This New Tool Changed Our Trading

[@epboyd]

Option Omega is more powerful but costs $50/month

[@mikeb5664]

Or Option Strat but $60 /month

[@erikreimann5556]

@@mikeb5664 OptionStrat has no backtesting

[@Phenn5589]

@@mikeb5664or $20 pm if you dont need Flow

[@JustFlow-it2zg]

Option omega is way powerful backtesting tool than this , but I guess if tasty ever match up with option omega level back testing than sure it will not be free

[@johngalang5773]

Thousand Thank You's....I know the importance but backtesting was always one of those things that I just didn't quite know how to setup all the parameters per say...like on tradingview and what not. I knew one day I will learn eventually. I know there is more too it but for now...this new feature definitely seems for user friendly. That's huge to me. So thank you. I am very grateful.

[@k1l0d3lta]

Great tool! Is there any plan to be able to back test 0DTE options? Currently the tool throws an error saying DTE should be between 1 and 365.

[@JustFlow-it2zg]

SPX is missing

[@ricomajestic]

Well Spy is pretty much the same thing!

[@JustFlow-it2zg]

@@ricomajestic No its not, try to take a trade based on SPY back test and see

[@logicchainoptions8941]

Is there an way to backtest futures options?

[@nitinmirpuri3313]

Hii. I am not familiar with backtesting in the US markets, but there is in India on a platform called opstra. Or you can see tradingview

[@ricomajestic]

So does this backtester use end of day data or 10 min data or 5 min data or 1 min data?

[@loubob21]

It uses data at 2:45. So even if you would have closed a trade technically at 1:00 for a profit but the market reversed and your trade was a loss by 2:45 this back test would not catch that win. So it’s basically useless.

[@ricomajestic]

@@loubob21 So basically end of day data with the end of day coming at 2:45 pm. That sucks! So it basically useless for intraday backtesting.

[@loubob21]

@@ricomajestic yes. I use optionet explorer for intraday.

[@MrEo89]

It’s free.. what the fk did you expect

[@ricomajestic]

@@MrEo89 Well maybe they should have a premium version that uses 1 min or tick data and open up their api so that it can be programmed to suit one's own needs.

[@michaelernst9124]

Love it. Would also love to see future options and conditional entries and exits also (e.g. VIX, SMA above/below and so on) Would be quite simple I thinks so to implement.

[@sethmiller5414]

Great back test tool -- for FREE. Thank you very much for making it available. The data feed costs $$ for the historical, so nice to have this tool. Well done.

[@Volleyball-tg3mh]

Great work!

[@stanchavik2358]

I consider strangles and naked puts (wheel if needed) to be the best options strategies. Prove me wrong, but backtesting doesn’t shown a significant advantage when compared buy and hold: (1) With strangles and naked puts, you incur a high amount in fees over time, there are no tax benefits or dividends, and just one market drop could erase months or even years of profits. (2) With a buy and hold, you only pay entry and exit fees. If you hold for over a year, you benefit from paying less taxes, you may earn dividends, and you don’t need to worry about sudden market drops as you can simply buy more.

[@benharsch9340]

I think everyone should start out with selling cash secured puts against an underlying you don't mind buying, and wheeling/flipping to covered calls if you ever take assignment. It is a great way to get a handle on some basic principles involved with options selling. I think building to strangles/straddles is natural progression and allows you to trade in more diverse scenarios/adds more tools to your toolbox if you will. Worth noting - their backtester doesn't have any additional entry condition controls yet (IV/IVR especially would be desired I think), which is a pretty big factor for most people, so this study doesn't really represent what you would probably expect if you do include that sort of info in your entry criteria/controls for your trades. These sorts of studies can still provide some value though - some confidence that your strategy will be profitable generically/without adding those further controls or for looking for general periods of outperformance and such. In regards to the strangle strategy not showing significant advantage to a buy and hold approach, I think you're thinking about it wrong. A strangle will make money when IV is overstated comparatively to actual volatility/movement in the underlying. So a 30 delta strangle for example would make the most money when you're able to sell it during a period of high IV (more credit up front) and when the underlying moves sideways/you end comfortably between the strikes you sold. To me, that represents a different way of making money compared to the buy-and-hold approach, as you're able to make money when the market is flat whereas buy-and-hold will obviously make money as the stock goes up. In the 2022-2023 years for example, this strategy drastically outperformed the S&P because the market was very choppy (probably had fairly high IV periods at times/allowed for elevated credit on entry as well), and the market traded pretty flat over those years. buy-and-hold would have returned you 0%, but the strangle returned over 10% in the same window. Its a different strategy, not better or worse, but when applied appropriately can be a good addition to your portfolio/to be used in combination with other strategies so you're able to make money in different "market regimes" if you will, not just in an outstanding bull market. Definitely have higher fees associated with shorter term options trades - capital gains taxes on any profits and Tasty charges a pretty hefty commission. There are other brokerages/platforms that have different fee structures and some with zero commission options trades, but you might not be getting as much out of their platforms.

[@stanchavik2358]

@@benharsch9340 Definitely, the wheel strategy has worked well for me, delivering solid results. It’s a reliable, stable, and steady approach. Strangles and NPs are likely the best options strategies and remain my favorites. However, recent market events in early August serve as a warning. When the price of the S&P drops suddenly with high volume, a trader holding several NPs can see their account drop significantly within just a couple of hours. While it's true the market recovered very quickly, within a few days, imagine a sudden 20% drop that lasts for weeks or even months. We’d be looking at a potential wipeout; no one would be able to close at 2x or 3x the max loss as planned. On the other hand, a buy-and-hold strategist would be thrilled if the entire market dropped by 20%. What a discount! I’ve had decent returns with buy-and-hold over the past couple of years, and after some backtesting, I’m not sure strangles would have outperformed this simple strategy - especially when factoring in fees, taxes, and trades closed at a loss. That said, strangles would have outperformed the same underlyings in the past year. A mixture of both is likely optimal. Backtesting is valuable for at least providing a basic comparison with buy-and-hold, though it’s limited and doesn’t account for factors like IVR, RSI, rolling, or strike adjustments. Interestingly, based on my backtesting, I also noticed that buying calls might not be a bad strategy at all. In fact, it outperformed strangles on certain underlyings. This makes sense, as the market generally drifts upward over time. It also makes me wonder whether selling premium is truly the best approach, despite its current popularity.

[@alxbuilds]

@@benharsch9340 got it. So if I can predict the market regime then I can beat S&P. That’s great ….

[@t_barraca]

Congratulations!!

[@Mesofs9]

i havent seen the backtest tool when logged in on the web platform :( anyone else missing this toool too?

[@benharsch9340]

I had issues at first, but after sitting on the "trading" tab for a while it offered me a "reload page for new content" popup in the top right. After that, the backtesting option was available.

[@Mesofs9]

@@benharsch9340 i will try that!!

[@Mesofs9]

@@benharsch9340 just tried it, and it was exactly as you said. After reloading new content it showed up. Thank you!

[@malihachape]

Great feature for reviewing the performance of favorite strategies. However, for traders who frequently adjust their trades, the results likely don’t reflect reality, as they don’t account for rolling, adjusting strike prices, or entering trades based on specific criteria like support and resistance, RSI, IVR, or avoiding earnings - all of which can provide an additional edge in real life. On the other hand, this also makes me wonder whether a simple buy-and-hold strategy might be more effective because many trades simply under-perform the simplest strategy.

[@benharsch9340]

Option Alpha's backtester looks to be more mature than this (probably expected since Tasty's just came out), but its not as nice looking/transparent with some of the data. They have 0DTE backtesting available and they have entry condition controls (current IVR, RSI, several others). You only get a free trial over there and have to subscribe after the first month, though.

[@laluna9998]

Love this!

[@mickey2pair]

Awesome.

[@alxbuilds]

looks like there isn't any option strategy that beats S&P buy and hold, in a 5 year or longer time frame. Is this correct? Anybody have any parameters that would show otherwise on the backtester?

[@pitabread1167]

I tested a lot of things, most lose in the 5 year time period. the only one that was slightly more profitable that I found with SPY was a PMCC

[@superlanguagelearning6589]

Do you mean the past 5 years or any 5 year period in the past?

[@alxbuilds]

@@superlanguagelearning6589 i checked last 5 years, but sure. any 5 years would be a good starting point if you have it.

[@kb1204]

I have tried it and I love it

[@calebogden]

🤝🤝

[@shinkai00000]

Strangles all loss except on SPY for the past 3 years!!! Buy and hold always outperform too! 😂

[@yuselbionovas8108]

right xd just sell puts to hold spy lower and keep doing b&h I'm honestly done with strangles

[@Alexadria205]

Did you manage winners at 25% max profit? That's the optimal exit according to tasty research.

[@benharsch9340]

S&P is up ~55% since start of 2021, so you're saying that buy-and-hold outperforms strangles during a strong bull market. I don't think anyone is going to try to refute that. I could just as easily point you to start of 2022 through to any point up to the end of 2023 as a period that strangles heavily outperformed buy-and-hold (as the market traded sideways over that two year period). It is a different strategy/allows you to make money in different ways/even when the market doesn't just go up, but yes it was outperformed in the past 3 years by another strategy that you should probably also be employing.

[@Rockingstars]

Seems like the bread and butter 45 dte strangle isn’t that good of a trade

[@yuselbionovas8108]

Seems like it's great but that one COVID month destroyed it.....

[@loubob21]

On which underlying?

[@benharsch9340]

Their backtest in this video didn't include the covid dip in March 2020 either. I'm always a bit wary of studies done during the "most recent 3 years" or similar periods since we've been on such a bull run in that period. We did recover from the covid dip in just a few months as well though (value lost in S&P was recovered in a few months, that is), and if you zoom out even farther, we've been on a bull run forever, essentially. Using their backtester I set the following criteria to look at the 45 DTE strangle: - Sell the 45 DTE 30 delta strangle in SPY (no limit on # of trades, not exact day matching either, wanted maximum exposure/least selection bias potential) - Closing at 21DTE or taking profit at 50% of premium (pretty typical advice from them to manage at 21DTE or take profit early at 50%) - Data set was custom: ran from Jan 1 2019 through to latest data (October 2024) This strategy shows profitability, but drastically underperformed a buy and hold strategy as well. Buy and hold returned 126% on the capital utilized and the strangle returned 25%. That is the total return over the period and it was utilizing unbiased entry criteria, so if you were to enter the positions regardless of any other factors, which is a deviation from what they usually talk about as well. They don't have ability to add more nuance to entry criteria yet though (I assume that is coming), such as "only enter when IV/IVX is greater than X%", but I would expect entering only when IV is inflated would narrow that gap pretty substantially as you'd be getting a lot more premium initially/smoothing out losses a good amount and inflating profits quite a bit due to IV overstatement compared to Historical Volatility. There are some pretty obvious periods where the strategy outperforms the S&P though as well - if you ran just 2022+2023 for example, SPY was pretty choppy but fairly flat over the period as well. This sort of strategy will perform well when the market trades sideways but still has a good amount of volatility/elevated premium on entry, and a lot worse when the market charges higher or the floor drops out. It is still a good idea to have multiple ways to make money though - if the market trades sideways for an extended period you don't want to be all buy/hold through that. I think it is pretty significant that this strategy made money when including the covid dip/latest fem months of pretty significant growth. Really hope to get more criteria for entry conditions soon though to get a bit more nuanced.

[@alxbuilds]

@@Rockingstars there isn’t any strategy that you can use on their back tester that beats buy and hold in a 5 Years or longer time frame.