In this episode of Options Jive, Tom and Nick discuss strategies for scaling up undefined risk option strategies while managing risk and avoiding account blow-ups. They analyze the differences between trading more contracts versus increasing the potential reward or risk, using examples of strangle and put strategies. The discussion highlights that while smaller delta strategies may yield higher success rates, they also carry greater notional and tail risk. The key takeaway is that traders should prioritize increasing a position's risk or reward before simply adding more contracts, emphasizing the importance of managing tail risk and being prepared for market downturns to avoid significant losses.
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