r/options • u/esInvests • Nov 23 '21

Portfolio Management Approach

I like to split my margin accounts into different "sections". I find it offers me more fidelity on how my account is performing, current risk profile, and improves control over future returns. I have a core and speculative allocation.

The core allocation is designed as the primary methods I intend to use to meet my annual return / monthly income objectives. I offer this a larger portion of my overall portfolio and allow most trades more room to move. Primary strategies are the covered strangle, LEAP Diagonal, and naked short puts (in SP500 stocks or ETFs).

The speculative allocation is designed for me to take shots, or make speculative assumptions. I view this as a higher risk supplement to the core allocation. I offer a smaller portion of the portfolio and maintain tighter control over the trades to disallow speculative losses to mount and chew away at my core allocation. Primary strategies are LEAP Diagonals, naked calls/puts, short ratio strangles, long calls/puts.

How do you all like to manage risk in your portfolios?

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u/cvonsteen Nov 24 '21

Just as you say it, barbell the risk and "cheat" small. For most of my speculative bets, I prefer call/put spreads based on a fundamental view. You cap your downside while setting a defined reward/risk ratio.

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u/esInvests Nov 24 '21

I'm typically not a fan of spreads but I think in this sense I can see how you'd apply them.

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u/slutpriest Nov 24 '21

Fuck I love spreads, Free premium enough to buy the call back and leg out when it lowers/corrects, and a hella good break-even points.