains elevated
Target / exitDefend and adjust the position
Invalidation / stopIf the trade is a loser and volatility collapses, close the position
SpeakerMichael
Risks
  • Market movements could lead to losses if the trade is a loser.
  • Volatility collapse could result in significant losses if the position is not closed in time.
defined risk tradeshort-term
high confidenceVerify in video at 1:17:24 ↗