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The Power Of Diversification
SteadyOptions - Mar 03 2014 02:27 PM
Self Managed, Auto-Trading...
SteadyOptions - Jan 03 2014 03:14 PM
Self Managed, Auto-Trading...
pezzodefero - Jan 03 2014 10:07 AM
Market Thoughts And Anchor...
fradav - Dec 01 2013 09:42 AM
Market Thoughts And Anchor...
cwelsh - Nov 29 2013 11:21 AM
Market Thoughts And Anchor...
tjlocke99 - Nov 24 2013 10:11 PM
Diversification is a commonly used word in the financial and investment industry. Most would agree it's important. In this article I'd like to share why I feel it is more than important, but really the only way to have a successful long term investment experience. Dalbar Inc. has shown study after study that investors consistently underperform the broad markets by significant margins. "For the twenty years ending 12/31/2012 the S&P 500 Index averaged 8.21% a year. A pretty attractive historical return. The average equity fund investor earned a market return of only 4.25%."
I'd suspect that a similar study of the average newsletter investor chasing past performance would be even more extreme.
Here is the inconvenient truth about successful trading. It’s work.
Trading is more than just numbers — it is a three dimensional fight that rages primarily inside the traders themselves. Missing any crucial element can ruin a trader quickly. The trader must first develop a robust trading system that fits their own personality and risk tolerance. Then they must trade it with discipline and faith consistently through ups and downs. But that’s not all. Risk exposure must also be managed carefully through position sizing and limiting open positions. The risk management has to be able to carry the trader through the losing streaks and enable survival for the chance to even make it to the winning side.
We are pleased to introduce a new subscription package - Level 1 subscription.
This subscription will provide access to all members forums except for the actual trades and trade discussions dedicated to the specific strategies (SteadyOptions, Anchor Trades or Steady Condors). The limited time introductory price is $49/Quarter or $149/Year, for the first 50 members.
Contributed by George Yates
The contemporary financial market is distinguished by a number of variable factors, not least its unique and constantly evolving range of product and derivatives. From carbon units to the contract-based options market, modern-day traders have the opportunity to create an optimised portfolio that suits their knowledge base, experience and individual skill-sets.
The options market is particularly appealing in 2014, primarily because it offers a certain degree of flexibility to those who operate within it. In essence, it enables the option writer to sell a particular security or asset to a designated holder, under the terms of a contract that is valid for a specified period of time.
Selling naked put options is often (mistakenly) considered to be a 'very risky‘ proposition. Professional stockbrokers who spread that message are doing their customers a major disservice, because they are steering those customers away from a prudent, profitable investment method.
The only dangerous part of options trading is the risk-insensitive trader who buys and sells options with little or no understanding of just what can go wrong. The options, by themselves, are not dangerous tools.
The stock market is going through rough times. The major indexes are down 5-7% in the last couple weeks. At the same time, SteadyOptions model portfolio is up more than 30%. We are not trying to predict where the market is going.
Our latest earnings trades performed very well, including:
As many of our readers know, we have been playing earnings very successfully in the last 2 years using variety of strategies. We had some nice winners, but the trade I'm going to describe in this article is fairly unique. The reason is that it actually comes from one of our members.
On January 27, one of our long term members posted the following post:
One of our members posted a link to an excellent post from Mark Wolfinger. Mark responded to a question from one of his readers:
"For the past 2 years, I've been selling naked options (mainly puts, a few calls) to generate monthly income. My position returns just over 1% per month on average on the total account value".
After a year like 2013, many traders forgot the meaning of risk. They think they can just buy call options and/or sell puts and make outrageous digits returns every year. I suggest that everyone reads Mark's post, it's an excellent read with a lot of wisdom.
2013 was a strong year for Steady Condors even while our preferred underlying, RUT (Russell 2000), managed to hit all-time highs on almost a daily basis to the tune of nearly 40% for the year. As most of you know Steady Condors is a market neutral, income generating, manage by the Greeks strategy. Our trades are primarily risk managed variations of iron condors. If you haven’t already, please see our introduction to the strategy here. Non directional income trading wasn’t designed for relentless trends like 2013 provided and many of our competing services set record drawdowns. Our worst drawdown in 2013 was less than 3% (unrealized, realized was less than 1%), and our year end performance was 29.4%. We report performance net of commissions, on the whole account, and non-compounded. If you would have begun with a $40,000 account you would have ended with $51,760. Please be sure to read the final comments of the Steady Condors introduction to understand our transparency in reporting performance compared to other services.
Happy New Year everyone! Wishing you and your families a lot of health, prosperity and happiness in 2014.
2013 marks our second year as a public service. Overall, we had an excellent year. We closed 186 trades in 2013 which produced 91.7% ROI, based on fixed $1,000 allocation per trade (non-compounded) and 6 trades open. The winning ratio was pretty consistent around 60%. We had only two losing months in 2013. Check out the Performance page to see the full results. Please note that those results are based on real fills, not hypothetical performance.
We get a lot of questions regarding different options of using our services. We currently offer three alternatives:
- Self-managed accounts (SteadyOptions, Anchor Trades and Steady Condors).
- Auto-trading (coming soon, Steady Condors only).
- Managed accounts (Anchor Trades and Steady Condors).
I came across a great post from Ken Grant, a founder of Risk Resources LLC and the author of the book Trading Risk: Enhanced Profitability through Risk Control.
As the year comes to an end, many traders/investors like to take a hard look at what transpired in the 12 months past and set a course for the 12 month ahead of them. While many dream of catching the next TSLA or SCTY to do most of the heavy lifting in their portfolio, the truth is, to achieve consistent positive returns over a long period of time, your management of your Risk will likely play a larger roll than your stock picking.
It's been a while since I wrote just a pure column for members, and I think it is about time to update everyone on where my firm is, how the Anchor strategy is performing, and my general thoughts on the markets before the end of the year. Since most people care more about the markets, I'll give my general thoughts on those, and I'll save the professional updates to the end.
As always, note these are my opinions only, I am not able to predict the future, and you should form your own opinions before making any investment decisions. If anyone has any questions, I welcome your posts, emails, and even calls.
Welcome to Steady Condors!
We are pleased to introduce an addition to SteadyOptions - the "Steady Condors" monthly income strategies. Steady Condors is a combination of low maintenance and market neutral options income strategies with a strong emphasis on risk management and proper position sizing, as well as minimizing drawdowns. In addition to providing trades and education on the forum, we are offering the Steady Condors portfolio as a separate service. We intend to autotrade it in 2014 with Global Auto Trading and potentially more brokers.
We would encourage everyone to read the Steady Condors Frequently Asked Questions and the Steady Condors Strategy (members only) topics. Those two topics should provide answers to the majority of your questions, as well a detailed discussion on what the Steady Condors is all about.
Those who have been trading options on major indexes like RUT, SPX or NDX know that those options behave differently from regular options. They usually stop trading on Thursday however the settlement value is not determined until the market opens the following day (Friday). (SPX weekly options are an exception, they stop trading on Friday, so the following article is relevant mostly to RUT and NDX options). But that's not all.
Last year I wrote an article for Seeking Alpha Google Options Underestimated The Risk Again. Looks like history repeats itself. On Thursday Google reported blowout quarter and the stock rallied the next day a whopping 122 points (13.8%). The options markets implied a 33 points move.
Over the last few years, Apple used to report earnings during the week after the monthly options expiration, meaning the fourth week of the first month of the earnings cycle (January, April, July and October). This cycle was expected to be no different. However, two days ago Apple surprised the trading community and announced that they will report earnings on Monday, October 28. What does it mean for the options traders?
This article includes a simplified explanation of the basics of options trading
Stocks, mutual funds, and gold are some of the common forms of commodities in the stock market today. Unfortunately, not a lot of people know about options trading, especially the non financial-savvy people. Coming across the term and researching about it on most financial websites may be difficult for most due to the number of jargons that are only used in financial circles. As such, this article provides a basic explanation about it for those who are interested in learning about the topic. Basically, options trading is similar to trading the aforementioned commodities but with a different risk.
As some of you know, Investimonials.com is "a place to discover the best financial products...and to weed out the worst." In fact, many of current and former SteadyOptions members found us on Investimonials.
What you might not know is that SteadyOptions is currently ranked #1 out of 705 newsletters on Investimonials. This is a remarkable achievement after being in business for less than 2 years. Many newsletters post testimonials on their website, and you not always can know how real those testimonials are. Our reviews are posted by a third party website, so you can be sure they are all real, from members that actually have used the service.
So please check out what our members say about SteadyOptions.
A mathematician who lived from 1170 to 1250 named Leonardo Pisano Bogollo introduced the Fibonacci sequence to the West, and tools based on that number sequence are still used by traders and other occupations today. What Leonardo found was a mathematical property that exists throughout nature and his sequence of numbers, called the Golden Ratio. This ratio is found in sunflowers, the Pantheon spiral galaxies and other natural and manmade structures. Nature, and humans which are a part of nature, seem to gravitate toward the Golden Ratio in such ways as how we assess beauty and buy and sell to determine market prices.