We Tested Bullish vs Neutral vs Bearish Strangles. The 30 Delta Put Won.

Añadido: 2026-06-01

[00:00:00]Here we go. Should we trade bullish strangles? And I think the answer is going to be yes.

[00:00:05]>> I think the answer is yes. I can do >> [laughter] >> I didn't look at it. I like to be surprised, but I think the answer is going to be yes.

[00:00:13]>> [laughter] >> All right, so let's take a look at this.

[00:00:15]When examining premium income potential, 30 delta puts typically generate higher premiums compared to 16 delta strangles.

[00:00:22]So this one's comparing the 16 delta strangle to just the put. This and then the delta delta makes sense. This premium advantage can potentially lead to better success rates and improve performance during sustained uptrends.

[00:00:34]>> And and we've been in a bullish market for a long time and I'm sure 30 delta puts have really outperformed 16 delta strangles.

[00:00:43]>> Well, it's pretty interesting here cuz they're going to go into strangles with this, but when they're talking about this, this is just the premium. So you're getting the same delta, right? You're doing a 30 delta put versus 16 delta call and 16 delta put. So that this is put skew cuz puts are going to be give you a little bit more on your up a little bit. So you're getting a little >> bringing it all the way up to the 30 delta. So you're looking at 45 day and I'm just going to go to 5.

[00:01:08]I'm going to go to spy to show people what we're talking about, what they're comparing. If I go to the table page here and go to 45 days, I'm going to go to monthly. It's 49 days on the monthly. If I sell I got to change this to delta. If I sell a 16 delta strangle I'm at the 712 put and looking for the 16 delta call I'm at the 793 call. But you can when Lisa's put skew here, 16 delta put, 16 delta call, you're getting 429 on the put and you're getting 293 on the call. Less on that call. Right.

[00:01:46]>> Much less on the call. Right. So and and that's that's true. You've got the same deltas versus the 30 delta put. So right here we got 722. Now what is the what is the 30 delta put? Just the put.

[00:01:55]>> 722 and risk on both sides.

[00:01:57]>> Risk on both sides.

[00:01:58]>> Um but you go from the 712 put and if you bring it to the 30 delta, you go from the 712 up to the 736. So, you you you move that put quite a bit. You're within the expected move. And here in this >> And you're collecting more. And you're collecting more. That was the point of that one thing down there is even just the put is collecting more than both sides.

[00:02:18]>> Right. But you're you're moving that put up. But I still think I still think that, you know, 30 delta put is probably >> Well, well, well, well.

[00:02:25]>> I know they're looking at premium collected, but um >> We go farther into strangles. We're just talking about um naked premium right now.

[00:02:32]>> Uh because that call doesn't give you that much, which is why we kind of turn that naked that strangle that naked strangle into that jade lizard. However, you why do you want to make that call spread?

[00:02:42]Cuz that call doesn't give you that much and the call spread buying that extra call doesn't take away that much credit.

[00:02:47]>> Right.

[00:02:49]>> Okay, the bullish strangles had better returns even though they the bullish strangles had better Well, now we're looking at bullish just >> Well, that's what I'm saying. They're telling you this is what I was trying to tell you. They transition into strangles. So, here you've got the 30 delta put and the 16 delta call, a bullish strangle. The the other trade the other thing was just showing you premiums.

[00:03:07]>> So, the bullish strangles had better returns even though they were a bit more volatile and could lose more money on the downside. The put side break even is closer, so market drops have more impact, but the return on capital was better than neutral strangles. So, um So, they are comparing the 30 delta put and the 16 delta call.

[00:03:26]>> put they're putting it together.

[00:03:28]>> Yeah.

[00:03:28]>> Yeah. Yes, yes, yes. Versus just the 16 16. So, the the success rate everything is the the return on capital is a little bit better. Other than that, it did say you can lose a little bit more because they're comparing it to the 16 delta strangle, not just the the 30 delta put.

[00:03:44]>> But the largest loss isn't that much difference. Considering we you know, you saw it. We had to bring that put up at least $20, that largest loss isn't that much different.

[00:03:51]>> It's not that crazy.

[00:03:52]>> I'd love to see them add on one standard deviation strangle, bullish strangle, and just the put.

[00:03:58]>> I know. That's what I want. [laughter] >> That's what That's >> And I I was trying to stop you because you kept being like, "And you have risk And you have risk to both sides." I was like, "We're going to have risk to both sides going forward in this."

[00:04:08]>> Because in my mind, my choice might just be the 30 delta put.

[00:04:11]>> I agree.

[00:04:12]>> I don't know. I don't know. After the beating some people have taken with calls in We have had some crazy moves to upside this year. I mean, this quarter, we've had insane upside moves in some individual products.

[00:04:25]Um and >> Think about if you had a strangle in Dell.

[00:04:27]>> Oh, it's it's crazy. The moves we've seen to the upside have been crazy. And not just individual products, also in ETFs. I mean, I've been [clears throat] selling 45-day iron condors, putting my calls at the expected move, and they're they're all through it's Those Those ETFs are through them all. So, we've had big moves not just in individual equities, but also in ETFs. So, I'm going to go with the 30 delta put, please.

[00:04:54]>> [laughter] >> All right, let's go to the next slide.

[00:04:57]Cuz then they I think they compare bearish, too. So, then the next slide is bearish strangle. So, you flip it over, right? So, you're going to go the 30 the 30 delta put. I'm sorry, 16 delta put and 30 delta call. Bearish strangles underperformed both alternatives, which we just talked about, while showing the lowest volatility among all three approaches. Returns were below expectations. This strategy appears better suited for traders holding bearish market assumptions.

[00:05:20]>> Okay.

[00:05:22]Got it.

[00:05:23]Uh So, takeaways, should we trade bullish strangles? Bullish strangles have positive delta exposure, so they perform much better when the market go markets go up constantly. We get higher returns, but also accept more volatility compared to neutral strangles.

[00:05:39]>> And the bullish strangle sits strategically between selling naked puts and neutral strangles. We get solid returns from the put side while having much better downside protection and less overall volatility than naked puts alone. So that is and I I mean that's just it is we've so many people have told us this. I know you and I like our preference. I do prefer just like a put and not having any risk to the upside but the adding that kind of farther out farther out call is enticing. You do get a little bit of extra from it.

[00:06:07]>> And what I don't mind here when they're talking about their bonus strangles are here's a 30 delta put and they're looking at a 16 delta call.

[00:06:15]>> Right.

[00:06:16]>> A 16 delta call, you're outside of the way of the expected move but not that much and recently I've been seeing us blow through calls blow through calls blow through calls. It going out 45 days putting them at the expected move. So you and I feel like we don't have to give up that much if we do want to protect ourselves to the upside and say we're getting $3 here, maybe I'll buy this call for a dollar.

[00:06:37]It's not so then it's $17 wide.

[00:06:40]>> I don't know. I wouldn't do that.

[00:06:42]I would just not sell that call.

[00:06:44]>> Or or bring it in and get maybe get a dollar on the dollar on a call spread instead of a a dollar on the call spread it's an extra it's an extra oomph to your put but then you're at least you don't have risk to the upside because the upside has seemed to be where our problems have lied lately. Or not just ours lots of people who are selling naked calls.

[00:07:05]>> Naked calls and even even iron condors they're all burned they're all they're all through.

[00:07:10]>> I know.

[00:07:12]So anyway, good market measure good market measure and I especially what they the research team says when vol's higher bring your strikes in. So when vol's higher definitely go from that 16 delta to the 30 delta.

[00:07:25]>> The 30 delta for sure.